IntroductionHave you ever received a demand letter? Upon opening it you suddenly feel sick, or ready to scream. But don’t worry; receiving a demand letter isn’t that bad.A demand letter signals the possibility of a legal dispute. That someone is making a claim against you. Sometimes the claim is valid and sometimes it is not; sometimes you can comply with the demand being made and sometimes you might need some time to comply; and finally, sometimes you may need to go to court to have the court determine the dispute and sometimes you might not.All these scenarios are possible., especially and including the fact that you can avoid going to court entirely. Of utmost importance is to take the demand letter seriously and get ready to respond.Responding to a demand letter correctly can help you resolve the issue quickly and even avoid costly litigation. In Kenya, many legal matters, such as unpaid debts, claims for child support, damages and breach of contract, begin with a demand letter.Crafting a suitable response communicates to the sender that you are willing to engage and solve the dispute. It also helps to share your side of the story thereby protecting your interests.
This article provides guidance on how to respond to a demand letter, ensuring you take the right steps to address the situation and avoid escalating the matter further.
What is a Demand Letter?
A demand letter is a formal notice sent by one party to another, outlining a grievance and seeking a specific remedy. The sender often threatens legal action if their demands are not met within a given timeframe. Common situations where demand letters are issued include unpaid debts, breach of contract, and property disputes.
For example, under the Law of Contract Act, if someone breaches a contract, the affected party can send a demand letter requesting that the breach be rectified. Failure to respond or comply with the demand may result in a lawsuit.
Steps to Respond to a Demand Letter
1. Review the Demand Letter Thoroughly
Carefully read the demand letter and take note of the following key details:
- The identity of the sender and their legal representative.
- The nature of the claim or dispute.
- The specific demands are being made.
- The deadline for compliance.
This information will help you understand the seriousness of the situation and prepare an appropriate response. If the letter contains legal jargon or complex language, consider consulting a lawyer for clarification.
2. Do Not Ignore the Letter
Ignoring a demand letter is a common but costly mistake. If you fail to respond, the sender may assume you are unwilling to resolve the issue amicably, prompting them to file a lawsuit. Courts often view non-response negatively, as it suggests you are not acting in good faith.
In the case of Mwaniki v. Wambua (2018), the court noted that the respondent’s failure to address a demand letter contributed to the escalation of the matter to court. Ignoring a demand letter can damage your chances of reaching a favourable outcome.
3. Seek Legal Advice
If the claim or demand is complicated, or if you are unsure of how to proceed, consult a lawyer. A legal professional can assess the validity of the claims and advise you on your best course of action. They will also ensure that your response complies with the law and protects your interests.
For instance, if the demand letter is related to a debt, your lawyer can determine whether the amount being claimed is accurate and if there are any legal defences you can raise under the Civil Procedure Act.
What Should Your Response Include?
Your response to a demand letter should be professional, factual, and legally sound. Here are the key elements to include:
- Acknowledgement: Confirm receipt of the demand letter and mention that you are taking the matter seriously.Example: “We acknowledge receipt of your demand letter dated [insert date]. We are reviewing the claims made and will provide a full response within the stipulated timeline.”
- Clarification of Facts: If the demand letter contains inaccuracies, incorrect amounts, or misrepresented facts, clarify them in your response. Be respectful, but firm.
- Request for More Information (If Needed): If you believe the letter is unclear or lacks critical details, ask for more information.Example: “We request further details regarding the [specific aspect] mentioned in the demand letter to facilitate a more informed response.”
- Position Statement: Clearly state your stance. Do you agree with the claim? Do you contest it? If you contest it, provide reasons and any supporting documents. If you partially agree, offer a compromise or counter-proposal.
- Next Steps: Propose your next course of action. This could be scheduling a meeting to discuss the matter, proposing a payment plan if you agree to the claim, or declining the claim with reasons.
- Deadline for Reply: Set a deadline for the sender to respond to your reply, especially if you are contesting the claim or seeking more information.
If you agree with the demand in part or in full, you can use your response letter to propose a settlement. A well-crafted settlement offer can prevent further escalation and avoid the cost of litigation.
For example, in debt-related matters, you may propose to settle the amount in instalments if paying the full amount at once is not feasible. Under Kenyan law, such an agreement should be documented and signed by both parties to make it legally binding.
While there is no specific statute in Kenyan law mandating how a response to a demand letter should be handled, courts encourage dialogue between disputing parties. According to the Civil Procedure Rules, out-of-court settlements are often favoured over prolonged legal battles.
In the case of Omondi v. Wanyama (2020), the court praised the efforts of the respondent in attempting to resolve the matter after receiving a demand letter, even though the dispute eventually proceeded to court. This highlights the importance of responding constructively to avoid unnecessary litigation.
Ignoring a demand letter or responding improperly can have serious consequences. The sender may proceed with legal action, which could result in court orders, fines, or other penalties. In the event of a court case, your lack of response can be used as evidence of bad faith, weakening your defence.
For example, in the case of Mutua v. Njoroge (2019), the court ruled in favour of the claimant after it was shown that the respondent ignored multiple demand letters. This failure to respond made the court less sympathetic to the defendant’s arguments.
A demand letter is not the end of the road. By responding thoughtfully and professionally, you can often resolve the issue without going to court. Whether you agree with the claim or contest it, your response sets the tone for future negotiations or legal action. Remember, ignoring a demand letter only increases the risk of escalating the dispute.
If you need assistance drafting a response to a demand letter, our team at Wacu Mureithi & Co. Advocates is here to help. We offer expert legal advice to ensure your response protects your rights and sets you on the path to resolution.
Contact us today for tailored legal solutions.