Letter before action: what it must contain, and the two versions
A letter before action is not a threat. It is a legal requirement before you issue a claim, and a court will penalise a claimant who skipped it. There are two versions, and which one you need depends on who owes you.
Company debtor: the Practice Direction on Pre-Action Conduct
Where the debtor is a limited company or LLP, the Practice Direction applies. The letter should set out the basis of the claim, the amount, how it is calculated including interest and compensation, what you want, and a reasonable period to respond. Fourteen days is typical for a straightforward debt; thirty where it is complex. Enclose copies of the invoices and a statement of account. Say plainly that proceedings will be issued if the debt is not paid or a response received.
Sole trader or individual: the Pre-Action Protocol for Debt Claims
Where the debtor is an individual, including a sole trader, the Protocol applies and it is stricter. The letter must include the amount and how it arose, whether interest is being claimed and how, and an up-to-date statement of account. It must enclose the Protocol's Information Sheet and Reply Form, and allow thirty days before proceedings. If the debtor returns the Reply Form, further time is required to consider it. Getting this wrong is a common reason claims are stayed.
What both must avoid
- Implying a court has already been involved when it has not.
- Adding charges the contract or the Act does not allow.
- Using a form of words that looks like a court document.
- Sending it to a home address for a company debt without care: post goes to the registered office.
Where it sits in the sequence
A letter before action should be the last letter, not the first. By the time it goes, the debtor should have had reminders, a statement, a call, a formal notice and a final notice. That history is what makes the letter credible, and it is what a judge looks for when costs are decided.