Settlement Demand Letter | Offer to Settle

A settlement demand letter is a letter in which the writer expresses their willingness to settle a case out of court and offers a settlement. You might write a settlement demand letter if you have received a claimant’s demand letter and wish to respond with a settlement counteroffer. This letter is a written response to the demand letter and an offer to settle for a different amount than the claimant requested.

In this article, we discuss offering a settlement and what to include in your letter. We provide a format you can use for your letter and a sample letter for you to read.

Why Offer a Settlement?

Settling a case out of court can save you money, time, and stress. Because a court case can be long-term and expensive, you might decide to settle even if you disagree with the claimant’s version of the incident that caused their loss. A settlement demand letter allows you to express your disagreement and offer a lower settlement amount.

Note: You might decide to settle out of court because you are not required to admit guilt to offer a settlement. You can deny responsibility for the incident and still offer to settle. Offering to settle might be preferable to a court case in which a jury determines your guilt or innocence.

A Guide to Write a Settlement Demand Letter

  • Understand and Summarize the Claim. The first step in writing a settlement demand letter is to understand the claimant’s version of the incident clearly. Take the time to carefully examine their claim and the evidence they present, along with their monetary demand. Use the first paragraph of your letter to acknowledge the claimant’s letter and to summarize their claim.
  • Dispute the Claim. You probably disagree with the claimant’s version of the incident that caused their loss. In the body of your letter, dispute the claim and offer your perspective of the incident. Backup your viewpoint with evidence, such as a police report. Enclose a copy of any evidence you discuss in your letter.
  • Discuss the Terms of Your Offer. Clearly outline the terms of your settlement offer. Often settlements require confidentiality agreements and a stipulation that both parties will release any legal claims arising from the incident. Include a time frame for the claimant to accept the offer. Be sure to include the date the offer expires in your letter.
  • Offer a Reasonable Settlement. When a claimant sends a demand letter, they ask for a larger amount of money than they expect to receive. Their demand letter opens negotiation. Your settlement demand letter continues that negotiation. Offer a smaller amount than the claimant demands but large enough to tempt the claimant to settle out of court.

Settlement Demand Letter Format

{your name}

{your address}


{recipient name}

{recipient address}

Dear {recipient name}:

I received your letter, dated {date of claimant’s letter}, in which you {summarize the claimant’s claim here}.

{Dispute the claim here and discuss what you disagree with. Mention any documents you are enclosing.}

{Outline any terms that apply to your offer. Make your settlement offer, including the date the offer expires.}


{your signature}

{your name}


Sample Settlement Demand Letter

Lindsay Moyers

3008 South Hickory

Broken Arrow, OK 74011

February 20, 2030

Matthew Davis

3006 South Hickory

Broken Arrow, OK 74011

Dear Matthew Davis,

I have received your letter dated February 10, 2030. You state that a tree located on my property fell on your car when it was parked in your driveway on February 6, 2030, and you ask for $2,300.00 for the car’s repair.

Although the tree did fall on your car, I do not accept responsibility for the damage. Insurance covers this type of situation, and your car insurance will pay for your car’s repair.

As a gesture of neighborly goodwill, I formally offer to pay $500.00, the cost of your car insurance deductible.

To accept this offer, please send a written response to this letter by March 20, 2030.


Lindsay Moyers

Settlement Demand Letter(Word Template)

Settlement Demand Letter(Word Template)


There are many reasons you might want to settle a case out of court. If you receive a claimant’s demand letter, you can write a settlement demand letter, including a settlement counteroffer. This letter indicates you are willing to settle, although you may not be responsible for the incident. Offer a smaller settlement amount than the claimant requests, but make the settlement tempting. Be sure to include the settlement offer’s terms in your letter.

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