Short answer: When your company receives a lawyer’s letter of demand, verify the sender and the claim, diarise every deadline, preserve documents and tell the board and insurers. Reply only with board authority, keep settlement proposals in a separate “without prejudice” letter, avoid signed acknowledgments or part payments that restart the limitation period, and involve a lawyer before the deadline.
A lawyer’s letter of demand is often the claimant’s first formal step, and the company’s first reply can matter more than the letter itself. A quick email from a director can admit liability, restart a limitation period that was close to expiring, or hand the other side an undisputed debt it can use for a statutory demand. This guide is written for the company that has received the letter: how to check it, who may answer it, how “without prejudice” works and when the file should go to a lawyer. If you are the creditor, our guide on how to write a letter of demand in Singapore covers the sender’s side.
Key facts at a glance
- Rules of Court 2021, Order 5 rule 1(4): a party must not reject an offer of amicable resolution unless it has reasonable grounds to do so.
- Order 5 rule 2: an offer of amicable resolution and any rejection must be in writing, and the offer must stay open for at least 14 days unless the parties agree otherwise.
- Evidence Act 1893, section 23(1): in civil cases, an admission made on an express condition that evidence of it is not to be given is not relevant. This is the statutory basis of “without prejudice” negotiation.
- Limitation Act 1959: contract claims generally have 6 years (section 6(1)(a)), but a signed written acknowledgment of a debt, or a payment, restarts the period from that date (sections 26(2) and 27).
- Insolvency, Restructuring and Dissolution Act 2018 (IRDA), section 125(2)(a): a written demand for a debt exceeding S$15,000, left at the registered office and neglected for 3 weeks, makes the company deemed unable to pay its debts.
- If the company is later sued by originating claim and served in Singapore, it has 14 days to file a notice of intention to contest and 21 days to file a defence, both counted from service of the statement of claim (Order 6).
Raffles Corporate Services works with a panel of experienced Singapore law firms who offer cost-effective and efficient legal service and advice. This article is general information only and is not legal advice.
What does it mean when your company receives a lawyer’s letter of demand?
A letter of demand is a formal written request, usually from the claimant’s lawyers, asking your company to pay a sum or take some action by a deadline, and warning of legal action if it does not. It is not a court document and it does not, by itself, prove that the company owes anything.
It still carries legal weight. Under Order 5 of the Rules of Court 2021, a claimant is expected to make an offer of amicable resolution (an offer to settle, or to resolve the dispute other than by litigation) before suing. Many lawyers’ letters serve as that offer, and your response can later matter when a judge decides costs.
Check what the document actually is. A written demand for a debt above S$15,000 left at your registered office may be a statutory demand under the IRDA, which runs on a 3-week clock; if so, read our guide for companies that have just been served a statutory demand in Singapore. If you have already been served court papers, go to our guide on what to do when your Singapore company has been sued.
Which laws apply when you reply to a letter of demand in Singapore?
Four sets of rules shape the reply, plus the Companies Act 1967 on who decides it.
- Order 5 of the Rules of Court 2021: parties must consider amicable resolution before and during an action (rule 1(1)); the terms of an unaccepted offer are kept from the court until it deals with costs (rule 2(3)); and a party refusing amicable resolution can be ordered to give sealed reasons, which may be referred to on costs (rule 3).
- Evidence Act 1893, section 23: the “without prejudice” rule for admissions in civil cases.
- Limitation Act 1959, sections 6, 26 and 27: the 6-year contract limit, and how a signed acknowledgment or a payment (including one made by an agent) restarts it.
- IRDA, section 125: winding up of a company that is unable to pay its debts, including the statutory demand route.
- Companies Act 1967, section 157A: the business of a company is managed by, or under the direction or supervision of, its directors.
What should you do in the first 48 hours after you have received a letter of demand?
In the first 48 hours, the aim is to protect the company’s position, not to argue the merits. Verify, diarise, preserve and notify, and hold back any substantive reply.
- Record how and when the letter arrived, and keep the original.
- Verify the sender. Check that the law firm and the named lawyer appear on the Legal Services Regulatory Authority’s search for a lawyer or law practice, which lists Singapore solicitors with a current practising certificate. Call the firm on a number you find yourself, not one printed in the letter.
- Confirm the claim is against the right party: the company, a related company, or a director personally under a guarantee. If the letter names the wrong entity, see our guide on a wrong company named in a letter of demand.
