Is a demand letter legally binding in Ontario?

A demand letter on its own is not legally binding. It is a notice that communicates your position and what you want the other party to do. It does not create a court order, and the recipient is not legally obligated by the letter alone to pay or take any action.

What the letter does is put the other party on formal notice. If the dispute ends up in court, the judge will want to see that you communicated your claim clearly before suing. A demand letter establishes that the other party knew about your position, which can matter when the court awards costs or assesses bad faith.

If the receiving party responds to your demand letter by agreeing in writing to pay a certain amount or take specific action, that written agreement can itself become binding if it meets the requirements for a contract or settlement. You should have a lawyer review any proposed settlement before you accept or sign anything. The letter is the starting point; a court judgment or signed settlement agreement is what gives your resolution legal teeth in Ontario.