There is no set “form” demand letter. A demand letter can be formal or informal, written by an attorney on behalf of a client or written by an individual on his own behalf, demand payment or demand some other action from a party. No matter the form, a demand letter’s purpose is the same – avoid litigation and expedite a resolution of whatever dispute exists between the parties.
This article contains guidelines and tips for drafting an effective demand letter – one that is more likely to persuade the other party to resolve the dispute. Generally, a demand letter includes:
1) what payment or action is demanded;
2) why the payment or action is being demanded;
3) what are the consequences for non-payment or non-action; and
4) a time limit to comply with the demand letter.
The demand letter’s tone is equally as important as the substantive information – how will it sound to the recipient? How will it sound to a disinterested person (such as a juror if the dispute got that far). The author might be very emotional about the dispute, but it is important to draft the demand letter with as little emotion as possible. Stick to the facts.
The demand letter should begin by identifying the author and the letter’s purpose – i.e. My name is John Doe and this letter’s purpose is to demand payment of XYZ.
Next, it should discuss the relevant facts – chronologically, telling the story that led to the letter. The facts are important because they are the basis of the demand. The easier it is for the recipient to follow the facts and story, the more likely it is they will take the letter seriously.
Next, the demand letter should discuss why the recipient owes money or to perform some action. Is the author not being paid according to the terms of his contract? Is the author unhappy with surface operations on his property?
Next, it should outline what the consequences will be for non-payment or non-performance. This is where the letter’s tone is really important. You catch more flies with honey than vinegar; so you want to be polite and respectful – but firm. The demand letter is by nature a threatening document– so there’s no need to express any extra hostility. While suing the recipient may be an option, suggesting a meeting to discuss options or mediation before threatening to sue is wise. Hopefully this will help reach some agreement. An angry letter may bring about an angry response and further delay the resolution. If the goal is to resolve the matter quickly, a nasty demand letter is not the right approach.
The demand letter’s last component is a time limit for repayment or performance. Make it very clear that the recipient must respond to the letter within a set time period. Leaving the response deadline ambiguous will likely lead to further delays.
Eric C. Camp is Of Counsel with the law firm of Decker, Jones, McMackin, McClane, Hall & Bates, PC in Fort Worth, Texas. He is licensed in Texas and North Dakota and practices oil and gas law. Contact him at 817-336-2400 or firstname.lastname@example.org.
This article is not intended as legal advice and should not be relied upon as such. If you need legal advice, seek independent legal counsel.
These comments are the author’s own and not the official or unofficial position of any bar association or his law firm. The author is an attorney licensed in Texas and North Dakota, not Louisiana.