- Diarise every date: the deadline in the letter, the expiry of any offer of amicable resolution (which must stay open for at least 14 days unless agreed otherwise), 3 weeks from delivery if it could be a statutory demand, and the limitation date for the underlying claim.
- Issue a document hold: no one deletes or edits emails, chats or files about the dispute.
- Tell the board, and check insurance. Many liability policies require prompt notice of a claim, or of circumstances that may lead to one. Our guide to directors’ and officers’ liability insurance in Singapore explains why notice matters.
- Read the contract’s dispute resolution, notice, liability cap and interest clauses.
- Send, at most, a short holding reply that acknowledges receipt of the letter (not the debt), says the company is reviewing it, and gives a date for a fuller response.
Who in the company is allowed to reply to a letter of demand?
Only a person the board has authorised should reply. Under section 157A of the Companies Act 1967, the company’s business is managed by or under the direction or supervision of its directors, so the board decides how the company responds and who speaks for it.
Problems start when an account manager, a finance executive or one director acting alone replies. Their words can be treated as the company’s, and because an acknowledgment can be made by an agent, a signed email from an employee can restart the clock on an old debt.
A cleaner approach is a short board resolution naming one person to handle all correspondence and to instruct lawyers, with no one else commenting on liability or amounts. Your company secretary can prepare it and keep it with the minutes.
Should your reply be open or “without prejudice”?
Use an open letter for your formal position, such as denying the claim, and a separate “without prejudice” letter for any settlement proposal. Mixing the two is how concessions end up in front of a judge.
“Without prejudice” rests on section 23 of the Evidence Act 1893. The heading helps show the condition that the letter is not to be used in evidence, but it is not a guarantee: the protection is designed for real attempts to settle. A letter so marked that simply confirms the debt and promises to pay may not be protected.
| Type of reply | When to use it | Main risk |
|---|---|---|
| Holding reply (open) | Within a few days, to buy time for review | Wording that acknowledges the debt rather than the letter |
| Open denial or defence | The company disputes liability or the amount | Statements of fact that later prove wrong or incomplete |
| Without prejudice settlement offer | The company wants to resolve the matter without conceding | Protection lost if the letter is not a real attempt to settle |
| Written response to an offer of amicable resolution | The letter is framed as an Order 5 offer | Rejecting without reasonable grounds, which may count against the company on costs |
| Payment or instalment proposal | The debt is owed and the company needs time | Becomes a signed acknowledgment that restarts the limitation period |
What documents should the company gather before replying?
Gather everything that shows what was agreed, delivered and paid; your reply can only be as accurate as these records.
| Document | Why it matters |
|---|---|
| Contract, quotation, purchase order and terms | Shows obligations, payment terms, interest and dispute clauses |
| Invoices, credit notes and statements of account | Confirms the amount claimed and any errors or set-offs |
| Delivery orders, completion records, defect reports | Proves what was or was not delivered, and any quality complaints |
| Payment records | Shows part payments, which can affect limitation |
| Emails and chat messages with the claimant | Reveals what each side said and any earlier admissions |
| Insurance policies | Decides whether the insurer must be told and may fund the defence |
| Board resolutions and authority records | Shows who may speak and sign for the company |
What happens if your company ignores a letter of demand, and what does responding cost?
Ignoring the letter rarely makes the claim go away. The claimant can sue by originating claim, and if the debt is undisputed and exceeds S$15,000, it can serve a statutory demand and then apply to wind up the company.
If the claimant starts an originating claim and serves it in Singapore, the company must file and serve a notice of intention to contest or not contest within 14 days after the statement of claim is served, and a defence within 21 days after the statement of claim is served (Order 6 rules 6 and 7). If it does not, the claimant may apply for judgment in default. See the Judiciary’s page on how to respond to an originating claim.
For an undisputed debt, the faster route is often a statutory demand under IRDA section 125(2)(a): 3 weeks of neglect makes the company deemed unable to pay its debts, a ground for winding up. If the company disputes the debt, it should say so clearly in writing and speak to a lawyer quickly.
