Legal Response to a Letter of Demand: When to Dispute and What to Say

# Legal Response to a Letter of Demand: When to Dispute and What to Say

You’ve received a letter of demand claiming you owe money, breached a contract, or caused damage. The letter gives you 7 to 14 days to respond or face tribunal proceedings.

You don’t agree with the claim. A legal response is your formal reply. Done properly, it can stop the matter escalating, clarify the real issues, and open the door to settlement.

When you should send a legal response

Send a formal legal response if:

• You dispute the facts — the claimant has misrepresented what happened
• You have a defence — the claim is invalid, time-barred, or unenforceable
• The amount is wrong — the figure is inflated, includes items you don’t owe, or double-counts losses
• You want to negotiate — you’re willing to settle but not on the terms demanded
• You need more information — you require additional evidence before deciding how to respond
• The claim is statute-barred — the limitation period has expired (typically 6 years for contract and debt claims in most Australian states)

Ignoring a letter of demand does not make it go away. If you fail to respond, the claimant may file a tribunal application, and your silence can be used against you.

What a legal response does

A legal response serves three purposes:

1. It puts your version on the record — you admit what is true, deny what is false, and explain your position
2. It raises defences early — if you have a legal defence (limitation period, set-off, breach by the claimant), you state it now
3. It opens settlement discussions — you can propose an alternative resolution without admitting liability

A well-drafted legal response can stop a weak claim. If the claimant sees you have a solid defence and are prepared to fight, they may reconsider whether it’s worth pursuing.

Structure of a formal legal response

A legal response should be formatted as a formal letter, addressed to the claimant (or their lawyer), and structured logically.

1. Header and reference

Include:

• Your name and address
• The claimant’s name and address
• Date
• Subject line referencing the original letter (e.g., “Re: Letter of Demand dated 15 March 2025”)

2. Acknowledge receipt

Open with a neutral statement:

“I acknowledge receipt of your letter of demand dated 15 March 2025.”

Do not apologise, admit fault, or make emotional statements.

3. Admit or deny the facts

Go through the claimant’s version of events and state clearly which facts you accept and which you dispute.

Example:

“I admit that I engaged your company to supply kitchen cabinetry in October 2024. I deny that the cabinetry was delivered in accordance with the agreed specifications. The doors were misaligned, the finish was defective, and the installation was incomplete.”

Be specific. Vague denials weaken your position. If you have evidence (photos, emails, invoices), mention it and attach copies.

4. Raise your defences

If you have a legal defence, state it clearly. Common defences include:

• Breach by the claimant — they failed to perform their obligations first
• Set-off — you have a counterclaim that reduces or extinguishes the debt
• Payment already made — you’ve already paid, and you have proof
• Statute of limitations — the claim is time-barred
• No contract — there was no binding agreement, or the terms were never finalised
• Duress or unconscionable conduct — the agreement was signed under pressure or unfair circumstances

Example:

“I raise the defence of set-off. Your company’s defective work caused me to incur $3,200 in rectification costs. I attach quotes from two licensed tradespeople. Any amount owed to you is extinguished by my counterclaim.”

5. Address the quantum (amount claimed)

If the amount claimed is wrong, break it down:

“The invoice claims $8,500. This figure includes $2,000 for materials never delivered and $1,500 for work not performed. The correct amount, if any liability exists, is $5,000.”

Provide your own calculation. If you’re willing to pay a reduced amount without admission of liability, state it.

6. Propose an alternative resolution

If you’re open to settling, say so — but frame it carefully:

“Without admission of liability, I am prepared to pay $2,500 in full and final settlement of this matter, provided you sign a deed of release.”

Or, if you need more information:

“I require copies of the signed contract, invoices, and proof of delivery before I can respond substantively to your claim.”

7. State your position on proceedings

Make it clear you will defend any tribunal or court action:

“If you commence proceedings, I will file a defence and counterclaim. I will rely on the defences outlined above and seek costs.”

8. Set a reasonable deadline

Give the claimant a deadline to respond (typically 14 days):

“I require your response by 5pm on 10 April 2025. If I do not hear from you, I will assume this matter is closed.”

