Are you a recipient of a demand letter?
It's safe to think that you have many questions on your mind and that stress is starting to set in. Don't panic ! A demand letter or a formal notice is a complaint that should be taken seriously, but it is only a warning – you have not been found guilty of anything yet!
Take a deep breath and check the procedure to follow after receiving a formal notice! JuriGo explains the steps to follow in detail so that you can respond appropriately with help from the right lawyers.
Would you like advice following the receipt of a formal notice? Contact JuriGo right away – we'll connect you with a qualified lawyer in your area to represent you!
What is a demand letter and what does it mean?
A demand letter is used to accuse someone of their failure to perform their obligations!
It may be the obligation to pay a sum of money, to perform a service, or to refrain from performing an action. We can, therefore, consider a demand letter as a “last warning” before legal proceedings are initiated.
But what does a demand letter or formal notice contain?
A demand letter first contains a reproach! The person who sends a demand letter must clearly stipulate the facts of the complaint as well as the context.
Next, a reasonable period of time must be granted so that the debtor can remedy the default which will vary between 10 to 30 days, depending on the type of default. Finally, the creditor must mention the consequences should the debtor fail to comply with the demands contained in the formal notice.
Here are some examples of situations that justify sending a formal notice!
- Formal notice to pay a sum of money
- Formal notice to perform one's obligations
- Formal notice to cease an action
- Formal notice for a hidden defect
What is the legal value of a demand letter?
Receiving a demand letter does not make you guilty of anything, nor does it oblige you to take any action. This "lawyer's letter" is simply a document written for a creditor in order to make you take action.
This does not mean that the demand letter has no legal value. It is used to calculate interest and to share legal costs if the case goes to court!
How to respond after receiving a demand letter?
Receiving a demand letter is a stressful situation, to say the least. How should you respond after receiving a demand letter in Quebec?
First of all, take the time to read the demand letter and understand the complaint!
Are you being asked to pay a sum of money? Are you being asked to cease an action or to perform an obligation? Understanding the facts of the complaint is the first essential step after receiving a demand letter.
Then, consider your options before responding - here are the main responses you could send!
1) You can agree to do what is asked of you...
Do you agree with what is stated in the formal notice? It is possible to simply acquiesce to the demand and carry out the requests contained in the formal notice. Such scenarios are rare, but it is your right to do so.
2) You may wish to contact the person to suggest a mediation or negotiation session.
Receiving a demand letter does not require you to take action in court. Alternatives such as mediation and negotiation can also be considered to resolve the dispute amicably and outside of court.
3) And finally, you can simply not respond!
It is also possible to simply ignore a formal notice. Not responding is part of your rights, and it will be up to the complainant to take legal action or send a second demand letter if he or she wishes.
Even if you think that the facts stated in a demand letter is true, it is best to consult a lawyer before responding in order to avoid problems and to consider all of your options.
EVERYTHING a demand letter should contain in Quebec
Whether you are the one sending the demand letter or the one receiving it, make sure the demand letter contains all the essential elements so that it is clear!
Here are things that a demand letter MUST contain in Quebec!
1) Information about the person being served with the notice and the method of delivery
The demand letter must first contain the date it was written, the name of the person concerned, his contact information, and the method of delivery. A notice of default will generally be served by a bailiff, although this is not mandatory.
2) The alleged facts and the context
The demand letter sent must state the alleged facts and the context surrounding them. The obligations not respected must be clearly stipulated so that the debtor can remedy them (ex: failure to pay a sum of money, late delivery, etc.).
3) The time limit for remedying the problem
Since the purpose of a demand letter is make the recipient react, it must give the debtor time to remedy the default. For example, it is possible to give a debtor 10 days to remedy the default, failing which legal proceedings will be instituted.
4) Consequences if the problem is not fixed
To be effective, the warning contained in the formal notice must be accompanied by a consequence. This consequence will take the form of a legal recourse if the obligation is not carried out within the given deadline.
5) The words "without prejudice" are also essential
The addition of the words "without prejudice" makes it possible to specify that the facts stated in your formal notice are true while specifying that other requests could be added later if legal proceedings are instituted.
What happens when the time limit on the demand letter expires?
According to legal definition, the person who received the demand letter is now considered to be "in default". He has been informed of the default and is aware of the consequences of a failure to comply. However, no further consequences will materialize until the case is adjudicated by the court.
Does a demand letter have to be in writing?
Yes, since the law requires that a demand letter be sent in this manner. However, the method of sending the demand letter is not specified, which leaves you with several options.
How do I send a demand letter?
All methods of delivery are available for sending a demand letter - registered mail, regular mail, or bailiff. Make sure you can prove the receipt of the demand letter, though!
Should you write a demand letter yourself? It is possible to write a demand letter yourself, but when the matter is complicated, it is better to entrust this task to a lawyer!
