Demand: Overview, definition and example
What is demand?
In a legal or business context, a demand is a formal request for action, payment, or compliance with a responsibility. It’s often made in writing and lays out what the requesting party expects and why they’re entitled to it. A demand is typically the first step in resolving a dispute or enforcing rights under a contract.
For example, if a supplier doesn’t deliver goods as promised, the buyer might issue a demand for either delivery or compensation.
Why is demand important?
Demand is important because it sets the stage for resolving disputes without immediately resorting to legal action. It gives the other party an opportunity to address the issue, whether that means paying an overdue invoice, fulfilling a contract term, or stopping a harmful action.
For businesses, sending a demand ensures there’s a clear, documented record of what was requested and when. This is crucial if the dispute escalates to arbitration or court. On the receiving side, responding to a demand appropriately can often resolve the issue and avoid further complications.
Understanding demand through an example
Imagine a company hires a contractor to complete a project but only pays half of the agreed fee. The contractor sends a written demand for the remaining payment, citing the contract terms and providing evidence of completed work. If the company doesn’t respond or pay, the demand can be used as part of the contractor’s case in legal proceedings.
In another case, a landlord issues a demand to a tenant for unpaid rent. The demand specifies the overdue amount and gives the tenant a deadline to pay before further action, such as eviction, is taken.
An example of a demand clause
Here’s how a demand clause might look in a contract:
“In the event of default or non-compliance with the terms of this Agreement, the aggrieved Party may issue a written demand specifying the breach and requesting remedy within ten (10) business days. Failure to comply with the demand may result in legal action or termination of this Agreement.”
Conclusion
A demand is a formal request for action or compliance, often used to resolve disputes or enforce rights under a contract. It’s a crucial tool for businesses to protect their interests while providing the other party with a chance to address the issue.
Understanding how to issue and respond to demands effectively can help businesses avoid unnecessary conflicts and maintain professional relationships. It’s about asserting rights clearly and fairly while keeping a pathway open for resolution.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.