Over the next several weeks, we will be publishing breakdowns of legal documents explaining each in plain language followed by an example of each document. We are starting the series off with the Letter of Demand.
– Melandie Buitendag
LETTER OF DEMAND – BACKGROUND
- A demand generally amounts to a request for payment or a request to perform in terms of a legal obligation.
- A letter of demand is generally an initial step in the litigation process.
- In certain instances, a letter of demand is necessary to place the debtor in mora. For example, in the event where parties failed to specify a performance date/period.
- However, it is not in all circumstances necessary to deliver a letter of demand to place the debtor in For example, where an agreement entered into between the parties clearly states that if payment/delivery is not made on a specified date, the other party may proceed to issue summons without any further notification to the defaulting party.
- In other instances, a letter of demand is necessary to complete the cause of action. For example, written notice of intended legal proceedings to the relevant organ of state – section 3(1)(a) of the Institution of Legal Proceedings against certain Organs of State Act 40 of 2002
- In certain instances, statute may require the delivery of a letter of demand. For example, a letter of demand in terms of section 129 of the National Credit Act 34 of 2005.
- It is important to state the facts upon which the demand is based clearly and concisely and to furnish full particulars to avoid any uncertainty, which the defaulting party may raise in future processes.
- The letter of demand must provide a clear indication of what is expected from the defaulting party, e.g payment of a liquidated amount, delivery of a certain thing, or to refrain from taking certain action.
- It is very important to state the period in which the defaulting party has to perform clearly. Specify the days clearly (calendar/business days).
- The letter should specify what the consequences are for failing to (timeously) comply with the demand contained therein, i.e. the institution of legal proceedings.
- Also, outline the cost implication of the letter of demand and the subsequent cost implications if the letter of demand is not adhered to.
- Approach the letter of demand in the same manner as one would approach a draft particulars of claim. Confirm, inter alia, the correctness of the names of the parties and representatives (if applicable); the facts; the amount outstanding; due performance; the terms of the written/verbal agreement; aver the reciprocal duties of the parties and the debtor’s subsequent failure to perform etc.
- Depending on the nature of the cause of action, the averments that need to be made will vary from one set of facts to another.
LETTER OF DEMAND – EXAMPLE – UNPAID LOAN (WITHOUT INTEREST)
- In a claim based on a loan, the creditor must allege and prove the existence of a loan agreement, that money was advanced in terms of the loan agreement and that the loan has become repayable.
- If the parties did not fix the repayment date, the loan will become repayable on demand by the creditor.
AN EXAMPLE OF A LETTER OF DEMAND BASED ON THESE FACTS CAN BE DOWNLOADED HERE
