How to Write an Effective Small Claims Demand Letter (Scroll Down for a Sample/Example)
The letter a plaintiff uses to begin settlement discussions is what’s called a demand letter; or to look at it another way, a demand letter is simply a demand to be paid for money or a debt owed to you. A demand letter is just like it sounds; it’s a written letter directed to the defendant or defendants outlining the strength of the plaintiff’s case and making a demand for the payment of the specific sum of money in exchange for settlement. Lawyers use demand letters all the time.
There are several ideas that a plaintiff will wish to convey in a demand letter one of the most important is to convince the defendant that settling the case is better than going to trial. So there are some things you will always say in a demand letter. For example, you will always make a general statement that it is better to settle a case than to spend the expense and time of going to trial. Even if everyone knows it you say it anyway. A good demand letter should be threatening without being combative — there is a difference — and it should be persuasive.
Small Claims Demand Letter Expert Tip:
When communicating with an opponent, never say “you might want to get a lawyer to help you with your case” or “you need to get help with this down at the court, they have free help” or anything to that effect. An experienced lawyer would never say such a thing-it amounts to giving good advice to your opponent. You don’t want your opponent to have a lawyer; they are more likely to make a mistake if they represent themselves.
Drafting a Small Claims Demand Letter
Drafting a demand letter is a good idea for another reason. Some cases in some courts require that a demand to be made before a case be initiated. But researching whether a demand is required isn’t even worth the effort; it’s easier just to send a demand and save a copy of it. Even if the demand isn’t required by law, sometimes judges will ask informally if the demand has been made. Judges always like to see that some effort at settlement has been made before coming to court.
Drafting a demand letter is very simple. A demand letter states the following:
- In the opening paragraph you should introduce to you are and who the parties to the dispute are.
- A brief summary of the underlying dispute. For example, if the case is a contract case you should outline the basic terms of the contract. Or, if the case is a negligence case you should outline the basic facts of the incident.
- You should state your monetary demand in clear terms. You must also state a time frame for the acceptance of the offer.
- Finally, you advise your opponent of the actions you’ll take if the demand is not accepted.
Sample Small Claims Demand Letter
The following demand letter is a demand for an overdue balance on a software development contract.
731 9th Avenue Suite E
San Diego, CA 92101
January 15, 2008
Kevin R. Baker
Big Bob’s International Inc.
Royal Bank Building
335 8th Ave. S.W.
New York, New York 10001
VIA US MAIL
RE: Demand for Payment under Professional Services Agreement
Dear Mr. Baker,
As you know, I am president of Demand-Letter, Inc. (“Demand-Letter”), and I am writing to you about claims that Demand-Letter has against your company, Big Bobs International Inc. (“Big Bobs”) under the Professional Services Agreement (“Agreement”) dated March 17, 2006.
This letter shall serve as our final demand for payments under the agreement.
Under the terms of the Agreement, Demand-Letter is entitled to $13,000. Our records show that we have received $8,500. This leaves a remaining balance of $4,500.
Furthermore, Demand-Letter performed extra work beyond the terms of the Agreement in the form of additional software modules and changes from the specifications outlined in the Agreement (“Overages”). Our invoices show $2,800 in Overages.
With the preceding in mind, we therefore submit the following demand.
1. The remaining balance of $4,500 must be paid within 5 days of the date of this letter in the name of Demand-Letter, Inc.
2. With respect to the balance for Overages of $2,800, we will accept $500, also to be paid within 5 days of the date of this letter in the name of Demand-Letter, Inc.
3. Upon receiving the full balances due under the Agreement, Demand-Letter will grant a full license to Big Bobs of all work product under the Agreement.
4. You must agree in principle to the terms outlined herein within 2 days of the date of this letter. Thereafter, I will draft a settlement agreement formalizing these terms before the 5-day deadline for payment of the outstanding balances.
This offer is not subject to negotiation, including any arguments that Big Bobs might impose with respect to issues of performance under the Agreement. If you do not accept the offer outlined in this demand in writing within 2 days of the date of this letter, this offer will be automatically and permanently withdrawn.
Upon the withdrawal of this offer due to your non-acceptance, you are instructed (i) to return to Demand-Letter all work product under the Agreement, including, but not limited to, all software code, files, documentation, and other materials; (ii) that Demand-Letter shall terminate the Agreement pursuant to the “Breach and Termination” clause, and pursuant to such clause, all sums under the Agreement shall become due and payable and shall bear 1% interest per month from the date of invoice; and (iii) that Demand-Letter shall take immediate and permanent steps to ensure that Big Bobs never receive a license to the work product under the Agreement.
Thereafter, we will pursue the case through the court system. It is only fair to warn you that we may report this matter to the credit reporting bureau, and that that event, your credit rating may suffer. You can avoid the time and expense of court by resolving this matter. Our offer is generous, and we sincerely hope you accept it.
I await your response, and sincerely hope that you accept the terms of our demand on behalf of Big Bobs.
President, Demand-Letter, Inc.
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Michael Spadaccini is the author of 8 books on self-help legal matters such as, Ultimate LLC Compliance Guide: Covers All 50 States (Ultimate Series), Ultimate Book of Forming Corps, LLCs, Partnerships & Sole Proprietorships, and Ultimate Guide to Forming an LLC in Any State, Second Edition (Ultimate Series).
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