A letter of demand is a crucial document in resolving legal disputes. It can either settle the dispute amicably or be the start of a formal legal process. In Singapore, a letter of demand is important in civil proceedings and can be used as evidence in court proceedings. It is, therefore, critical to understand the intricacies of drafting and sending a letter of demand.
Whether you want to demand payment for an outstanding debt, request compensation for breach of contract, or negotiate what you feel is a wrongful dismissal, a letter of demand can be the first step to achieving your goal.
This article will explain what a letter of demand is, when it is a good idea to send a letter of demand, and what you should include in your letter of demand. It will touch on what to do if the recipient ignores the letter of demand and whether you need a lawyer to draft your letter of demand.
We also touch on negotiation after sending a letter of demand and what to do if you receive a letter of demand.
What is a letter of demand?
A letter of demand is a written communication to the other party setting out your legal claim and the demands you want the recipient to comply with. It is not a formal court document, but it can be the first step towards formal proceedings, or the last step before taking legal action.
When is it a good idea to send a letter of demand?
A letter of demand can be critical in resolving disputes without resorting to court. You can set out your grievances and claims, seek action or compensation, and start “a conversation” with the other party.
Letters of demand are typically sent in contractual disputes when one party fails to deliver on their contractual obligations, or when one party owes money to the other party. Where the aim is to stop conduct rather than recover money, such as an infringement of your intellectual property, the equivalent letter is usually called a cease and desist letter.
A demand letter is excellent for setting out the circumstances and your claim. It also allows the recipient the opportunity to rectify the situation before legal action is taken. At the same time, it gives the recipient a clear warning that you will proceed with legal action if your demands are not met.
Often, a letter of demand leads to settling the dispute without taking any further legal action. An obvious advantage is that if you can resolve the dispute without going to court, you save time and money and reduce stress.
If your matter ends up in court, a letter of demand can serve as evidence that you tried to settle the case without approaching the court. It also provides a clear record of the outstanding debt or obligation.
The duty to try to resolve matters before suing
Since the Rules of Court 2021 came into force on 1 April 2022, parties to civil proceedings have a duty to consider amicable resolution of their dispute, both before and during the case. A party is to make an offer of amicable resolution before commencing an action, unless it has reasonable grounds not to, and should not reject such an offer without reasonable grounds.
The offer, and any rejection, must be in writing, and the offer must stay open for at least 14 days unless the parties agree otherwise. The terms of an offer that was not accepted are kept from the court until the merits have been decided, but the court can then take the parties’ conduct into account when deciding costs.
In practice, a well-drafted letter of demand is often where that offer is made. It is one more reason to get the letter right: it is not just a warning to the other side, it is part of the record the court may later look at.
What should you include in your letter of demand?
There is no prescribed format to follow, but it is crucial to set out your claim and demand clearly and accurately.
Your letter of demand should include the following:
Establish the parties
Set out your details (the claimant’s name, address, and contact details) and the recipient’s details. Where the recipient is a company, use its full registered name.
State the purpose of the letter
Ensure the recipient understands the dispute.
Summary of the dispute
Set out the material facts and context leading up to the dispute. Focus on relevant facts, and be specific and accurate, e.g. the amount of the debt, when it became due, invoice numbers, etc. (Remember the letter can be used as evidence in future legal proceedings.)
The legal basis for the claim against the recipient
On what do you base your claim? Set out the legal framework and refer to the relevant law or specific contract.
Your demands
Clearly state the action or remedy you seek.
A timeframe or deadline for compliance
It shows you are serious and expect a prompt response.
Consequences of non-compliance
Clearly state your intentions and potential legal actions if your demands are not met.
Closing
Expressing a willingness to negotiate, or to attempt mediation, is almost always a good idea, and it sits well with the duty to consider amicable resolution described above.
Common terms used in letters of demand
- “Without prejudice”: communications made in a genuine attempt to settle a dispute are generally protected, so that an offer or concession made in them cannot be used against the writer as an admission if the matter goes to court. A letter of demand is usually sent as an “open” letter, precisely so that it can be shown to the court later, while any settlement offer is often made separately on a “without prejudice” basis. Getting this distinction wrong can either weaken the letter as evidence or expose a concession you did not mean to make.
- Reserving rights: you reserve the right to commence legal action, and to claim further sums such as interest and costs, even if you accept part of what you are owed in the meantime.
- Without notice (formerly “ex parte”): an application made to the court without the other party being given notice or being present. The Rules of Court 2021 replaced the older term “ex parte” with “without notice”. In urgent cases, such as where there is a real risk that assets will be moved, a party may apply without notice for a freezing order over the other side’s assets.
Sending the letter of demand
Make use of a courier service or registered mail. It is essential to receive confirmation of receipt. You don’t want the other party to claim they never received the letter of demand in subsequent legal proceedings.
Email is common and often sensible as well, particularly alongside a hard copy. If there is a contract between you, check its notice clause first, because it may specify how and where formal notices must be sent.
