Last updated 2 October 2026 · Reviewed by the Claim Done team · Not legal advice

What Is a Letter of Demand? Australian Law Explained

A letter of demand is a formal written notice requiring a person or company to take a specific action — most commonly to pay money — within a stated timeframe. It is the standard first formal step in the Australian dispute resolution process and is recognised by tribunals and courts as evidence that you attempted to resolve the matter before filing proceedings.

Is a letter of demand legally binding?

The letter itself is not a court order. It cannot force payment. However, it:

• Creates a formal legal record that the other party was put on notice
• Shows a tribunal or court that you tried to resolve the dispute first
• Can be submitted as evidence in any subsequent proceedings
• Can resolve the dispute without any tribunal

When should you use a letter of demand?

• An invoice has not been paid after the due date and reminders have been ignored
• A rental bond was not returned after you vacated the property
• Goods or services purchased were defective and the seller refuses to refund or replace
• A contractor failed to complete work to the agreed standard
• Property was damaged and the responsible party refuses to compensate you
• A personal loan has not been repaid according to the agreed terms

Letter of demand vs statutory demand

• A letter of demand can be sent to anyone — individuals, sole traders, or companies. There is no minimum amount and no legal consequence of ignoring it.
• A statutory demand (under s459E Corporations Act 2001) can only be issued against a registered company, for debts of $4,000 or more. Ignoring it within 21 days creates a legal presumption of insolvency and grounds for winding up.

For debts owed by a company, a statutory demand is significantly more powerful. Read the full comparison.

How much does a letter of demand cost?

• Solicitor: fee quoted by the firm, depending on the matter
• DIY template: Free – (risk of errors)
• Claim Done: flat fee — generated from your facts by our Programmatic Algorithms, legally precise, delivered by email

What is the standard deadline?

14 days from delivery is standard in Australia. Courts and tribunals regard this as reasonable. Always state the deadline as a specific date — “on or before [date]” — not “within 14 days”.

What if they ignore it?

1. Tribunal application — the tribunal or court for your state (for example QCAT, VCAT, ACAT or NTCAT; in New South Wales, NCAT for a consumer claim and the Local Court for a business or private debt; in Western Australia, South Australia and Tasmania, the Magistrates Court). Claim Done prepares the full application for $97.
2. Statutory demand — if the debtor is a company and the debt is $4,000+. Claim Done prepares this for $97.
3. Local or Magistrates Court — for larger claims or matters outside tribunal jurisdiction.

Get a letter of demand generated and sent