Demand Letters in BC: What to Include Before You Sue

If someone owes you money or has broken a contract, a demand letter is usually the first formal step. It tells the other side exactly what you want, by when, and what happens if they do not respond.

A good letter can end the dispute. A careless one can weaken your position, invite a counterclaim, or lull you into missing a court deadline. This guide covers what to put in a demand letter in BC and the traps to watch for before you send it.

What a demand letter does

A demand letter is a written request that the other party pay a debt, fix a problem or perform a contract by a set date, failing which you will take further steps. In most situations no law requires you to send one before starting a claim, but there are good reasons to do it:

• It often works. Many people and businesses pay once they see the claim set out clearly and understand that court is the next step.
• It frames the dispute. The letter records your version of events, the amount and the basis for it while the facts are fresh.
• It shows you acted reasonably. Judges and tribunal members see the history of a dispute. A measured letter that gave the other side a fair chance to respond reflects well on you.
• It may be required by your contract. Some contracts require written notice of a default, and a chance to fix it, before you can terminate or sue. Read the notice clause before you write.

What to include

A strong demand letter is short, specific and factual. It should include:

• The parties. Your full legal name, or your company's exact legal name, and the full legal name of the person or business you are claiming against.
• The facts. A brief chronology: the agreement, what you did, what they failed to do, and any earlier requests for payment. Refer to invoices, contracts, emails and texts by date.
• The legal basis. For example, an unpaid invoice under a written contract, a loan that was not repaid, or work that was not completed as agreed. You do not need legal argument, but the reader should understand why they owe you.
• The amount and how you calculated it. Show the principal, any credits or partial payments, and any contractual interest separately. Only claim interest or fees the contract or the law supports.
• A clear deadline. Give a specific date, usually 10 to 14 days out, and say how to pay or respond.
• The next step. State plainly that if you do not hear back by the deadline, you intend to start a claim without further notice. Only say this if you mean it.

Attach or list the key documents. Keep a copy of the letter and proof of when and how it was delivered, such as email confirmation, registered mail tracking or a courier receipt.

Mistakes that weaken your position

• Overstating the claim. Inflated amounts or unsupported penalties make the letter easy to dismiss and can undermine your credibility later.
• Admissions about your own performance. Avoid conceding points about your own work, delays or the quality of what you delivered. The letter may become evidence.
• Mixing settlement offers into an open letter. If you are prepared to accept less to settle, it is usually better to make that offer in a separate communication marked as a without-prejudice settlement proposal, so the demand itself stays clean.
• Threats and copying others. Stick to the legal steps you are entitled to take. Sending the letter to the other side's customers, employer or social media can create problems of its own, including a defamation risk.
• Ignoring the right forum. The Civil Resolution Tribunal handles most small claims up to $5,000, and its free Solution Explorer includes communication templates. Larger claims go to Provincial Court small claims or the Supreme Court. Knowing where you would file makes the letter more credible.

A demand letter does not stop the limitation clock

This is the most important trap. Under section 6 of BC's Limitation Act, a court proceeding generally must be started within two years after the day the claim is discovered. Under section 8, that is usually the day you knew, or reasonably ought to have known, that you suffered a loss caused by the other party and that a court proceeding would be an appropriate remedy.

Sending a letter, negotiating, or waiting for promised payments does not pause that period. If your deadline is close, you may need to file first and negotiate afterward. Our post on BC's two-year limitation period explains how the clock is calculated.

Two rules can work in your favour:

• Demand loans. For a demand obligation, such as a loan repayable on demand, section 14 says the claim is discovered on the first day the debtor fails to perform after a demand is made. In that situation the demand itself matters for timing, so keep proof of it.
• Acknowledgments and part payments. Under section 24, if the debtor acknowledges the debt in a signed writing to you before the limitation period runs out, the clock restarts from that date. For a fixed sum, a part payment also counts. A reply that admits the debt is worth keeping.

When a lawyer's letter makes sense

You can write your own demand letter, and for small, simple debts that may be enough. A letter from a lawyer tends to carry more weight, and it is worth considering when the amount is significant, the contract is complex, the other side has a lawyer, there is a risk of counterclaim, or the limitation deadline is approaching. A lawyer can also confirm the correct legal names to claim against, check the contract's notice and dispute resolution clauses, and calculate interest properly.

If the letter does not produce payment, the next steps are a claim and, if you win, enforcement. Our guide to collecting unpaid debts in BC walks through those options.

Owed money or dealing with a broken contract? Start with the right letter

Our litigation lawyers can review your contract and documents, check your limitation deadline, prepare and send a demand letter, and start a claim in the right forum if the other side does not respond.

Call 604-259-2844 or send us a message to arrange a consultation at our Vancouver office.