What it means
A letter of demand is a formal written request that the other party do something — typically pay a debt, complete work, or remedy a breach — within a stated time. It sets out what is owed, why, and what will happen if the demand is not met (often, the commencement of legal proceedings). A clear letter of demand frequently resolves a dispute on its own, because it signals you are serious and creates a paper trail a court can later see.
How it's used
After three unpaid invoices, the supplier sent a letter of demand giving the customer 14 days to pay before court proceedings began.