How to serve a demand for payment
Produced in partnership with James Hannant of Guildhall Chambers
How to serve a demand for payment

The following Restructuring & Insolvency practice note Produced in partnership with James Hannant of Guildhall Chambers provides comprehensive and up to date legal information covering:

  • How to serve a demand for payment
  • Materials available in Lexis®PSL
  • What should the demand letter contain?
  • What address should the demand letter be sent to?
  • Deemed receipt
  • What is sufficient time?
  • Case law examples of 'sufficient time'
  • Impact of discussions with borrower
  • How to reduce the risk of challenge
  • Consequences of failing to make a demand for repayment
  • More...

A demand for payment is a formal demand made in accordance with the contractual requirements underpinning the liability which the party issuing the demand is seeking to enforce.

A demand will be necessary where the contract which exists between the parties requires a demand to be made in order for a party’s obligation to make payment to crystallise.

Such a situation is likely to arise in the following circumstances:

  1. where a creditor wishes to realise its security

  2. where there has been a default under an ‘on demand’ facility

  3. where party wishes to rely upon a guarantee; and

  4. where non-payment of a demand equates to an event of default under the contract

The consequences of making a demand may include:

  1. crystallisation of a cause of action which gives rise to a party’s entitlement to commence proceedings

  2. commencement of the limitation period

  3. establishing the date from which a lender’s right to repayment of the loan becomes due; and

  4. establishing the date from which a lender’s right to default or enhanced interest arises

Materials available in Lexis®PSL

In this Practice Note, the terms ‘borrower’ and ‘lender’ are used to reflect the terms used in the following Precedents in Lexis®PSL:

  1. Facility agreement (term loan): single company borrower—bilateral—with or without security or a guarantee

  2. Demand letter—borrower (together with related drafting notes)

  3. Demand letter—guarantor (together with related drafting notes)

What should the demand letter contain?

The demand

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