9. Sign off formally

Close with:

“Yours faithfully, [Your name] [Date]”

Attach supporting documents: receipts, photos, emails, contracts, quotes.

Common mistakes to avoid

Do not admit liability unless you genuinely accept the claim. Phrases like “I’m sorry this happened” can be used against you.

Do not ignore deadlines. If you need more time, ask for it in writing before the deadline expires.

Do not make threats you can’t back up. Saying “I’ll sue you for defamation” when no defamation occurred weakens your position.

Do not send multiple contradictory responses. Draft carefully, get it right, send it once.

Do not use emotional or aggressive language. Stick to facts and logic.

What happens after you send your legal response

One of three things typically happens:

1. The claimant withdraws the claim — they realise their case is weak or not worth pursuing
2. The claimant proposes a settlement — they counter-offer, and you negotiate
3. The claimant files tribunal or court proceedings — the matter escalates, and you file a formal defence

If proceedings are filed, your legal response becomes the foundation of your defence. Tribunals and courts expect parties to have attempted to resolve disputes before filing.

State-specific tribunal thresholds

If the claimant files, they’ll likely use the civil tribunal in your state:

• NSW — NCAT (up to $30,000 for general division)
• VIC — VCAT (up to $100,000 for civil claims)
• QLD — QCAT (up to $25,000)
• WA — Magistrates Court (up to $75,000 for general procedure)
• SA — SACAT (up to $100,000)
• TAS — Magistrates Court (Civil Division, up to $50,000)
• ACT — ACAT (up to $25,000)
• NT — Local Court (up to $100,000)

If the claim exceeds the tribunal threshold, it goes to the relevant state court.

How ClaimDone helps

ClaimDone’s Legal Response service generates a formal, structured reply to a letter of demand based on the facts and evidence you provide. You complete a 5-minute intake form, upload supporting documents, and our Proprietary AI Engine drafts your response — raising defences and proposing resolution.

The service costs $97 flat fee. No subscription. Done in 60 minutes. Australia-wide.

ClaimDone does not provide legal advice. For complex disputes, high-value claims, or matters involving fraud or criminal conduct, consult a qualified Australian lawyer.

Final checklist before sending your legal response

• [ ] Have you admitted only the facts you genuinely accept?
• [ ] Have you clearly denied the facts you dispute?
• [ ] Have you raised all relevant defences?
• [ ] Have you attached supporting evidence?
• [ ] Have you proposed an alternative resolution (if appropriate)?
• [ ] Have you set a reasonable deadline for response?
• [ ] Have you kept a copy for your records?
• [ ] Have you sent it via email and registered post (proof of delivery)?

Ready to send your legal response?

ClaimDone prepares a formal legal response to a letter of demand in 60 minutes. Upload your evidence, answer a few questions, and we’ll generate a structured reply based on Australian law. Start your legal response now — $97 flat fee, no subscription, Australia-wide.

Frequently Asked Questions

Do I have to respond to a letter of demand?

You’re not legally required to respond, but ignoring it is risky. If you don’t reply, the claimant may file tribunal or court proceedings, and your silence can be interpreted as an admission. A formal legal response protects your position and opens the door to settlement.

Can I send a legal response by email?

Yes, but also send a copy by registered post. Email is fast, but registered post provides proof of delivery. Keep screenshots of the sent email and the tracking receipt for the registered letter.

What if I need more time to respond?

Contact the claimant in writing before the deadline and request an extension (typically 7-14 days). Explain why you need more time — for example, you’re gathering evidence or seeking advice. In most cases, claimants will grant a reasonable extension if you ask politely.

Can I admit some facts but deny others?

Yes. You should admit facts that are clearly true and deny facts that are false or exaggerated. This shows you’re engaging in good faith and makes your denials more credible. A blanket denial of everything looks defensive and weakens your position.

What happens if the claimant ignores my legal response?

If they don’t respond within the deadline you set, the matter is effectively closed — unless they file tribunal or court proceedings. Keep a copy of your response and all evidence. If they do file, your legal response becomes the foundation of your formal defence.