Last updated February 2, 2024

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A Demand Letter is a final reminder for another party to resolve an issue before you take legal action. It aims to reach an amicable resolution by addressing the problem with a professional tone. 

Sending a Demand Letter shows you are serious about the situation and are setting a solid deadline for the recipient to resolve the issue.

A Demand Letter is also known as a:

• Payment demand letter
• Letter of demand
• Formal notice

A Demand Letter has many benefits to help resolve an issue with the recipient. It is an attempt to negotiate in good faith before any legal actions. In addition, a Demand Letter can:

• Resolve disputes amicably
• Outline your grievances clearly and concisely
• Provide a course of action before litigation
• Avoid costly litigation fees and time
• Provide the recipient with an opportunity to meet the demands or make a counteroffer

Provincial courts, like the Alberta Court of Justice and British Columbia Civil Resolution Tribunal, suggest using a Demand Letter to try and resolve a dispute before taking a claim to litigation. 

Some specific cases require you to send a Demand Letter, such as hidden defects claims after property sales in Québec. It proves you formally notified the seller of damages to reach an agreement before court action. 

Even if it is not legally required, sending a Demand letter is beneficial as it will provide evidence for any legal actions you might need to take. Each province will have different rules for a Demand Letter in small claims court.

A Demand Letter is used in various situations to help resolve an issue amicably and professionally. You can easily use LawDepot’s customizable Demand Letter template when:

1. You are owed a payment

If a borrower owes you money, sending a Demand Letter will prompt them to pay the outstanding debt. It also allows the borrower to counteroffer without legal action. In this case, you can attach the Loan Agreement or Promissory Note the borrower signed, proving that a debt is owed to you.

2. Action is required

You can send a Demand letter when an individual or business still needs to hold up their end of an agreement. For example, suppose you have a Service Agreement with a contractor, but the work isn’t complete after the contract ends. You can write a Demand Letter outlining that the job needs to be completed by a specific date, or you’ll take legal action.

3. You need to make an insurance claim

Sending a Demand Letter to an insurance company can help you secure a settlement. For example, if a collision occurs and your vehicle is damaged significantly, you can send a Demand Letter requesting compensation for the repairs.

Each circumstance for a Demand Letter is unique. LawDepot’s questionnaire lets you quickly fill in all the details for a Demand Letter for your situation. The steps to writing a Demand Letter are:

1. Explain why you are writing the letter

State the purpose of the letter. Be specific on why you are sending it, whether it be a debt collection, demand for action, or making an insurance claim—the more precise the details, the stronger the letter.

2. Give details about the issue

If the demand is for an outstanding debt, include the following:

• The amount owing
• When the payment was due
• A description of the debt (e.g., when the loan took place, the reason for the loan, etc.)

If the demand is for required action, include specific details such as:

• A description of the action required
• The date to complete the action by
• Any previous contracts between you and the recipient

If the demand is for an insurance claim, include:

• Details of the incident, such as when it happened, the insurance claim number, and a description of the event
• A description of any physical or mental health injuries, if it applies
• A description of any lost expenses, income, or damages

3. Attach evidence

Any relevant documents help enforce your Demand Letter. Evidence includes signed contracts between you and the recipient. For example, if you have a Loan Agreement or Promissory Note outlining money owed, include it with your letter.

Similarly, if you demand action or an insurance claim, you can support your argument by attaching relevant contracts, photos, or documents.

4. State the terms of any settlements

Providing potential terms of a settlement is an option for a Demand Letter should you be open to any negotiation. Settlements can be:

• An option for a payment plan or reduced payment if a debt is being recovered.
• Money you require to cover expenses, damages, and medical costs.

5. Provide the parties' details

To complete your Demand Letter, provide both parties' names, addresses, and contact details. 

Sending a Demand Letter is also known as serving a Demand Letter and should be done the same day it’s dated.  The critical part of sending a Demand Letter is that you have proof of delivery for future reference and possible litigation.

Different options to ensure the recipient gets the Demand Letter are:

• Tracked mail or courier services: You can have receipts and delivery notifications as proof of delivery.
• Hand delivery: This is a cost-effective option, but be sure to have proof of delivery.
• Hire a lawyer: A lawyer can send the letter on your behalf through documented delivery.

Please note sending a Demand Letter through email or text message isn’t recommended as it can be difficult to prove that the recipient got the letter. Also, keep a copy of the Demand Letter for future reference or legal actions.

A lawyer is not required to write a Demand Letter. However, you can consult a lawyer for anything you don’t understand or if guidance is needed should there be no response from the recipient.

Recipients can acknowledge a Demand Letter by complying with the demand or responding with a counteroffer. On other occasions, the recipient may ignore a Demand Letter completely. 

It is best to give a reasonable time for the recipient to respond. However, if there is no response from the recipient, the next steps you take can be to:

• Follow up with another demand
• Seek legal advice
• Proceed with legal action through small claims or tribunal

Small claims proceedings vary in each province. Check the requirements of your province for filing a claim.

Related Documents:

• Loan Agreement: Write an agreement that sets out the terms of a loan between two parties, like a corporation and an individual.
• Promissory Note: Create a contract that documents a financial promise between two parties.
• Cease and Desist: Write a letter to an individual or organization to demand they stop engaging in a specific activity, or legal action will follow.
• Release/Waiver Agreement: Create an agreement in which one party waives their rights to pursue legal action against another party in case of a dispute.
• Affidavit: Create a written statement of facts and swear them to be true under oath or affirmation.

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