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A NOTICE and demand look fairly ordinary at first glance and sometimes they are treated as if they are synonymous. Yet they are not because a notice is frequently used to make a demand though it is also used in many other situations. 

In law, a demand has greater significance in establishing a right and as the starting point of an action and litigation. Where an obligation is provided for as arising from a demand being made, then a demand is an indispensable prerequisite before proceeding any further. 

If in such a scenario a demand is not made, the primary obligation does not come into existence and the party claiming will find that proceedings, if they have been instituted, are premature and cannot be sustained. Such proceedings are likely to be stayed or struck out and in many cases a fresh action may be instituted. 

In reality a creditor makes not one but many demands before reaching the stage where proceedings are eventually instituted even when demand is unnecessary. Readers may therefore find it difficult to imagine a single situation where a demand is not made but where it is a prerequisite. 

Yet it is not unknown that many financial battles are fought and lost because a demand is not made or, if made, is not done properly.  

One area where the subject often comes up for deliberation is guarantees where one finds provisions that the guarantors for the loan facility are to pay “on demand all money which now is or may during the continuance of the agreement be owing to the creditor from the customers”. Such a clause would require the sum guaranteed or any balance to be paid with interest from the date of demand. It will therefore be seen that the “demand” aspect plays a crucial role. 

In a local case where the customer of a bank defaulted on overdraft facilities and there were four guarantors, a demand letter was sent which read: “Please take note that unless the total sum plus interest stated above is fully paid within seven days from the date hereof legal proceedings will be instituted against you and your guarantors without further reference to you or to your guarantors”. 

It was contended by the guarantors and not disputed by the bank that the guarantors only received carbon copies of this notice of demand which was actually addressed to the customer. It was therefore contended that there was at that stage no liability on the part of the guarantors who had not received any demand.  

As the bank’s claim against the guarantors had been allowed by the High Court the matter was taken on appeal to the Supreme Court where the main issue was whether the notice sent by the plaintiff bank was a proper demand.  

In accepting the contention of the guarantors and allowing their appeal the Supreme Court was of the view that the demand was made only on the first defendant, the customer, and not on any of the six guarantors including the appellants. The then Lord President Salleh Abbas went on to say that: “In our opinion the law is very clear on this point. The respondent as creditor must prove a real demand by sending actual notice of demand to the respective guarantors. Sending a carbon copy of it as in this case is not enough.” 

His Lordship also referred to another unreported case where copies of a demand to the borrower were sent to the guarantors just like in the case discussed above but the words “This is a demand upon you” were written against the names of the guarantors appearing at the bottom of the notice. 

It would appear that based on the remarks made in the Supreme Court that it would not have been sufficient either to comply with the requirements of the notice.  

It would also appear that since bank guarantees invariably specify that the liability of the guarantor is to pay on demand the words make the demand a condition.  

What then are the options for a creditor plaintiff? The answer is simply that one should be familiar with the obligations including the obligation to make a demand stipulated. This goes back to a point that agreements are documents which govern our actions and are not merely “formal documents” just for the record. 

The other option would be to change the obligations. However, this will require forethought and need to be done at the outset. But a stronger party always is in a better position to provide for this to be so. 

It will also be apparent from this discussion that a demand is a step in the proceedings which is provided for as a prerequisite to further action. On the other hand a notice is merely an aspect involving informing the specific person.  

In some cases providing information may have an important place in a contractual relationship. Sometimes it is the provision of such information which is a trigger for other steps to be taken. Then it may have other implications.

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