30 NOV 2018

When and How to Use a Letter of Demand

Do you have a business client that keeps promising but never pays their bill? Is somebody in the community spreading nasty rumors about you that is hurting your business reputation? What about a tenant that continues to act out of line with their lease agreement?

In Malaysia, and around the world, these issues are best handled person to person and without the involvement of the courts. Still, in the case that the offending party does not comply with a prior legal agreement or if somebody’s actions are causing legal issues, it’s time to take action. If the other party refuses to fix their behavior or respond to your communications, it’s time to use a letter of demand.

Letters of Demand

A letter of demand is a simple letter sent by registered mail or delivered in person letting one party know that they are officially doing something wrong. It describes their actions and references the agreement between the two parties as a reminder of their legal obligations.

The letter of demand is legal correspondence that demands action or money on the part of the recipient and functions as documentary evidence that a formal demand has been made in Malaysia. The letter can have the desired effect of stopping the harmful action or it can later be used as evidence in further legal action. Essentially, letters of demand formally notify the offending party that you are prepared to take legal action if they don’t rectify the situation.

Because the letter is documentary evidence of a legal claim, the letter can be used to prove to the courts later on that the person was aware of their wrongdoing. The letter proves they are aware of the situation and demands that the recipient follow through by paying the withheld money or by completing the desired action. Anyone can prepare a letter of demand, but where the case is complex or potentially fraught with problems, it is always better to have a lawyer draft it.

When to Send Letters of Demand in Malaysia

There are two situations when it is normal in Malaysia to send a letter of demand:

  • In the first case, the letter can be a straightforward demand for an action to be performed. For example, a demand for the immediate payment of rental arrears. Simple templates for this type of letter of demand are available in ShakeUp’s business document library and personal document library. The hope in this case is that by issuing the letter of demand, this solves the problem quickly and easily because the offending party realizes that they may face legal consequences through their inaction or actions, and they would prefer to stay out of court.
  • In the second case, a letter of demand can be sent when the sender has already decided to take further legal action. In this situation, the letter of demand is intended to be used as evidence in a future court case. If the letter is sent through Malaysia’s postal service as a registered mail requiring a signature, the court can prove it was received on a specific date.

Cases of planned further legal action occur when the parties already have a clear and binding legal agreement, such as a business contract, that requires a letter of demand as an escalation step. Prior to filing a legal action, agreements often stipulate a letter of demand be sent. In this case, it may be merely a formality but an essential step in the legal process.

Reactions to Letters of Demand in Malaysia

A letter of demand is sometimes useful because the response to the letter reveals something about the offending party’s intentions. Here are some examples:

  • If the offending party refuses to receive the letter or open the letter, it could be because they are trying to avoid taking responsibility. This could justify asking for increased damages in the courtroom.
  • If the offending party receives the letter and responds with a demand of its own, this could suggest that the disagreement is more complicated than originally thought.
  • If the letter is complied with prior to commencing legal action, it might be a basis for reducing the original damages.

How letters of demand are received often indicates to what extent the recipient acknowledges wrongdoing and how willing they are to right any wrongs. This behavior will be taken into account in Malaysian courts when secondary legal action takes place.

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