An effective letter of demand is a powerful tool that can be used in various legal and financial scenarios to compel individuals or entities to fulfil their obligations or address a specific issue. In this 101 article, we will explore the nature, importance and legal consequence or implication of a letter of demand in the form of FAQs (frequently asked questions) for the ease of your understanding and to unlock the power of a letter of demand for your gains.

1. What is Letter of Demand?

A demand letter is a letter stating a legal claim which makes a demand for the performance of certain legal obligations or to refrain from performing certain acts due to compliance of legal obligations.

A letter of demand is used frequently in the following scenarios:-

a. Business owner seeking payment for overdue invoices;

b. A landlord requesting rent arrears and/or vacant possession of a property;

c. An individual pursuing a resolution to a personal dispute; and

d. Other appropriate circumstances.

2. A Letter of Demand can only be issued by a lawyer?

A Letter of Demand is not necessary issued by a lawyer and it can be issued by a layman. However, it is not advisable for a layman to draft his/her own Letter of Demand because a poor drafting of a Letter of Demand may lead to misunderstandings and misinterpretation of its content. Consequently, such poorly drafted Letter of Demand may be used against you in a Court of Law. Therefore, it is advisable that you should consult a lawyer to draft your Letter of Demand and it is highly likely that the recipient will take the matter seriously.

3. Does it mean that you are getting sued when you have received a Letter of Demand by a lawyer?

No, a letter of demand does not necessary mean you have been sued. The scenario is entirely different if the letter is enclosed with any document from a Court of Law such as Writ of Summon and/or Statement of Claim (Writ Saman or Pernyataan Tuntutan in Malaysia language) or not. If there are no such documents enclosed with the letter, it may mean that the writer has not commenced an action in a Court of Law yet.

4. Is it a pre-requite requirement to issue a Letter of Demand prior to the commencement of a legal proceeding in a Court of Law?

No unless it is required under the law such as the statutory notice requirement stipulated under Companies Act 2016 prior to a winding-up proceeding of a company or a contractual term stipulates for a Letter of Demand as held by Federal Court in Catajaya Sdn Bhd v Shoppoint Sdn Bhd & Ors [2021] 2 MLJ 374.

Our Malaysia legal position is different from Singapore legal position where the Singapore litigation protocol will require a Letter of Demand to be issued first prior to the commencement of a legal proceeding in a Singapore Court of Law.

5. Should you leave it aside after the receipt of a Letter of Demand against you?

In short answer is a big “NO”. This is because a Court of Law may take your silence without an objection to a Letter of Demand as an admission. The High Court in Jessen & Jessen (South East Asia) Pte Lto v Citranet Sdn Bhd [2019] MLJU 1757 held that:-

“…It is trite law that when a party issues documents to the opposite party, the contents of those documents are deemed accepted/conceded by opposite party if the opposite party did not protest to such documents at the material time…”

In a business or commercial transaction, a Court of Law may even treat the unresponsiveness to a Letter of Demand as fatal on the rationale that a businessman should aware the consequences of not responding to a Letter of Demand as held by the Court of Appeal in Halim Saad v Chan Yok Peng [2021] 1 CLJ 499 where it opined that:-

“[46] Next, we note that the Defendant did not respond to the Plaintiff’s letter dated 19 October 2018 and to the solicitor’s letter of demand dated 4 December 2018. The non-response to the latter documents is fatal to the Defendant. Being a person of business, the Defendant could not have been unaware of the grave implications to himself by not responding to and repudiating the contents of both the letters.”

6. What should you do after receiving a Letter of Demand against you?

You should consult your lawyer immediately to discover the most appropriate legal solution for your case. This is because every cases will have its own distinct case facts and your lawyer will provide the appropriate legal solution to you after an assessment of your case.

Based on the adumbrated reasons above, a well-crafted letter of demand serves as a vital instrument for resolving disputes, securing payments, and to avoid disadvantages to your case in the event that the dispute is referred to a Court of Law for an adjudication.

Written By: Yap Jian Zhi, Nicholas Edited By: Low Chee Hau, Melvin

Note: This article does not constitute legal advice in any case. The facts in each and every case will differ and you can contact us for complimentary legal advice.