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Demand letters can inform costs awards. If you send a demand for a liquidated sum and you get a default order for this amount, you have a better case for substantial indemnity costs. As a recipient, you can ignore them, but this isn't necessarily in your best interests depending on the circumstances.
The only exception to this principle recognised under English law is a fraud affecting the documents presented by the beneficiary (for example if they have been forged) or, in the case of a standby LoC, if the beneficiary had no honest belief in the validity of its demand.
- Demand Letter Information
- Conclusion
- Video Transcript
1. A demand letter shows the other party you’re serious.
Let’s say your business is engaged in a dispute with another company. You’ve made phone calls and sent e-mails. Angry words are exchanged. The other company may think you’re not going to pursue the issue legally. A demand letter makes the possibility of a lawsuit “real” for the other company. Perhaps for the first time, the other party will have to weigh the possible consequences of not complying with the demand.
2. A demand letter is generally seen by the court as a sign of good faith.
The letter shows that the party sending it wants to resolve the issue and isn’t wasting valuable judicial resources. Courts like to see that efforts have been made to settle disputes. Sending a demand letter by certified mail (with return receipt requested) and by regular mail provides proof that you made the effort. In some cases, sending a demand letter is required before going to court.
3. The information in a demand letter may be used against you.
If you do wind up in court, a judge will read the demand letter. Being insulting or threatening can hurt your case. So can demanding an unreasonable amount of money. The wording of a demand letter is important. Certain issues fall under the Fair Debt Collections Practices Act, or other federal and state laws. You want to ensure any demands made are in compliance with all applicable laws. You also want to ensure the wording of the letter does not result in a waiver of your rights.
As you can see, demand letters can be an efficient option for settling disputes. They can expedite a successful outcome and avoid costly litigation. Even if you do end up filing a lawsuit, a demand letter shows the court that you reasonably tried to work with the other party to settle the problem.
What is a demand letter? And what should you know if you receive a demand letter or you’re thinking about sending one? These are the questions I’ll be addressing today. I’m Aaron Hall, an attorney representing business owners in Minneapolis, Minnesota. You can learn more about me at aaronhall.com. And please see the description below for a importan...
Nov 9, 2020 · The Court of Appeal confirmed that, under the autonomy principle, a bank’s obligation under an LC is independent of a tenant’s obligations under the lease, and clarified the fraud exception that allows a bank to refuse to pay on an LC. The case also holds implications for Canadian bankruptcy law.
This Practice Note provides an overview of letters of credit, including both standby letters of credit and commercial (documentary) letters of credit. It describes the basic letter of credit process involving an applicant, a beneficiary, and an issuing bank.
Jul 9, 2024 · 1. What should I do if I receive a legal demand letter? Remain calm, review the letter carefully, gather relevant documents, consult with a lawyer, and respond within the specified deadline. 2. Can I ignore a legal demand letter? No, ignoring a legal demand letter can escalate the situation and lead to a lawsuit or other legal actions.
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The purpose is to substitute the issuing bank's credit for that of the applicant and eliminate the risk to the beneficiary that the applicant will not pay. Letters of credit are irrevocable unless expressly stated otherwise.