Responding to a demand letter: TAKE NOTE of the factors to consider!
Before formulating your response to a demand letter, ask yourself a few questions!
The fact that someone sent a demand letter does not mean that they are right or wrong: this document simply states their opinion regarding your compliance with your obligations.
There are two sides to every story, so take the time to analyze your response if you want to send one by considering the following questions!
Are the claims contained in the demand letter justified?
The first thing to ask is: are the claims true? Is the creditor right and is there merit in pursuing legal action to correct the debtor's failure to perform? You should consult a lawyer to answer this question since the answer is not always simple.
WORD OF CAUTION - A legal recourse comes with a cost!
Is the amount claimed sufficient to justify paying court costs, lawyer's fees, and taking time off paid work? This is a question you need to ask yourself!
Will you have the right to be represented by a lawyer?
This is an important question because in some cases, you will not be able to be represented by a lawyer in court. This will be the case if you are sued for less than $15,000 since such a claim must be brought before the Small Claims Court where legal representation is not allowed.
You must also know that you have an obligation to consider other options before going to court!
Is it mandatory to send a demand letter before filing a case?
In Quebec, it is generally not mandatory to send a formal notice before filing a case. However, in certain specific situations, it is necessary to send the debtor a formal notice!
Here are two examples of when the law mandates a formal notice to be sent!
When a promise to purchase has not been followed
Does the seller or buyer of a house no longer desire to conclude the transaction after having signed a promise to purchase? The action in the passing of title, which consists of forcing the sale of the house before the courts, requires that a formal notice be sent prior to the legal action.
Recourse for latent defects
Have you discovered a hidden defect in a property you purchased? The law requires you to report the defect to the previous owner within a reasonable period of time following the discovery of the defect. The notice must be in writing.
The fact that a formal notice is not mandatory does not mean that you should neglect this step. See why it is essential to send a formal notice even if it is not mandatory!
Why send a notice of default if it is not mandatory?
Sending a formal notice is essential even when it is not mandatory since it allows you to avoid going to court!
In fact, the demand letter is the last chance to settle the dispute out of court. Although it is not mandatory, it allows the parties to consider negotiation or mediation, two avenues that are often preferable to legal recourse.
Most importantly, the demand letter sets the starting point for the calculation of the interest!
This is very important if you are trying to recover money since the demand letter starts the accumulation of interest. In fact, if the person who has been given a formal notice of default does not remedy the default within the time limit given, interest will start to accrue on the amount being claimed.
Can a demand be automatic?
Yes, it is possible for a person to be placed in default automatically, and this is what the law calls "default by right"! An automatic demand occurs in certain specific cases provided for by law. Here are some examples:
When the contract provides for a default clause in case of non-performance.
When signing a contract, it is possible to include a clause stipulating that in the event of a default, the contractor will be considered to be in default as of right. This means that no formal notice of default will be required and that interest will start to accrue from the date of the default.
Urgency can also be a situation of automatic formal notice, since you simply do not have the time to notify the other party, especially since the situation requires immediate action.
And finally, if your co-contractor clearly indicates that he will not perform, he will also be in default without having to send a formal notice! For example, a delivery person who clearly indicates his intention to hold a shipment in violation of the contract will be automatically considered to be in default .
What happens if you ignore the demand letter you received?
In some cases, nothing may happen!
Remember that a demand letter is only a reproach from a disgruntled creditor. Whether he is right or wrong does not change the fact that for the moment, you are not guilty of anything. It is therefore possible that nothing will happen if you ignore the formal notice sent.
It is also possible that a second notice of default will be sent to you.
Whether it is the first, second, or twentieth demand letter does not change its legal value - it is still just a warning. However, after receiving a second demand letter, you should consider consulting a lawyer!
If you are faced with a persistent claimant, you will eventually be served with legal process.
At this point, it is definitely advisable to hire a lawyer to represent you, as the likelihood of you ending up in court increases significantly.
Know the statute of limitations for sending a formal notice
The issue of prescription concerns both the plaintiff and the defendant! A personal recourse such as the non-performance of a contract is prescribed after a period of 3 years following the knowledge of the non-performance.
Failure to comply with this time limit may result in the pursuer's recourse being dropped if he is late in taking action.
If you believe that the prescription has eliminated the right of the person filing a claim, take the time to discuss this with a lawyer who can give you the facts.
Find a lawyer to advise you with the help of JuriGo!
A demand letter may be just a warning, but it is still a warning that can have serious consequences if you are found liable in court.
Don't leave that letter sitting on the corner of a desk. Rather, take the time to consult a lawyer to understand your rights and options.
JuriGo is just the resource you need to find a qualified lawyer quickly!
Just fill out our form at the bottom of the page to be put in touch with a JuriGo partner lawyer, free of charge.