Debt Recovery

Letter of Demand Singapore – A Quick Guide & Explanation

Written by Team Farallon | February 4, 2018

What is a Letter of Demand?

A letter of demand is a letter from a Singapore law firm setting out certain requests, usually for payment, from the law firm’s client to the recipient of the letter of demand.

The letter of demand usually stipulates a time frame for the recipient to comply with the terms of the letter of demand.

The letter of demand would also warn the recipient that the claimant would take certain action if the terms of the letter of demand are not complied with by a certain amount of time.

Examples of terms which could be included in a letter of demand are:

How do I Draft a Letter of Demand?

Before writing a letter of demand, it is important to first examine all the facts and evidence carefully, so that when the letter of demand is drafted it does not contain any inaccuracies or untruths.

It is also important to establish whether the law firm is entitled to issue the letter of demand on behalf of that particular client.

A poorly drafted or inaccurate letter of demand would cause more harm than good, as the defendant would be able to use it against the claimant if the matter goes to Court or Arbitration.

If you have not sent out letters of demand before, it would be advisable to consider instructing a law firm to advise you on the terms of the letter of demand, especially those with experience with letters of demand (e.g. not corporate lawyers).

You should also instruct your lawyers to conduct ACRA business profile searches and litigation and winding up searches on the recipient company, to ensure that the letter of demand is addressed to the correct address, and that the demand will not be ineffective because the recipient company has closed down or has already been sued by numerous creditors.

When should a Letter of Demand be Sent?

A letter of demand should be sent when you have tried all emails, phone calls and correspondence with the debtor, and the debtor has failed to respond or has been ignoring or avoiding you.

The letter of demand is a clear message to the other side that you are serious about the matter and that you will not hesitate towards taking legal action if the matter is not resolved in an amicable manner.

What about using Debt Recovery Companies?

Debt recovery experts are usually not legally trained, and they may use non-legal ways to recover your debt.

As the principal, their non-legal actions could be attributable to you.

They also charge a percentage of the debt recovered. If the debt is very large, then it is definitely more cost effective to take legal action.