Lawyer's letter of demand: respond today without losing your position

The deadline in the letter is your first constraint

A letter of demand states how much the business owes you, what for and when they need to pay the invoice by. It may also include a warning that you'll consider legal action if the debt is not paid by a particular date. If the letter gives you seven or fourteen days to respond, that window is not arbitrary. It is the time the sender intends to allow before issuing court proceedings, reporting the debt, or taking other formal steps.

Note the deadline on a calendar and count it from the date of the letter, not the date you opened the envelope. If the deadline falls on a weekend or public holiday, assume it means the next business day. Missing the deadline does not make the claim disappear, it tells the other side you are either ignoring the matter or disorganised. Neither interpretation helps your position if the dispute escalates.

Check the claim against your own records today

Pull your contract, invoices, payment records, correspondence and any site or delivery records that relate to the claim. Compare every amount and allegation in the letter to what your records show. If the letter claims you failed to pay an invoice, confirm whether that invoice was received, whether it complied with your contract's payment claim requirements, and whether you issued a payment schedule or dispute notice in response.

If the claim relates to defective work, delayed delivery, or a disputed variation, locate the documents that show what was agreed, what was delivered, and what was communicated at the time. The lawyer who sent the demand has been briefed by their client. Your records are the only evidence that will test whether that briefing was complete or accurate.

Source: Official guidance

Reply in writing without admitting anything you dispute

Send your response to the lawyer's firm, addressing it to the person who signed the letter. Acknowledge receipt, confirm you have reviewed the claim, and state your position clearly. If you dispute the debt in whole or in part, say so and explain why in plain language. If part of the claim is correct but part is not, break down what you accept and what you dispute with reference to specific invoices, dates or contract clauses.

Do not apologise for matters you do not accept responsibility for, and do not offer to pay amounts you genuinely dispute just to make the letter go away. Every statement you make in writing can be used later if the matter reaches court or adjudication. Keep your reply factual, professional and supported by your records. Avoid speculation, opinion or any language that could be read as an admission of liability for disputed items.

Consider whether an early offer makes commercial sense

If the claim has merit, or if part of it is undeniably correct, consider whether making a realistic settlement proposal now will resolve the matter at lower cost and faster than defending it through court or adjudication. An offer to pay an undisputed amount by a specific date, or to enter a short payment arrangement for a sum you genuinely owe, may end the dispute and preserve a working relationship.

Do not make an offer unless you intend to honour it and can meet the proposed terms. A broken settlement promise will be used against you if litigation follows. If you make an offer, mark your letter 'without prejudice' so that the offer itself cannot be tendered as evidence of liability if settlement discussions fail. Document any agreement in writing and signed by both parties before you pay.

Get advice before the deadline if the claim is complex or high value

If the letter threatens court proceedings, involves a large sum, disputes the quality of completed work, or raises issues you do not fully understand, you need qualified legal advice before the deadline expires. You should try to resolve your dispute before coming to court, by negotiation or by sending a letter of demand. Your response to the demand shapes the court's view of your conduct if proceedings are later filed.

Bring the letter of demand, your contract, all correspondence, invoices, payment records and any other relevant documents to that meeting. Explain what you dispute and why, and ask whether your position is defensible and what responding will cost compared to settling or ignoring the claim. CRP coordinates independent qualified professionals who can assess dispute letters, draft compliant responses and explain your options under contract law, Security of Payment legislation and court rules. Contact CRP today to arrange advice tailored to construction disputes before your deadline passes.