Litigation can be costly, but can be very lengthy, especially for a party seeking to immediately resolve a dispute. However, writing a demand letter can be an essential tool for quickly resolving a dispute between parties and avoiding litigation. A demand letter is a letter stating a legal claim, in which the sending party makes a demand for payment or performance of some obligation the receiving party owes to the sender. An effective demand letter can also be strategic because it provides the other party notice of its wrongdoing, which may be beneficial in the event the dispute proceeds to litigation.
The basis of a demand letter consists of a concise and clear demand for payment or specific action from a party. A well drafted demand letter begins with an introduction of facts. This should be carefully done. Thus, before writing a demand letter it is wise to first review and recite the facts underlying the dispute. The facts should be specific, in which the letter includes enough facts to give a third party enough information to understand the basis of the dispute. The letter must also have a specific demand for action, which specifically states to the receiving party what relief is requested and how the sending party can be made whole. If the demand is for payment, calculation of the requested amount should be reasonable and based on relevant damages. Lastly, what makes the demand letter effective is the threat of filing a lawsuit and proceeding to litigation if the demand is not met. This can be done by providing a deadline for the receiving party’s response and stating that inaction will result to the sending party to seek relief in court.
Furthermore, a demand letter is strategic and should be sent soon after the dispute has occurred and there are enough facts to support the party’s claim for the demand. In the event that the dispute does lead to litigation, a timely demand may convey to the court that the sending party was diligent an attempted to mitigate further damages.