Letter before action

Use this letter before action if:

• your business is owed money by another business and you want to warn them that you are considering suing them for what they owe; or

• you want to threaten legal action against a private individual or a sole trader who has failed to pay your invoices; or

• you want to sue a person or business for anything other than a debt. For example, if a freelancer or consultant’s services have fallen short of what was agreed, you may want to sue them for compensation if it has cost your business money.

You do not have to wait until you have exhausted all other options before you use this letter before action, but remember that it is a serious thing to threaten legal action so this should not be your first step in trying to encourage payment of unpaid invoices or other claims. At the very least, you should send a chasing letter first explaining what they owe and making it clear how they can pay you.

This template letter before action covers all the key points you need to include to comply with the law. In particular, it includes reference to the relevant part of the court rules that the other side should look to when considering how they reply (these rules are also known as the Civil Procedure Rules).

It also helps you make the most of your claim by including options to help you claim the maximum amount of interest that you are legally entitled to.

The questionnaire of this letter before action includes guidance notes to:

• help you fill in the details of what happened and what you are asking for in a simple and straightforward way. Being clear about what you want as early as possible improves your chances of sorting matters out without ever having to resort to expensive legal action.

• make it easy for you to comply with the law, for example when setting a response time after which you reserve the right to start your claim.

It is crucial to get your letter before action (letter of claim) right. The court rules say that there are particular things you have to include in a letter before action and failure to do so can mean you miss out later on, or even get penalised by the court for failing to follow the rules properly.

Properly completed, this letter will include a summary of what has happened, what you want from the other side (including, if applicable, how any sum of money you are asking for is calculated) and how long you will give them to reply before you start your claim.

Using this template also gives you the best chance of coming to an agreement with the other side whilst showing them you are serious about taking the matter further if they do not make some effort to pay you or provide you with a remedy. It is usually well worth agreeing things if you can, rather than going to court - even small claims can be slow and expensive, regardless of whether you win or lose.

If you haven't already, you should chase for payment of your invoices before you create a letter before action and send it off. You can use our suite of debt collection letters for this:

• First letter chasing payment;

• Second letter chasing payment; and

• Final letter chasing payment.

For guidance on chasing debts and enforcement options, see Chasing payments and enforcement, and for how to conduct a small claim yourself, see Small claims and letter before action.