Receiving a demand letter can be unsettling, it might accuse you of owing money, breaching a contract, or causing harm. But don’t panic. A demand letter is often a starting point for dialogue, not an automatic lawsuit. How you respond in the next few days can determine whether the issue gets resolved quietly or escalates into a full-blown court case.
Here’s what to do and how to respond properly.
• If the claim is valid and you can pay: respond quickly, admit the debt, propose a payment plan, and ask for confirmation in writing that the matter will be closed when payments are made. This prevents unnecessary escalation.
• If the claim is partly valid or disputed: acknowledge receipt, set out the factual points you disagree with, attach relevant evidence, and invite negotiation or mediation. Keep your tone professional and calm.
• If you firmly deny the claim: acknowledge receipt, state your denial briefly, and say you will provide supporting documents. Avoid emotional language or threats.
• If you need time or legal advice: send a short acknowledgment (e.g., “We have received your letter of [date]. We are reviewing the matters raised and will respond within [reasonable time e.g., 7–14 days].”) . This shows you are not ignoring the letter.
(LawHaven can draft a tailored response for you). For common demand-letter practice in Nigeria, many letters give 21 days to comply; a prompt, documented response within that window preserves options.
Negotiation and settlement
1. Open a line of communication through a lawyer or your authorised representative, this often cools matters.
2. Offer a realistic payment plan (dates, amounts, security if possible) and put any agreement in writing.
3. Consider mediation or ADR if emotions run high; courts in many Nigerian jurisdictions expect parties to attempt settlement under pre-action protocols. Courts may look on favourably upon genuine settlement efforts.
If the other side sues
1. Don’t miss court deadlines. File your defence on time and follow court rules; missing a defence deadline can be fatal.
2. Consider counterclaims or set-offs if you have losses arising from the same dispute.
3. Explore interim relief (injunctions, stay applications) only with legal advice. Courts can award costs, interest, and, in extreme cases, committal for contempt if orders are ignored.
Common mistakes to avoid
1. Reacting emotionally — threats or admission of liability in haste can harm your position.
2. Destroying records — never delete relevant emails or files. That can be fatal in court and may attract sanctions.
3. Waiting until court papers arrive — early negotiation usually saves money and reputation.
4. Refusing to negotiate because you “have nothing to lose” — legal costs, interest and enforcement action (including seizing assets or committal in extreme situations) can be severe.
Quick checklist you can follow now (short & actionable)
1. Read the letter fully and note the deadline.
2. Preserve all related documents and communications.
3. Check basic facts: who sent it, why, and what evidence they claim.
4. Acknowledge receipt in writing (even a short email).
5. Contact LawHaven (or your lawyer) for advice. Don’t rely on guesswork.
6. If negotiating, get any settlement agreement in writing and paid/secured.
Final note from LawHaven
Demand letters are stressful but manageable. Acting quickly, keeping evidence, communicating professionally, and getting legal advice early almost always improves outcomes. If you’ve just received a demand letter and want a confidential review or a tailored response from experienced solicitors, LawHaven is ready to help . We draft responses, negotiate settlements, and defend clients in court. Reply here or call our office and we’ll take the next step with you.
Sources & further reading
- “What is a demand letter” — Investopedia
https://www.investopedia.com/terms/d/demand-letter.asp - Practical demand letter precedent and common 21-day demand form — NigerianLawGuru
https://www.nigerianlawguru.com/wp-content/uploads/2024/06/LETTER-OF-DEMAND-SIMPLE-DEBT.pdf - Limitation periods (simple contracts — commonly six years) — Templars / Lagos Limitation Law summaries.
- Pre-action / Civil Procedure Rules (expectation of attempts to settle) — Lagos State Civil Procedure Rules.
- Practical consequences and enforcement (debt recovery / committal) — debt-recovery overviews.