There is no fixed fee for answering a letter of demand; cost depends on how far the matter goes. The table shows the time limits and the Judiciary’s published filing fees for a defendant.
| Stage | Time limit or trigger | Official fee or cost driver |
|---|---|---|
| Letter of demand received | Deadline set in the letter; an Order 5 offer stays open at least 14 days | No court fee. Internal time to gather documents; lawyer’s review and reply if instructed |
| Statutory demand left at registered office | 3 weeks to pay, secure or compound (debt over S$15,000) | No court fee to respond. Urgent legal work if the debt is disputed |
| Originating claim in the District Court | 14 days for notice of intention to contest; 21 days for defence | S$20 to file the notice and S$20 to file a defence, plus Service Bureau fees and lawyer’s fees |
| Originating claim in the General Division of the High Court (claim up to S$1 million) | Same time limits | S$100 to file the notice and S$200 to file a defence, plus Service Bureau fees and lawyer’s fees |
| Originating claim in the General Division of the High Court (claim over S$1 million) | Same time limits | S$200 to file the notice and S$500 to file a defence, plus Service Bureau fees and lawyer’s fees |
| No response to the claim | Claimant may apply for default judgment | Judgment sum, interest, costs and the expense of trying to set judgment aside |
Assumptions: the company is served in Singapore, the claim follows the general (not simplified) civil process, and fees are as published by the Judiciary on 23 October 2026. Lawyers’ fees vary with the amount in dispute and how far the matter goes, so ask for an estimate at each stage.
When should the company hand the letter to a lawyer, and what does the company secretary do?
Hand the matter to a lawyer before the letter’s deadline if the claim is disputed, the amount is material, the letter could be a statutory demand, limitation is close, or the claim goes beyond a simple unpaid invoice.
A lawyer assesses the merits, drafts the open and without prejudice letters and, if proceedings start, files the notice of intention to contest and the defence. Court proceedings are conducted by a Singapore Advocate and Solicitor. If you are unsure whether the matter needs one, speak to a lawyer early; a short review is usually cheaper than undoing a bad reply.
Your company secretary or corporate service provider supports the company, not the litigation. Typical tasks include:
- confirming the registered office and directors from ACRA records;
- preparing the board resolution that authorises one person to handle the matter and to instruct lawyers;
- pulling the minutes, registers and resolutions the lawyer asks for;
- passing on further letters or court papers received at the registered office the same day; and
- minuting any settlement approval and reflecting the outcome in the accounts.
The company secretary does not give legal advice, negotiate with the other side’s lawyers or file court documents. A settlement by itself does not usually require any ACRA lodgement; ACRA filings only come into play if the dispute leads to changes such as a new director, a change of registered office or, at the far end, a winding-up order.
What are the common mistakes that make a letter of demand worse?
Most damage comes from rushed replies.
- Partial admissions. “We accept we owe something but not the full amount” can turn part of a disputed claim into an admitted debt the claimant can pursue quickly.
- Restarting the limitation clock. A signed email saying “we acknowledge the outstanding balance and will pay when cash flow improves”, or a small goodwill payment, can restart the 6-year period on an old debt under sections 26(2) and 27 of the Limitation Act 1959.
- Putting settlement ideas in an open letter. Offers belong in a separate without prejudice letter that is a real attempt to settle.
- Ignoring an offer of amicable resolution, or rejecting it without reasons. Order 5 rule 1(4) requires reasonable grounds, and refusal can be raised when costs are decided.
- Missing the insurance notification; late notice may affect cover.
Our free business tools can help with day-to-day compliance while the dispute is being handled.
Frequently asked questions
Is a lawyer’s letter of demand legally binding on my company?
No. A letter of demand is a request and a warning, not a court order. It does not prove the debt, but it may be the claimant’s formal offer of amicable resolution under Order 5, and the company’s reply can be used in evidence unless properly protected.
How long does my company have to reply to a letter of demand?
There is no single statutory deadline for an ordinary letter of demand; the letter sets its own date. If the letter is an offer of amicable resolution, it must stay open for at least 14 days unless the parties agree otherwise. If it is a statutory demand for a debt over S$15,000, the company has 3 weeks before it is deemed unable to pay.
Does writing “without prejudice” on a reply always protect it?
Not always. Section 23 of the Evidence Act 1893 protects admissions made on the condition that evidence of them will not be given, which in practice means real settlement negotiations. A letter that only confirms the debt is at risk even with the heading.
Can a director reply personally to save legal fees?
A director can reply if the board has authorised it, but the reply speaks for the company and can be used against it. Keep it short, factual and limited to acknowledging receipt until the company has checked its records and, where the claim is disputed or large, taken legal advice.
Need help with this?
Raffles Corporate Services can handle the ACRA filings, compliance documentation and records for you, and where court proceedings or legal advice are needed, we work with a panel of experienced Singapore law firms who offer cost-effective and efficient legal service and advice.
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Last reviewed: 23 October 2026. The Editorial Team, Raffles Corporate Services.