How To Write The Best Demand Letter For Payment
A 2007 study by a researcher at Tulane university estimated that the average person has significant encounters with 10-25 people every day, including friends, business associates, family members and strangers. Multiply that number by 300 million Americans, and one can see why our courts cannot keep up with the volume of lawsuits. With so many interactions, conflicts are inevitable. From a business deal gone bad, to a loan not paid, to a product not working properly, to an injury in an accident, there are countless situations in which a conflict may lead to legal action. Before going to court, however, it is important to be thoroughly prepared. Some preliminary steps can increase your chances of success in court, and even help settle a dispute without having to resort to legal action.
If phone calls or personal meetings fail to lead to a satisfactory resolution, the next step before filing suit is to write a formal demand letter. A well-crafted demand letter for payment or to cure contract performance will serve several functions:
1. Your demand letter will clarify the issues. The process of putting your claim in writing will help you clarify things in your own mind, making it easier for you to effectively present your case if you do have to pursue litigation. It will also give you a chance to communicate your complaint with the other party, free of emotion. You will be less likely to forget important details or points you want to make if you write everything out.
2. A thoughtful, polite demand letter can facilitate settlement. Once the other party has had a chance to read your statement, they may gain a better understanding of your position and agree to pay or settle your claim. A demand letter also lets the other party know that you are serious about pursuing the claim. This may also open a dialog and eventually lead to payment or settlement out of court.
3. If you do have to sue the other party, your demand letter can be used to prove they were given notice of your claim. You may also refer to the letter while giving your testimony, making the process less stressful, and ensuring that you will not forget top present all of the relevant information.
12 Tips To Write The Best Demand Letter For Payment
1. Start the letter with a recitation of the facts. Give the other party a detailed timeline of the events leading up to the dispute.
2. After stating the facts, present the evidence that supports your claim. If the claim involves money owed for services rendered, explain the services you performed, and state why you believe the services were in accordance with the contract, or within acceptable standards. If the claim is for negligence on the part of the other party, explain why you believe their conduct was negligent.
3. Give a detailed account of your damages. This is where a lot of claimants lose focus, so make sure you cover all damages without exaggerating. Attach receipts or other written evidence to support your damages.
4. Avoid inflammatory language and threats. You will gain more respect from the other party and from a judge if your letter is polite but firm. Avoid name calling and keep your tone even and businesslike. Threatening the other party may also lead to extortion claims.
5. Make sure that your letter complies with applicable laws and regulations. If your demand is based on a written contract, check the contract terms to determine if there are any specific requirements, such as where correspondence should be sent, whether certified mail is required, and whether specific time frames exist. In some cases, the contents or timing of demands for payment may be specified by law. Correspondence between landlords and tenants may be governed by state law. Any dispute against a governmental agency will have specific time limitations and notice requirements. When in doubt, consult an attorney.
6. End the letter with a request. Specify the action that you request from the other party. For example, in a dispute with a contractor, you may list the specific repairs or unfinished items that must be completed. Be as specific as possible when asking for actions to be taken. If you are asking for money, the amount you demand should correspond with the receipts and other proof of loss you included earlier.
7. Give yourself some room for adjustment. Let the other party know that you are still investigating, and that additional information or damages may come to light with further investigation. Reserve the right to amend your demand if new or additional information becomes known. That way, if you did forget something, or if additional damages occur, you have not foreclosed the possibility of collecting more than you initially asked for.
8. Let the other party know that they should not destroy any relevant evidence.
9. Give the other party a reasonable and specific deadline. Demanding action immediately is not sufficient. You should demand that the requested action be taken by a stated date, and give the other party a reasonable amount of time to comply. The amount of time that would be considered reasonable may vary with the type of action you are requesting, but try to be objective when determining what is reasonable. Demanding that work be done on Christmas Day, for example, may not be reasonable.
10. State clearly and politely what the consequences will be for failing to meet your demands. Do not threaten any action unless you are prepared to follow through. If you threaten to sue, be prepared to do so. Otherwise, future correspondence will likely be ignored. Do not threaten any unlawful action. Do not threaten to accuse the other party of a crime, or to take any action to harm his reputation. This should be self-evident, but do not threaten any violence, or threaten to expose any damaging information about the other party or about any other person.
11. Remember that anything you put in writing can help you in court, and can also be used against you. Make sure your statements are true and accurate.
13. Make sure you keep a copy of the letter. Send it to the other party by certified mail so you can prove that it was received. Respond to any offers or other communication with the same level of politeness and professionalism that you used in your original demand. Keep copies of all written correspondence you send or receive.
Following these recommendations will not guarantee a favorable conclusion to your dispute, but it will increase your chances of settling the dispute without going to court, and will make the process easier and less stressful if you do end up in litigation.