Demand: Overview, definition, and example
What is demand?
In a legal and business context, "demand" refers to a formal request or claim made by one party to another, typically requiring payment, action, or compliance with a specific obligation. Demand can be made for various reasons, such as the repayment of a debt, the fulfillment of a contract, or the resolution of a dispute. It signifies that one party is asserting their right to something owed or due under the terms of an agreement.
For example, if a borrower fails to repay a loan by the due date, the lender might issue a demand letter, formally requesting the payment of the overdue amount.
Why is demand important?
Demand is important because it serves as the first step in enforcing rights or obligations under a contract or agreement. It often acts as a formal notification to the other party that they are in default or breach of the terms, allowing them the opportunity to fulfill their obligations before further legal actions, such as litigation or penalties, are pursued. Demand helps to clarify the issue and establish a clear record of the request, which can be vital in legal or contractual disputes.
Understanding demand through an example
Imagine a company that delivers goods to a customer with the agreement that payment will be made within 30 days. When the customer fails to pay by the agreed deadline, the company sends a demand letter requesting immediate payment. The letter outlines the outstanding amount and gives the customer a set period (e.g., 10 days) to settle the debt before the company takes further legal action, such as seeking a court order.
In another example, a landlord may issue a demand for rent payment if a tenant misses a due date. The demand notifies the tenant of the overdue rent and requests payment, often including late fees, before legal action for eviction or further penalties is taken.
An example of a demand clause
Here’s how a clause related to demand might appear in a contract:
“In the event of non-payment or failure to meet any contractual obligations, the Party owed shall have the right to make a formal demand for payment or performance. If the demand is not satisfied within [specified period], the Party owed may pursue legal remedies as outlined in this Agreement.”
Conclusion
Demand is a formal, assertive request that plays a crucial role in ensuring that contractual obligations are fulfilled. Whether related to payment, performance, or any other requirement, a demand helps establish a clear record of a party’s rights and expectations. It can serve as a first step in resolving issues and avoiding further legal action, but if unmet, it often leads to more serious consequences, such as litigation or penalties.
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.