Demand for Payment Letter

A demand for payment letter quite often has the desired effect
after numerous phone calls asking for payment may have failed.

It is easy for a defendant to ignore a phone call or to claim being unaware of your letter of demand. It is therefore good practice to make copies of your demand letter and to send it by registered mail (with delivery confirmation) to the recipient.

final demand letter

There are additional reasons for getting it all in writing:

  • In some jurisdictions it may be a requirement to write a formal letter of demand before you can pursue further legal action in court.
  • Your letter, clearly stating the reason(s) for your claim, the payment demanded and the time allowed, can be submitted as evidence should you need to go to court.
  • And perhaps the best reason of all is showing your intention to follow through, which may well result in payment.

Important Note:
Before you click through to our demand letter samples, take a look at the following five paragraphs which should be covered in your demand for payment letter.

1. Identify the Author of the Letter

You do not need a lawyer to write your letter - you simply state that you are acting in your own capacity.

However, if you do act on behalf of someone else or on behalf of a company, you need to disclose that e.g. "I act as accountant on behalf of Company XYZ".

Or if you aquired the services of a legal professional to draft the letter, this too must be made known to the other party. The demand letter would then typically start with: "We act for Mr M Jones. Our client informs us that ..."

2. Outline the Reason for Your Demand for Payment Letter

Here you need to outline the cause of action i.e. the reason for your claim against the opposing party. Supply clear but concise details of how or why the claim arose, e.g.

  • Demand letter for property damage or faulty goods
  • Auto accident demand letter
  • Demand letter for services rendered by you or compensation for faulty services rendered by the defendant
  • Collection demand letter for a Promissory Note or for rental due
  • Wages due to you

Reference and attach copies of any affidavits or invoices that can support your statement and enclose copies thereof with your letter. Make notes of any further discussions with the defendant or any reaction which may be threatening or inappropriate.

3. What do You Expect from the Other Party

letter in typewriter

You need to outline exactly what reaction/restitution you expect from your letter of demand e.g.

  • Payment in full for damages suffered
  • Payment of a reduced amount if the debt is paid within a short, specified period
  • A structured repayment (instalment) plan until the debt is paid in full.

4. Time Allowed for a Response

You need to specify the timeline within which the opposing party must affect payment of your claim. You could give a number of working days (typically a 10 day demand letter) but if you specify the day and date there is no chance of confusion.

5. Consequence for Non-Payment

In the final paragraph of your demand for payment letter you must outline the consequences of the opposing party's failure to affect payment of your claim within the previously prescribed timeline.

You want the defendant to understand that you will not go away and he/she needs to understand the risk of losing in court, the time it will take to defend, the matter being of public record and possibly affecting his/her credit rating.

Note: In Full and Final Settlement

This is typically added to the demand for payment and serves as assurance to the defendant once paid in full, that no further demands for payment will be madeby the claimant relating to this specific claim.

For example, in an automotive accident the claimant may not come back at a later date and claim for other damages that he/she was not aware of at the time of the demand.

Small Claims Court

If you intend pursuing the matter in Small Claims Court or Disputes Tribunal, you need to confirm your claim is below the maximum limit. Many courts offer (and encourage or even demand) a mediation service prior to pursuing the matter in court.

scales of justice with money

USA - State specific (2.5k - 25k but no limit in eviction cases in some states) Some jurisdictions also allow tenants to claim double the security deposit (even if over the limit) where the landlord failed to return the deposit.

England and Wales (Generally 10k)

Scotland and Northern Ireland (3k)

Canada (8k - 50k)

South Africa (15k)

Australia (5k - 25k)

New Zealand Disputes Tribunal (15k - 20k)

You also need to show that you attempted to settle with a defendant before taking your case to court i.e. wrote him/her a demand for payment letter and gave adequate time to respond.

Since your demand for payment letter (and other supporting documents) will be submitted as evidence to the judge, you need to have your letter typed and be mindful of your tone and language.

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