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A letter before action is the first step which has to be taken before any legal claim is launched. It is a means of warning the defendant in the case that legal action will be triggered if the issues detailed on the letter before action are not properly resolved. If someone – person or organisation – owes money to your business, then a solicitor’s letter before action will make it known that you intend to pursue the debt via legal action, if need be.
When to send a letter before action
Although closely associated with debt issues, a letter before action can be sent for any type of civil claim. This might include any of the following:
Requesting data or documentation
Pursuing debt collection
Dealing with a breach of contract
Stopping someone from making defamatory remarks.
The aim of a letter before action
The key to understanding the operation of any letter before action lies in understanding that the courts in England and Wales always encourage parties involved in disputes to settle their matters at the earliest possible stage, through clear communication. Actual litigation and time and expenses involved in appearing in court should only be considered as the last resort. It is hoped, therefore, that the delivery of a letter before action will concentrate the minds of both parties and increase the chances of a negotiated settlement.
The law behind a letter before action
The preference of the courts for cases to be resolved without litigation is enshrined in the Practice Direction on Pre-action Conduct and Protocols contained in the Civil Procedure Rules (CPR). These rules state clearly that any claimant must send a letter before action to the defendant, in which they outline the details of their claim. The importance of doing so is underlined by the fact that the courts actually have the power to impose sanctions on any parties not acting properly prior to any action being taken. These sanctions might include the party being asked to pay extra legal costs, or having any legal costs which are awarded cut. In addition to the possible ramifications of not sending a letter before action, it should be noted that a letter before action can often play a useful role in bringing a dispute to a head. It can persuade the other party that you are serious about pursuing your claim, and may well convince them of the benefits of negotiation over litigation.
A letter before action template
In most cases, best practice will involve asking a solicitor to draft your letter before action, to ensure that no mistakes are made. In all cases the template for any letter before action should include the following:
The facts of this case – this will include the basis on which the claim is being made with reference to any relevant contract or agreement.
The request of the claimant – this is the part of the letter before action in which the claimant sets out what they are demanding, and how the defendant can settle that demand. If the dispute hinges upon a debt, for example, then the letter should include details of the debt and any interest being applied.
A time limit – the letter before claim should set out a time limit for the defendant to comply with the request. This could range from 14 days for a fairly simple dispute up to 3 months for more complex claims – although the time limit can’t exceed 3 months.
The consequences – the letter before claim should set out the consequences for the defendant of non-compliance. This can range from court proceedings to a winding-up petition.
Documents – the letter should be accompanied with any documents which support the claim.
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