We often hear about people receiving a letter of demand, or a “lawyer letter” in common parlance, and associating with it a certain gravitas. People certainly tend to feel threatened by it, or at least to take it as an intended threat.
But what is a letter of demand? And what should you do if you receive one?
A letter of demand does not denote a lawsuit
A letter of demand is a written letter setting out a list of demands from the sender for the recipient to comply with. It is generally backed up by the threat of legal action being taken against the recipient should the demands not be met within a certain timeframe.
It is important to note that a letter of demand does not constitute the beginning of legal proceedings. Most individuals and companies do engage law firms to send out letters of demand; lawyers are not generally wordsmiths, but they can be reliably expected to be clear and precise in their language, and their involvement does lend a certain weight. However, a letter of demand does not necessarily need to be written by a lawyer; anyone can personally send one. It merely outlines certain claims and asserts the willingness to begin legal proceedings in order to back up those claims.
If sending a letter of demand is not the first step towards filing a lawsuit, why send one?
The most practical reason is that going to court in Singapore is often costly in terms of both time and money, and most people would wish to avoid that if an agreement can be arrived at privately. The courts also do not wish to be bogged up by cases which do not absolutely require their attention.
In many instances, an official letter of demand from a law firm is sufficient to make the point that the sender takes his demands very seriously and is indeed willing to engage in the costly process of civil litigation to enforce them. This has a very persuasive value.
At the end of the day, the purpose is to get the recipient to comply with the demands, and not for the sender to have “his day in court” to fulfil a sense of superiority or vindication. The courts themselves do not take kindly to having their time wasted, and in some cases letters of demands may need to be used in court proceedings to show that concerted attempts to obtain compliance have been made before a lawsuit was filed.
Moreover, in the course of engaging a law firm to send a letter of demand, a qualified lawyer would be able to advise on whether the matter is justiciable, and whether the demands can be enforced through the due process of the law.
What does a letter of demand contain?
A letter of demand usually contains the following information:
1. The identity of the claimant;
2. The identity of the lawyer and law firm acting for the claimant and their contact details;
3. The matter in dispute and the material facts;
4. The claims against the recipient of the LOD;
5. The claimant’s list of demands, which, for instance, may require the recipient to satisfy the sum owed to the claimant and his legal fees;
6. A deadline before which the recipient must satisfy the demands, failing which legal action may be taken.
What should one do upon receiving a letter of demand? The baseline to establish is that one does not absolutely have to do anything; there are no legal consequences to ignoring a letter of demand. Having said that, one would usually be ill-advised to not take any action at all. As established, a letter of demand usually indicates that the sender has taken this matter seriously, especially if he has engaged the services of a law firm. As such, whether one agrees or not with the demands stated in the letter, some form of response should still be made before the issue becomes unduly escalated. We do not discount the possibility of a letter of demand being sent frivolously, even if a law firm is involved. The world does not lack for ill-intentioned people, and some of them do have money to burn (a law firm charges anywhere from a 2-digit sum to a 4-digit sum of money to send a letter of demand, depending on the matter and how much work is involved in advising the client). And since a letter of demand is simply a form of written communication and not a legal document there are few tangible reasons for a law firm to be unobliging. Even so, a response should be made if only to cover one’s behind, so to speak. If one wishes to comply with the demands, one should consider contacting the sender to negotiate favourable terms. A lawyer may be engaged to assist with this by conducting negotiations on a “without prejudice” basis. This means that should negotiations fail, and litigation commences, the contents of the negotiation may not be used as evidence in court, particularly as any admission of liability. If one disputes the demands, legal advice should be sought. What happens after a letter of demand is sent and the demands are not complied with?
A letter of demand does not require the sender to follow up on it. He could very well cease any further action, which is not uncommon especially if the recipient mounts a strong response in disputing the claims. If the sender does indeed wish to escalate the matter, legal proceedings will most likely have to be commenced in the form of filing for a writ of summons. This is a formal court document that will be processed by the courts, typically the District Court or Magistrate Court. The writ must then be served onto the defendant within a time limit permitted by the court. The defendant then has to file a memorandum of appearance if he wishes to defend himself against the action before the stipulated deadline. Usually accompanying a writ of summon is a statement of claim. This is a comprehensive legal document that serves to establish the claimant’s position by setting out the relevant facts, the legal rationale for the suit, the losses suffered by the claimant, and the relief that is being claimed for. One must not ignore a writ of summons, as the other party may obtain a judgement in default of appearance, making the absent party automatically liable. Legal advice from a civil litigation lawyer is almost certainly required at this point. More information about the civil litigation process can be found here.
Note: This article first appeared on SMART TOWKAY. It is reproduced with permission.