How to Use Demand Letters to Recover Payments from U.S. Buyers When They Breach a Contract

If you’re a business, especially a foreign company, dealing with a U.S. buyer who has breached a contract and failed to pay, you’re not alone. It’s a common issue, and understandably frustrating. The good news is that you don’t always have to go straight to court to seek payment. One of the most effective first steps is sending a formal demand letter.

In this blog post, we’ll explain how demand letters work, why they’re important in U.S. business disputes, and how you can use one to recover what you’re owed—without jumping immediately into a lawsuit.

What Is a Demand Letter in a Contract Dispute?

A demand letter is a written notice sent by one party (typically through a lawyer) to another party demanding performance of an obligation under a contract, usually payment. It outlines the breach, the amount owed, and gives the recipient a deadline to comply before further legal action is taken.

For international and domestic businesses, demand letters are a powerful tool to encourage resolution while preserving a professional tone. In the U.S. legal system, they’re also seen as a reasonable first step before litigation, often required to show that you tried to resolve the matter informally.

When Should You Send a Demand Letter to a U.S. Buyer?

If you’ve delivered goods or services and haven’t been paid, or the buyer otherwise breached your agreement, a demand letter can be sent as soon as it’s clear the buyer is not performing according to the contract.

Common scenarios include:

• Unpaid invoices after delivery
• Refusal to accept goods after a purchase order
• Canceling a contract without cause
• Breach of exclusivity or licensing terms

Even if the buyer gives you excuses or promises to pay later, it’s often smart to set a firm deadline in writing. That’s where a demand letter comes in.

What Should Be Included in a Demand Letter for Breach of Contract?

To be effective, and to potentially hold up in future litigation, your demand letter should include:

1. The Parties: Clearly identify both your business and the buyer.
2. The Contract: Reference the agreement or purchase order that was breached.
3. Details of the Breach: Be specific. What exactly did the buyer fail to do?
4. Amount Owed: Include a clear breakdown of the money or performance due.
5. Deadline for Payment: Give a firm deadline, typically 7–14 days.
6. Notice of Legal Action: Explain that failure to comply may result in legal action.

Having the letter drafted and sent by an attorney adds seriousness to the demand, and signals that you’re prepared to escalate if needed.

Is a Demand Letter Legally Required Before Suing in the U.S.?

In many cases, no, but it’s highly recommended.

Some U.S. jurisdictions or specific types of contracts may require that you send a demand before filing a lawsuit or seeking attorneys’ fees. Even where it’s not mandatory, judges often look favorably on parties who try to resolve disputes before resorting to litigation.

Plus, it increases your chances of recovering payment quickly, without the cost and time of going to court.

How Effective Are Demand Letters in Business Disputes?

Very. In our experience, a well-written demand letter can:

• Prompt immediate payment or settlement
• Open the door for negotiation
• Establish a record that the buyer was given notice
• Strengthen your position in court if the case proceeds

U.S. buyers who realize they’re exposed to legal liability, or who want to avoid a judgment on their record, often act fast once they receive a lawyer’s letter.

Can a Foreign Company Send a Demand Letter to a U.S. Buyer?

Yes, and you absolutely should if you’re owed money.

At our firm, we frequently represent international clients with disputes involving U.S.-based companies. Whether you’re based in Latin America, Europe, or Asia, we can draft and send a formal demand on your behalf and help you navigate any legal proceedings that may follow in the U.S.

What Happens After a Demand Letter Is Sent?

After your demand letter is delivered, you may receive:

• Payment in full
• A settlement offer
• A denial or refusal to pay
• Silence

If the other party ignores the letter or refuses to pay, it may be time to pursue formal legal action. In many cases, the demand letter helps you enter that next phase with a stronger foundation and clear paper trail.

Why Work With a Law Firm to Send a Demand Letter?

It’s possible to send a demand letter yourself, but when the amount at stake is significant, or if you’re dealing with a U.S. buyer from outside the country, it’s much more effective to work with a business litigation attorney.

At Ayala Law, our attorneys:

• Review your contracts and documentation
• Draft demand letters that are clear, firm, and legally sound
• Contact the buyer professionally and directly
• Provide legal follow-up if the matter escalates

Whether you’re seeking to recover unpaid invoices, enforce contract terms, or protect your rights as a seller or service provider, our team has experience representing clients on both sides of international commercial disputes.

Final Thoughts: Start With a Demand Letter Before You Sue

A demand letter is a smart, cost-effective first step to recover payment from a U.S. buyer who has breached a contract. It shows you’re serious, puts the other party on notice, and often resolves the matter without a drawn-out legal fight.

But not all demand letters are equal. The tone, structure, and legal strategy behind your letter can make the difference between getting paid, or being ignored.

If you’re a business owner or legal representative seeking to recover payment from a U.S.-based buyer, contact one of our experienced business attorneys in Miami at 305-570-2208.

You can also contact trial attorney Eduardo A. Maura at eduardo@ayalalawpa.com.

Schedule a case evaluation online here.