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  • Writer's pictureGavin Jayapal

Letters of Demand

Letters of Demand

Being the addressee of a letter of demand (LOD) is an unpleasant experience, to say the least. Many would be surprised to discover that failing to sufficiently attend to a LOD has far-reaching consequences.

In the Malaysian business scene, it is disconcerting to note that many businesses do not deal with LODs; the age-old adage of silence is golden certainly does not hold true here. LODs need not necessarily be issued by a law firm; disputants may also issue LODs on their own letterhead (though it reaps dividends to consult a lawyer).

Definition of a LOD

Letters of demand (also referred to as “Notices of Demand” or a “Demand”) have been defined by Black's Law Dictionary (8th ed.) as being "A letter by which one party explains its legal position in a dispute and requests that the recipient take some action (such as paying money owed), or else risk being sued”.

Emails may also constitute a demand (Dato’ Mohamad Salim Bin Fateh v Nadeswaran Rajah [2012] 10 MLJ 203) but in general, letters will normally be the first salvo fired in a litigious undertaking.

In certain commercial scenarios, typically for on-demand guarantees, there will be a stringent requirement to first issue a LOD, outlining the amount claimed (Hong Leong Bank Bhd v M Muthiah Nagappan [2014] 1 MLJ 1; Nik Che Kok v Public Bank Bhd [2001] 2 MLJ 328; YM OKMP Dato’ Wan Ahmad Isa Shukri Wan Rashidi v Kwong Yik Bank Bhd (2) (1989) 1 CLJ (Rep) 187).

Before any civil and/or commercial claim is commenced, it is important to first peruse any agreement and/or correspondence that has been exchanged between the parties; this will ensure that all addresses are correctly stated. 

Failing to issue a reply to a LOD

Upon receiving a LOD, it is of the utmost importance that one consults a solicitor immediately. Solicitors should thereafter issue a ‘holding letter’, stating that a reply will be issued pending the receipt of instructions.

The importance of replying to a LOD cannot be downplayed. In SME Development Bank Malaysia v Lim Woon Katt [2016] 5 MLJ 220 the Court of Appeal considered this matter. The learned Judges distinguished between the effect of failing to reply to a LOD in a civil and commercial matter and stated as follows:

[8]  We had read the appeal records and submissions of the learned counsel. We thanked the learned counsel for their able submissions. After giving much consideration to the submission of the learned counsel for the respondent, we took the view that it was a fit and proper case to allow the appeal. Our reasons, inter alia, were as follows:
(a) in the instant case, it was not in dispute that the respondent did not respond to the demand notice of the plaintiff and the defence alleging that he was not liable was only raised in the statement of defence. Evidently, failing to respond to the plaintiff’s letter of demand, that too when the defence case was related to forgery, as well as the fact that the respondent did not lodge a police report upon receiving the demand, weakened the probative force of the defence case. In Wong Hon Leong David v Noorazman bin Adnan  [1995] 3 MLJ 283 ; [1995] 4 CLJ 155, the Court of Appeal went to the extreme end to say that failure to respond on the facts of the case should lead to entering of judgment. Justice Gopal Sri Ram JCA at p 288 (MLJ); p 159 (CLJ), had this to say:
On December 17, 1991, the respondent wrote to the appellant confirming an agreement between them whereby the former was to receive an additional fee of RM100,000 if he assisted in resolving the problem regarding the access. It is the respondent’s case that he did in fact obtain the required access through his exertions. The appellant, however, denies any agreement to pay the additional fee. In respect of this sum, the learned Judge granted leave to defend. We would digress for a moment to say a few words about this latter order of the learned judge.
During argument, we registered our surprise at the learned judge’s reluctance to enter judgment for this sum of RM100,000. After all, the appellant had failed to respond to the letter of 17 December. If there had never been an agreement as alleged, it is reasonable to expect a prompt and vigorous denial. But, as we have pointed out, there was no response whatsoever from the appellant;
(b)  in abundance of caution we must say that failure to respond must not be equated to admission of the claim under  s 17  of the  Evidence Act 1950 (‘the EA 1950’) . Failure to respond will relate to conduct under  s 8  of the  EA 1950 . Conduct is a relevant fact for the court to take into account to give the relevant probative force to the version of the plaintiff and/or defendant’s case. It is well settled that not all demand notices must be responded. In Wiedemann v Walpole [1891] 2 QB 534, in an action for breach of promise of marriage, it was held, that the mere fact that the defendant did not answer letters written to him by the plaintiff in which she stated that he had promised to marry her, was no evidence corroborating the plaintiff’s testimony in support of such promise;
(c) it must also be noted that in commercial cases (not civil), courts have taken notice that, in the ordinary course of business, if one man of business states in a letter to another that he has agreed to do certain things, the person who receives that letter must answer it if he means to dispute the fact that he did so agree (see PECD Construction Sdn Bhd v Freehold Point Sdn Bhd  [2008] MLJU 127 ; [2008] 3 CLJ 215);
(d) there is a latin maxim which says ‘silence amount to consent’ (see Quit tracet consentire videtur). However, this is not part of our law of evidence. Failure to respond goes to conduct and is a relevant fact and not an admission as stated in illustration (g) of  s 8  of the  EA 1950 , which reads as follows:
(g) The question is whether A owes B RM10,000. The facts that A asked C to lend him money, and that D said to C in A’s presence and hearing: ‘I advise you not to trust A for he owes B RM10,000,’ and that A went away without making any answer are relevant facts;
(e) in the instant case, the learned trial judge failed to take into account that the appellant’s demand notice in a commercial matter was not responded to. Further there was no reason or justification for not responding to it. The omission of the learned trial judge to do so in our view compromised the decision making process.


From the above, it is clear that the COA distinguished between civil (think fraud, breach of trust, etc.) and commercial (goods sold and delivered, payments not made) cases.

When a LOD is sent and ignored in the former, it goes towards the conduct of the parties. This will be an issue that is to be addressed at trial. The failure to reply will be an issue taken into account when considering the veracity and probative value of a witness’s evidence.

In contrast, the failure to reply to a LOD for a commercial case carries far more serious consequences. Failing to reply to a LOD in a commercial case may actually entitle a Plaintiff to enter a summary judgment against the Defendant. As put by Gopal Sri Ram JCA (as His Lordship then was) in Wong Hon Leong David v Noorazman bin Adnan [1995] 3 MLJ 283:

During argument, we registered our surprise at the learned judge’s reluctance to enter judgment for this sum of RM100,000. After all, the appellant had failed to respond to the letter of 17 December. If there had never been an agreement as alleged, it is reasonable to expect a prompt and vigorous denial. But, as we have pointed out, there was no response whatsoever from the appellant

Wong Hong Leong David has been affirmed by the COA in Jetara v Maju Holdings [2007] 3 CLJ 41.

Refer further:


From the above it is clear that litigants must immediately attend to any and all letters that have been sent to them. Legal advice should be sought as quickly as possible and timelines contained within the LOD must be carefully scrutinised.

Sticking one’s head in the sand, much like the proverbial ostrich, will simply not do when the matter is before a Judge.


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