A letter of demand is also known as a letter before action or abbreviated to LBA in debt recovery matters.
A letter of demand is sent from one party to another when the first party wishes to claim money they believe is owing to them. The letter states the amount that is outstanding, a timeframe for action and advises that proceedings (litigation) may be commenced without further notice if the debt is not paid. Equally, a letter of demand might be sent in the first instance to make a demand for restitution or performance of some obligation, owing to the recipients' alleged breach of contract, or for a legal wrong.
The absence of sending a letter of demand prior to the commencement of legal proceedings may well have a negative impact on expenses.
A letter of demand letter could prompt a denial letter stating the basis for rejecting a claim, and is sometimes a good indication of what the defences will be and indeed might be able to be founded upon at a later date. Ideal for debt recovery in Scotland, but matters concerning individuals in England and Wales look at 'Pre-action Protocol' before proceeding.
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