Is there a legally specified response time for a letter of demand?
There is no specified response time for a letter of demand.
When sending a letter of demand, you should provide a reasonable time within which the recipient must respond. Typically, the response time is 14 days, but it depends on the complexity of the dispute, the parties involved, and whether time is of the essence. Where the letter contains an offer of amicable resolution, the Rules of Court 2021 expect that offer to stay open for at least 14 days unless the parties agree otherwise.
Whatever the deadline, you must specify the response time in the letter.
Do you need a lawyer to write a letter of demand?
It is not mandatory to ask a lawyer to write a letter of demand. You can write your own letter. However, seeking legal advice would be beneficial.
It is a crucial legal document and must be correct and accurate. You also want to maximise the chances that the recipient will comply with your demand. If the matter proceeds to court, the letter can be helpful evidence in your favour.
If the letter sets out the core issues and your remedies comprehensively, it improves your chances of success without going to court.
The letter of demand must be accurate and legally sound to achieve the desired outcome. Lawyers are familiar with the legal terms and correct use of terminology when drafting an effective letter of demand.
An experienced lawyer knows how to protect your rights when drafting a letter of demand. They know where and how to use terms such as “without prejudice” and “reserving rights”.
Often, recipients take a letter of demand more seriously if received from a lawyer.
An experienced lawyer will also assess your case before drafting a letter of demand and advise on the most efficient way to achieve the best outcome.
What happens if the recipient ignores the letter of demand?
If the recipient chooses to ignore the letter of demand, the sender can choose to pursue further legal action. You can opt for alternative dispute resolution, such as mediation or arbitration, or decide to file a claim against the other party. Your next step will depend on the nature of the dispute.
Where a claim is filed depends mainly on its value:
- Small Claims Tribunals for claims up to S$20,000, or up to S$30,000 where both parties consent in writing. Lawyers cannot represent parties there.
- Magistrate’s Court for claims up to S$60,000.
- District Court for claims up to S$250,000 (higher for some road traffic and industrial accident personal injury claims).
- General Division of the High Court for claims above that.
In the courts, most claims are now started by an originating claim, which replaced the old “writ of summons” under the Rules of Court 2021. Our article on the civil litigation process in Singapore walks through what follows, and for unpaid sums specifically, see the legal debt recovery process.
An experienced lawyer can advise on the most appropriate resolution for the dispute.
Can you still negotiate a settlement after sending a letter of demand?
Yes, you can still negotiate a settlement after sending a demand letter. The purpose of the letter of demand is to set out the claim and request payment or performance. It also serves to start a conversation with the other party.
When the other party responds, they may ask for clarification or further details on some issues. They may deny responsibility or admit some liability, but not to the full extent of your claim.
Either way, once the recipient responds, you will have a better idea of where you stand and the chances of resolving the dispute amicably.
You can start negotiations knowing the recipient’s position and counterclaims.
You can negotiate directly or through legal representatives or mediators.
What to do when you receive a letter of demand
When you receive a letter of demand, it is best to respond. It is unwise to ignore a letter of demand. If your matter ends up in court, it may count against you that you didn’t respond, and if the letter contains an offer of amicable resolution, rejecting it without reasonable grounds can have consequences when the court comes to decide costs.
A letter of demand also allows you to request more information or clarify any uncertainty.
If you don’t dispute the claim, it is often best to comply with the letter of demand. However, if you disagree with the claim, you should seek legal advice before you respond.
Your lawyer might advise you to negotiate “without prejudice” to your rights.
Common questions
Is a letter of demand legally binding?
No. It is a formal statement of your claim, not a court order, and the recipient is not legally obliged to do what it says. Its force comes from what follows if they do not, and from the record it creates.
Do I have to send a letter of demand before suing in Singapore?
There is no rule that the document must be called a letter of demand, but under the Rules of Court 2021 you are expected to make a written offer of amicable resolution before starting an action unless you have reasonable grounds not to. A letter of demand is the usual way of doing that, which is why it is rarely sensible to skip it.
Can I send a letter of demand by email or WhatsApp?
Email is widely used and can be effective, ideally with a hard copy by registered post or courier as well. A messaging app is a poor substitute for a formal letter. If a contract governs your relationship, follow any notice clause it contains.
Does sending a letter of demand stop the limitation period?
No. Sending a letter does not by itself stop time running for bringing a claim. If a limitation deadline is close, speak to a lawyer promptly, because the claim may need to be filed rather than merely demanded.
Conclusion
A letter of demand is critical to civil law proceedings in Singapore. Under the Rules of Court 2021, you are expected to make a written offer of amicable resolution before commencing an action unless you have good reason not to, and a letter of demand is usually where that happens.
An experienced lawyer will assess your claim and, if appropriate, draft an effective letter of demand. A well-drafted letter of demand could resolve your claim without going to court. Our civil litigation team regularly drafts and responds to letters of demand.
Your lawyer will advise you on the way forward if the recipient does not comply with your demands.