Is a demand letter legally binding?

I recently received a demand letter from a former business partner who is claiming that I owe them money. This demand letter states that I must pay the amount specified by a certain date or face legal action. I am concerned about the legal implications of this demand letter and want to know if it is legally binding.

Gregory F.

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Technically, the demand letter has no legal impact. It simply represents an offer to resolve a dispute via an out-of-court settlement under the threat of litigation. In your case, it appears from your description that your former business partner has demanded that you pay the disputed amount by a certain date or else s/he will commence a lawsuit against you. It is, of course, possible that even if you do not pay the amount demanded, your former business partner would decide not to pursue the lawsuit--in other words, it could be a bluff. However, if you call the bluff and ignore the letter, and your former business partner sues you, it could become a much more expensive problem for you. I would therefore strongly recommend that you retain an attorney to advise you and respond to the letter.