Report No. 63

6.6. Notice of demand preferred as the criterion for fixing starting point.-

We have examined all aspects of the matter, and, in particular, the question whether the cause of action should be substituted, as in England, as the starting point1. After careful consideration, we have come to the conclusion that except in the case of a debt payable by virtue of a written instrument at a certain time, it is the notice of written demand of interest which should be crucial, as at present.

Where a definite date is not fixed in writing2 for the payment of a sum, justice requires that a person who has failed to perform a monetary obligation (whether in debt or in damages) should, in cases falling under section 1, main paragraph, be given notice, by the creditor or person entitled to damages, of the intention to claim interest, so that the person liable may stop the negotiations which he might have undertaken or examination of the facts of the case or legal consultation, and pay the principal amount, if he so chooses. The notice of demand serves two purposes, namely,

(a) re-asserting the claim for the principal, and

(b) notifying the desire of the claimant for interest.

Moreover, there is a practical advantage in giving a notice of demand. It avoids disputes as to the date of breach of contract or date of commission of tort, where the claim for the principal amount is relatable to breach of contract or tort. The notice seeks to identify a particular point of time, for these events. In cases where the cause of action is based on any omission or failure rather than on a positive act, this aspect becomes of particular importance, because it is often difficult to locate the point of time of the omission or failure. There is, thus, obvious convenience in having a definite date.

1. Para. 6.4, supra.

2. The requirement of writing merely adds to the certainty of the date of payment.