Demand Letters: How to Handle Them

June 22, 2016

Demand letters are formal notices that may be written by private individuals as well as lawyers. The term itself stems from the fact that the letters essentially require recipients to rectify an apparent wrong. Accusations that are made in demand letters include the need to pay a sum of money, or to perform a commitment that has been previously agreed in a contract. The reasons for demand letters are wide ranging and people receiving them might feel understandably threatened.

Nevertheless, it is important to remember that demand letters are primarily used instead of legal action, or as a precursor to legal action. Think of them as providing notice of a potential claim without yet inittiating legal action. The sender of a letter often also hopes to avoid litigation, which is by its very nature long, time consuming, and inescapably expensive. Often the sender is aiming for the resolution of the perceived problem without having to go down an arduous route.

Letters may include a threat that the sender intends to proceed to court if a perceived wrong is not rectified by a certain date, or payment is not received. It should be noted that they are often used between businesses and even sent from former employees to businesses in an attempt to ensure that some goodwill remains between parties. They can be used in cases of personal injury, in insurance cases, in debt collection, and by former employers, who may threaten a lawsuit.

Former employees may send demand letters for a few reasons (i.e. accusing former employers of failure to pay wages, wrongful termination, or even sexual harassment). Those in receipt of these letters should remember that how they respond is likely to dictate how any possible legal case will proceed. It is advisable to ensure that the letter is read. However tempting, it should definitely not be ignored, especially as the letter will undoubtedly include a deadline and facts that the recipient should investigate. Finally, in most cases, professional help will mean that the case can be either solved or quickly shut down.

Whenever a potential claim arises, the first steps in asserting these rights can be critical to the outcome of the case. A properly drafted demand letter can sometimes be the difference between an amicable solution versus long and protracted litigation. In short, the power of a demand letter should not be underestimated by the demander and the receiver. Consulting a lawyer is imperative not only for strategic purposes, but depending upon the claim and the party, notification of a party’s claims may be mandatory under the applicable law. Failure to provide such notice may even be a bar to a potential claim down the road. If you have a potential claim against your employer, please contact Parks, Chesin & Walbert, PC today.

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