We all make demands on others, but a legal demand is a special category of demand. In the simplest terms, a legal demand tells the person who receives it that he or she has to do something—such as coughing up a payment required under a contract or paying damages when someone has been injured.
A legal demand can also refer to the amount of money requested by a plaintiff either to make up for damages they suffered as a result of someone else’s actions or to settle a lawsuit.
People and companies typically make legal demands through something called a letter of demand. These letters state a legal claim and demand that the person or organization on the other end take action to remedy that claim. For example, if a person has a dispute with an insurance company, his or her lawyer might write a letter laying out the damages that the person suffered, why they believe the insurance company has an obligation to them, and what that obligation is.
A demand letter will often generate a denial letter, which explains why a claim was rejected. That can serve as a good indicator of the defense that may be used if a suit is brought.
A demand letter may be required under state law to initiate legal proceedings, and as such, it may encourage the recipient to settle the matter out of court. However, sending a demand letter doesn’t mean that the sender must sue the recipient. The decision on taking the matter to court is made if the recipient does not respond or refuses to do what the letter requests.
Whether someone crafts a demand letter himself or herself or has a lawyer do it, it’s important to secure proof of delivery, possibly by using certified mail with a return receipt or the services of a bailiff or sheriff, depending on the jurisdiction.
As a general rule, a demand letter should contain the following: