A demand letter is a formal notice demanding that the addressee perform a legal obligation, such as rectifying a problem, paying a sum of money or honouring a contractual commitment, on specific terms and within a specified time. The letter gives the recipient a chance to perform the obligation without being taken to court.
In certain types of legal proceedings, a demand letter is mandatory; a person failing to send it could lose his or her case. It is always best to send a demand letter before instituting legal proceedings; in many instances, it encourages the recipient to settle the matter out of court.
Sending a demand letter will not require the sender to actually sue the recipient. The decision on taking the matter to court is made when the recipient does not respond within the allowed time or refuses to perform the legal obligation.
A demand letter may be written by the person seeking redress or by a lawyer on that person's behalf. After a copy has been made, the original must be sent in a way that provides proof of delivery.
The demand letter can be sent by registered mail, since a confirmation of delivery will be provided. It is important for the sender to keep a copy of the demand letter and the confirmation of delivery provided by Canada Post to be able to prove that the demand letter was delivered to the intended recipient.
A demand letter can also be served by a bailiff, who will provide a document stating when and to whom the letter was delivered. This document can then be used to prove that the demand letter was, in fact, delivered. Before asking a bailiff to serve a demand letter, it is important to check the cost of the service, since this can depend on the distance involved.
A demand letter must contain the following information:
- the date, the recipient's contact information, and the legal phrase WITHOUT PREJUDICE to protect the sender with regard to the contents of the letter;
- a summary the matter at issue;
- a demand for a specific relief or payment;
- a deadline by which the matter must be settled;
- the sender's contact information and signature; and
- the term demand letter stated in the body of the letter to direct the recipient to act accordingly.
A sample demand letter is available in the section on small claims on this website.