Demand letter

Demand letter – Within the Litigation Procedures, this is a letter signed by the creditor (or by their lawyer acting as their representative) and usually before local notary public, that demands payment or some other action, which is in default. Demand letters are not always prerequisites for a court dispute but there are exceptions such as legal action on promissory notes or if the contract requires it. This letter is served by notary public to the debtor in order to certify they have acknowledged the consistence of the demand letter. Basically, a demand letter sets out why the payment or action is claimed, how it should be carried out (eg. payment in full), directions for the reply and a deadline for the reply; where warning for further protection of the creditor has been also stipulated. Demand letters are often used in business contexts because they are a courtesy attempt to maintain some goodwill between business parties and they often prompt payment, avoiding expensive litigation. A demand letter often contains the “threat” that if it is not adhered to, the next communication between the parties will be through a court of law in the form of formal legal action (usually a civil claim or an application for issuance of an execution order by the local court).

Posted in: D