In short
The difference between a commercial letter before action and a protocol Letter of Claim, and why sending the wrong one causes problems.
Two different documents
A commercial letter before action is sent in ordinary business-to-business disputes, where the general requirements of the Practice Direction on Pre-Action Conduct and Protocols are usually the relevant framework.
A Letter of Claim under the Pre-Action Protocol for Debt Claims is different. That protocol can apply where a business claims payment of a debt from an individual, including a sole trader, and may require prescribed information and accompanying forms.
Why the distinction matters
Applying the Debt Claims Protocol indiscriminately to company debtors, or ignoring it where it applies, can lead to delay, criticism on costs or a stayed claim. The debtor type must be confirmed before the letter is drafted.
What a well-drafted letter contains
The correct parties, a clear statement of the sum claimed and how it is calculated, the basis of the claim, interest and any compensation relied on with the calculation shown, reference to the supporting documents, what is required and by when, and what is proposed if there is no response.
Response periods
Where the Pre-Action Protocol for Debt Claims applies, the 30-day response period is significant. In ordinary commercial matters, what is reasonable depends on the circumstances. A fixed seven-day ultimatum applied to every debtor is not a considered approach.
Frequently asked
- Can we send a letter before action ourselves?
- A creditor can correspond directly. The value in having it prepared professionally lies in the analysis behind it and in ensuring the correct framework, parties and figures are used.
Sources & references
- Civil Procedure Rules and the Practice Direction on Pre-Action Conduct and Protocols
- Pre-Action Protocol for Debt Claims
- Late Payment of Commercial Debts (Interest) Act 1998
- [INSERT ADDITIONAL VERIFIED SOURCES USED FOR THIS GUIDE]
This guide is general information only and does not constitute legal advice. Procedures described relate principally to England and Wales. Every matter is assessed on its own facts and contractual documentation.