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This Letter of Demand can be sent to a person or organisation that has failed to make a required payment. In most cases, this letter may be used by service providers who have invoiced a client, but have not received payment from the client.
A Letter of Demand is often used as a final warning before commencing legal action for recovery of the debt. Before sending a letter of demand, service providers may wish to send more friendly reminders.
This Letter of Demand states how much money is being claimed, what it relates to, and when the payment must be made. It also informs the other party that if payment is not made by the date stated in the letter, then legal action may be commenced.
How to use this document
Before finalising the letter, the person claiming the money ("the Claimant") should check who the letter should be sent to. In some cases, the Claimant might have been hired by a company, but all of the Claimant's dealings might have been with an employee of the company. If this occurs, then the letter may need to be addressed to the company itself, or to the person that owns the company, rather than to the employee.
Once the letter has been finalised, it can be sent (together with any relevant attachments) to the other party.
In order to prove that the letter was sent, it may be helpful to send it by registered post.
Make note of the new due date for payment. If payment is not received by that date, then the Claimant will need to decide whether to commence legal action.
Any organisation that is involved in pursuing a debt has various legal obligations. These include obligations to avoid physical force, to avoid unreasonably harassing the debtor, and to avoid providing misleading information about the nature of the debt. Further information is available from the website of the Australian Competition and Consumer Commission.
If the money being claimed relates to the provision of goods or services, or some other agreement between the parties, then general principles of contract law, as provided by the common law, will apply.
If the Claimant provides goods or services to the public directly (rather than to a company) then the Australian Consumer Law may also apply.
If payment is still not received after this letter has been provided, and legal proceedings are commenced, then various other legislation in the relevant state or territory may also be relevant. For example, legislation in relation to the relevant Magistrates Court or Small Claims Tribunal may apply. If the letter is used in court as evidence, then legislation in relation to rules of evidence in the relevant state or territory may also apply.
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A guide to help you: How to Get your Debtor to Pay
Other names for the document: Demand Letter, Letter Demanding Compensation, Letter of Financial Demand, Letter of Monetary Demand, Letter to Demand Compensation