How to Review a Demand Letter: a Clause-by-Clause Checklist

You received a demand letter. What should you do first? Do not ignore it, and do not pay or admit anything before you understand it. Read the letter carefully, work out what it is actually demanding and on what legal basis, check the amount and how it was calculated, note the deadline and whether that deadline is set by a statute, preserve all your records, and get advice before you respond. A demand letter, sometimes called a legal notice, is usually the step a party takes before going to court or starting a statutory process, so how you respond can shape what happens next. The most important early move is to identify what kind of demand this is, because the clock and the consequences differ. A plain demand for payment before a civil recovery suit is one thing. A cheque dishonour notice under Section 138 of the Negotiable Instruments Act, 1881 is another, with a strict 15-day payment window. A demand notice from an operational creditor under Section 8 of the Insolvency and Bankruptcy Code, 2016 is a third, with a 10-day window and the threat of insolvency proceedings. Each needs a different, and timely, response. This article is general guidance, not legal advice. Demand letters engage contract, negotiable-instrument, insolvency and limitation law, which vary by jurisdiction, so have a qualified lawyer review a serious notice before you reply. ## The clause-by-clause review checklist 1. Who is demanding, and do they have standing? Is the sender the creditor, an assignee, or a lawyer with authority? Confirm the party claiming the money or performance is the one entitled to it.

2. What is being demanded? Separate the core demand (pay a sum, perform an obligation, stop doing something) from add-ons such as interest, costs and damages. Note the exact figure claimed.
3. What is the legal basis? Which contract, invoice, cheque or statute does the demand rest on? A demand with no clear basis, or one that misstates the contract, is weaker than it looks.
4. Is the amount correct and properly calculated? Check the principal against your records, and check how interest has been computed, at what rate, and from what date. Demands often overstate interest or double-count.
5. What kind of notice is it, and what clock does it start? Identify whether it is a pre-suit demand, a Section 138 cheque dishonour notice (15 days to pay from receipt), an IBC Section 8 operational-debt notice (10 days to respond), or a statutory notice such as one under Section 80 of the Code of Civil Procedure, 1908 for suits against the government. The type sets the deadline and the right response.
6. Is there a pre-existing dispute? This matters most for IBC notices. If you genuinely disputed the debt, or there is a pending suit or arbitration about it, before the notice, raising that dispute in time can block an insolvency filing. Record the dispute clearly in your reply.
7. Is the claim within limitation? Most money claims in India must be brought within three years of the cause of action under the Limitation Act, 1963. A demand for a very old debt may be time-barred. <!-- [VERIFY: applicable limitation period for the specific claim] -->
8. How was it served, and when did you receive it? Statutory clocks usually run from the date of receipt, not the date on the letter. Note the delivery method and keep the envelope and tracking record.
9. What does it threaten, and is that credible? A recovery suit, a Section 138 complaint, or an insolvency petition are very different risks. Match your response to the real consequence.
10. What are your options? Pay in full, pay a part or negotiate a settlement, dispute the claim with reasons and evidence, raise a pre-existing dispute, or seek more time. Decide before the deadline, with advice. ## Red flags in a demand letter - The amount is not broken down, so you cannot see what is principal, interest and costs.

• Interest is charged at an unusually high rate, or from a date earlier than the debt was due.
• The letter threatens criminal consequences for what is really a civil debt, to create pressure.
• An IBC Section 8 notice ignores a dispute you had already raised, which may make the notice contestable.
• The demand relies on a debt that looks time-barred under the Limitation Act, 1963.
• The deadline is shorter than the statute allows, or the letter misstates the statutory period. ## How to respond safely If the debt is clearly owed and correctly calculated, paying or settling within the deadline is usually the cheapest outcome, especially for a Section 138 notice where paying within 15 days of receipt generally closes the matter. If you dispute the claim, reply in writing before the deadline, set out the dispute and your evidence, and avoid any wording that admits the debt. For an IBC notice, a clear, timely record of a genuine pre-existing dispute is often the strongest response. Keep every reply factual, serve it so you can prove delivery, and preserve all records. Last verified October 2026. ## A note on jurisdiction Demand letters are governed by local law. In India the key sources are the Indian Contract Act, 1872, the Negotiable Instruments Act, 1881 (Section 138 for dishonoured cheques), the Insolvency and Bankruptcy Code, 2016 (Section 8 for operational debts), the Code of Civil Procedure, 1908 (Section 80 for notices to the government), and the Limitation Act, 1963. The notice requirements, time limits and consequences are different in the UK, US, Ireland, Singapore and Australia, so treat "varies by jurisdiction" as the default and take local advice for cross-border debts. ## Where a contract and matter workspace helps Reviewing a demand letter well means pulling together the contract or invoice it relies on, your payment records, any earlier dispute correspondence, and the statutory clock you now have to meet. Spread across inboxes and accounting systems, that takes time you may not have when a 10-day or 15-day window is running. Drafting, reviewing, tracking and governing a demand letter and the matter around it can live in one AI workspace tuned to how your team handles disputes, so the notice, the contract and the deadline stay together. Adira is one tool that works this way.