Leave it to the lawyer
Woodbridge corporate and securities lawyer, Joseph Chiummiento, of Core Lawyers, discusses how to protect your sales and use a demand letter effectively.
There are tasks that almost every business owner tends to avoid, and asking their customers for money is one of them. Using a lawyer to help remind your customers they have to pay outstanding invoices or settle accounts, can be a welcome choice to deal with this task in a professional manner.
What Is a Demand Letter?
A demand letter is simply a request for payment. It can be drafted using different tones and language and should be tailored for each specific situation. We typically see the following types of demand letters
- Friendly
- Cautious / Warnings
- Protective / in preparation for litigation or collections
When do I use a Demand Letter?
Use a demand letter when you need to confirm a specific set of circumstances that occurred and may not be covered in an agreement between your company and the company receiving the letter. It is not uncommon for a company that provides “services” to have situations arise where discussions may have changed the scope of a contract. For example, a customer may have requested extra work and changed their mind as to how they would like something done.
Providing a service, which is typical in the construction industry, is not an exact science. Personalities clash, misunderstandings happen, expectations are not always clarified up front or may change as time passes. When it comes time for your invoices to be paid there can be a lot of blaming, complaining and playing the victim on the part of those that don’t want to pay.
In these types of situations, a professionally-drafted demand letter can be the unbiased tool to clarify expectations and take emotions out of the matter at hand.
Why should I use a Lawyer to draft a Demand Letter?
- To establish the matter as ‘serious’
A lawyer can help “ghost write” a letter for you to use on your own letterhead, much like an in-house lawyer would, in order to remind a customer in a friendly, boundary-setting way that your issues are important.
In a more serious situation, where a business owner wants to communicate the immediate need to deal with an issue, an unpaid account, or the loss of time/money, having a demand letter delivered from your lawyer lets people know you consider the matter important enough to engage legal assistance. It also communicates you are serious about dealing with the issue and should result in bringing people to the table – depending on the tone and approach used.
- In preparation for litigation
In situations where there has been a breakdown in the relationship between two or more parties, a demand letter is used to frame the context of the dispute from your perspective. Typically, your lawyer will ensure the summary of the dispute and the requests you are making are strongly supported in the caselaw, or – if looked at by a judge – would be proper in law. At this level, demand letters are written with the goal of ensuring the position taken looks “morally” good in the eyes of a third party (ie. a judge). Ensuring you look like the reasonable party that has been taken advantage of with a legally defensible position is important.
Please feel free to contact me to discuss your situation and to determine how a demand letter may help you protect your sales.
Direct Line:905.851.8180 ext. 2
Email: joseph@corelawyers.ca