10 Common Mistakes to Avoid When Sending a Letter of Demand in Malaysia

Introduction

A Letter of Demand (LOD) is often the decisive first step in recovering debts or enforcing contractual rights in Malaysia. Drafted and delivered correctly, it can elicit payment within days, preserve business relationships, and demonstrate to any future judge that you acted fairly before litigating. Done poorly, however, an LOD letter in Malaysia may be ignored, challenged, or even used against you in court. This guide demystifies the most frequent errors Malaysian creditors make, offering practical fixes that align with local statutes such as the Contracts Act 1950, Limitation Act 1953, and the Rules of Court 2012. By the end, you’ll know how to deploy an LOD that commands attention—and maximises your chance of prompt resolution.

(Need a refresher on what an LOD looks like? Visit our complete walkthrough on drafting an LOD letter Malaysia to see sample wording, format tips, and service methods.)

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Mistake 1: Sending the Letter Too Late

Waiting until the eve of the six-year limitation period (or shorter periods for certain torts and employment claims) creates two problems:

1. Zero negotiating time – The debtor will sense your desperation and stall for mere weeks until the clock runs out.

2. Process errors are fatal – If your LOD or subsequent writ contains technical defects, you may lose the claim forever.

Fix:
Issue your LOD no later than 12 months before limitation. This buffer lets you:

• engage in meaningful negotiation

• correct address or service defects

• file suit in a measured fashion if talks collapse

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Mistake 2: Using Informal or Aggressive Language

WhatsApp rants and threatening phone calls are commonplace, but Malaysian courts assess a party’s reasonableness when awarding costs. An LOD laced with insults, profanity, or threats of criminal exposure (“I’ll make sure you’re jailed!”) can:

• undermine your credibility

• open you to defamation or harassment counter-claims

• erode goodwill needed for settlements

Fix:
Adopt a firm yet professional tone. Structure the letter into:

• Particulars of the breach – dates, invoice numbers, contract clauses

• Legal entitlement – statutory or contractual basis

• Demand – sum or action required and a precise deadline

• Warning – civil action will follow for non-compliance

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Mistake 3: Omitting Key Evidence and Calculations

An LOD that simply says “You owe me RM 50 000—pay up” invites two stock replies: “Prove it” or “How did you calculate this?” Without attachments or a breakdown, the debtor stalls while you scramble for documents.

Fix:
Enclose or attach:

• Aged debt schedule / statement of account

• Copies of contracts, invoices, delivery notes, or service reports

• Interest computation (principal × rate × days) with clause reference

• Proof of previous reminders or emails acknowledging the debt

This front-loads evidence, making it harder for debtors to dodge.

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Mistake 4: Addressing the Wrong Entity

In Malaysia’s SME ecosystem, business owners often operate:

• Enterprise / sole proprietorships

• Sdn. Bhd. companies

• Partnerships

• Dormant holding vehicles

Misidentifying the defendant—e.g., writing to “ABC Trading” when the legal party is “ABC Trading Sdn. Bhd.”—can nullify service, forcing you to restart.

Fix:
Conduct a quick SSM search on the company name, registration number and address. For individuals, verify NRIC and latest residence. State both the registered and service addresses in the header.

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Mistake 5: Ignoring Statutory Pre-Conditions

Certain Malaysian statutes require unique steps before litigation:

• Hire-purchase agreements – notice under the Hire-Purchase Act 1967

• Construction disputes – CIPAA payment claim

• Tenant eviction – written termination under the tenancy agreement

Skipping these can see your writ struck out for prematurity.

Fix:
Check your sector-specific laws and contracts. Include a clause in your LOD confirming that all required preliminary notices have been served.

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Mistake 6: Setting an Unrealistic Deadline

Demanding “payment within 24 hours” may feel cathartic but is seldom enforceable. Courts recognise commercial reality—bank transfers require time, board approvals take days, and cross-border payments can take a week.

Fix:
Adopt a 7-day deadline for straightforward debts and 14-day for sizeable or cross-border claims. Explain that the window balances urgency with practicality; this looks reasonable if the matter proceeds to court.

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Mistake 7: Failing to Reserve Rights Properly

Some creditors end their letters with “We will take legal action without further notice.” While dramatic, it can be self-defeating if you later:

• wish to grant an extension

• negotiate instalments

• pursue alternative dispute resolution (ADR)

Fix:
Use “Our client reserves all rights, including but not limited to commencing legal action, without prejudice to any further or alternative relief.” This preserves flexibility while signalling seriousness.

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Mistake 8: Disclosing Confidential or Prejudicial Content

Sharing sensitive pricing, supplier lists, or trade secrets in your LOD risks:

• breaching confidentiality clauses

• exposing information in open court (all pleadings become public)

• giving competitors insight into your operations

Fix:
Attach confidential material only if essential, mark it “Without Prejudice Save as to Costs”, and consider a summary instead of full disclosure. In high-stakes matters, execute a non-disclosure agreement first.

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Mistake 9: Using Standard Templates Without Local Customisation

Download-and-fill templates from generic legal websites often omit:

• Malaysian statutes and case citations

• Local currency formatting (RM vs MYR)

• Bilingual requirements for certain state agencies

• Reference to Malaysian court jurisdiction

Fix:
Either instruct a local lawyer or tailor the template with:

• Correct statute names and sections

• Malaysian case law (e.g., Yong Wan Hong v. QBE Insurance (Malaysia) Bhd [2018])

• Proper governing-law clause (“This demand is governed by the laws of Malaysia and the Courts of Malaya shall have exclusive jurisdiction”)

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Mistake 10: Serving the Letter Incorrectly

A perfectly drafted LOD is useless if the debtor later claims, “I never received it.” Malaysian courts accept a variety of service modes, but each has nuances:

• AR Registered Post – gold standard but ensure correct postcode and retain the signed card.

• Courier / Process Server – obtain signed delivery order.

• Email / WhatsApp – courts increasingly accept screenshots with timestamps, but physical service remains safer for default judgments.

• Personal Service – ideal for large sums; have a witness or affidavit of service.

Fix:
Serve via two methods simultaneously (e.g., AR Registered Post + email). Keep copies of envelopes, tracking slips, and digital receipts. Record service in a Service Log detailing date, time, and recipient particulars.

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Additional Best-Practice Tips

Include a Clear Payment Method Section

State your bank name, account number, SWIFT code, or DuitNow QR. Ambiguity slows compliance.

Offer a Reasonable Instalment Alternative

Cash-strapped debtors often pay faster when given a face-saving, staged option.

Keep Internal Notes of All Communications

Maintain a chronological log of calls, WhatsApp chats, and meeting minutes. These bolster credibility if litigation arises.

Engage in Without-Prejudice Settlement Discussions

Mark negotiation emails “Without Prejudice” so they remain inadmissible as evidence of liability, yet still demonstrate effort to settle.

Know When to Escalate

If silence persists beyond your deadline, instruct counsel to prepare the writ immediately. Delay dilutes psychological pressure.

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Conclusion

Avoiding these ten pitfalls transforms a mere letter into a potent legal instrument—one that commands respect, accelerates payment, and places you in the strongest position should litigation follow. Craft your demand early, anchor it with watertight evidence and statutory compliance, and serve it impeccably. Combine firmness with professional courtesy, and you will vastly improve the odds that your LOD becomes the final chapter of the dispute rather than the prologue to an expensive court battle.

By mastering these details, you not only protect your financial interests but also strengthen your reputation as a principled, meticulous counter-party in the Malaysian commercial landscape.