Business English

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Debt recovery letter of demand
This information sheet explains the function of a letter of demand for debt recovery. It includes a sample letter of demand for the recovery ofmoney following your supply of goods or services (eg. sale of artwork, performance fees) to a person or organisation.
What is a letter of demand?
A letter of demand is sent to a person or organisationwho owes you money (a debtor) following your supply to them of goods or services (eg. sale of artwork or performance fees). The letter advises the debtor of the amount outstanding and threatens courtaction to recover the debt if it is not paid within a certain time. A sample is provided below which can be used as a guide.
Why send a letter of demand?
A letter of demand serves two purposes.First, it warns the debtor of your intention to commence legal proceedings unless payment is made and gives the debtor one more opportunity to pay. Secondly, the letter is a document which may be tenderedin evidence during court proceedings as written proof of your claim of the debt owed and your attempt to settle the matter.
Copies of any relevant documents such as contracts, letters of agreement,invoices, etc, should be listed and attached to the letter of demand to assist the debtor to identify the transaction and their liability to pay.
It is advisable to send the letter of demand byregistered post or fax to confirm receipt and don't forget to retain a copy for your records. Only one letter should be sent and you should be prepared to act on your threat to initiate legal actionotherwise the debtor may simply call your bluff.
When sending a letter of demand, you should be careful not to:
harass the debtor – they have the right to complain about this behaviour to particulargovernment agencies and the police; and
send a letter which is designed to look like a court document because this is illegal.
How to respond to a letter of demand
Do not ignore a letter of demand...