One of the documents lawyers are often asked to prepare is a letter of demand.

A letter of demand is usually issued in relation to an outstanding debt and will often warn of legal action unless the debt is paid by a date.

However, the humble letter of demand can also sometimes give rise to unintended consequences for the party issuing the demand. An example is in the context of unfair preference claims in insolvency law.

In simple terms, an unfair preference occurs when a creditor receives a payment (for a debt) from a company who subsequently goes into liquidation giving them an unfair preference over other creditors. If a liquidator of the company who made the payment can prove that the creditor obtained an unfair preference, then it can…

Read the full article at: http://www.theherald.com.au/news/local-news/5608832/more-to-letters-of-demand/