Overcome Collection Challenges: How South American Exporters Can Enforce Payment Agreements with U.S. Buyers

As a South American exporter, selling your products to U.S. buyers can open doors to incredible business opportunities. But what happens when a buyer doesn’t honor their payment agreement? Whether it’s delayed payments or a complete refusal to pay, it can feel overwhelming to navigate international disputes. 

At Ayala Law, we understand the unique challenges of cross-border trade, and we’re here to guide you through the steps to protect your business and enforce payment agreements in the U.S. 

Can a South American Exporter Sue a U.S. Buyer for Nonpayment? 

Yes, you absolutely can. The first step to enforcing payment is understanding that U.S. courts recognize international contracts. If a buyer in the U.S. fails to pay, you have the right to take legal action. However, where and how you pursue that action depends on your contract and the specific circumstances of your case. 

What Legal Protections Do South American Exporters Have in the U.S.? 

1. Enforceable Contracts: If you have a written contract, especially one that includes clear payment terms and a jurisdiction clause (more on this below), U.S. courts are likely to uphold it. Even if you only have an email exchange or invoice, this may qualify as a binding agreement under U.S. law.
2. The United Nations Convention on Contracts for the International Sale of Goods (CISG): Both the U.S. and many South American countries are signatories to the CISG, which provides a framework for resolving international sales disputes. If your contract doesn’t specify governing law, the CISG may automatically apply.
3. Fraud and Breach of Contract Laws: U.S. law protects against fraudulent business practices and breach of contract, giving you avenues to recover your losses if a buyer fails to pay.

What Steps Should Exporters Take Before Filing a Lawsuit? 

Taking proactive steps before escalating to litigation can save time and money. 

1. Review Your Contract Terms: Check your agreement for a jurisdiction or choice-of-law clause. These specify where disputes must be resolved and which country’s laws apply. For example, your contract might state that disputes must be resolved in Florida courts under U.S. law.
2. Send a Demand Letter: A formal demand letter is often enough to compel payment. This letter should outline:

• The amount owed 

• The terms of the agreement 

• A deadline for payment  

Our experienced attorneys can draft a professional demand letter to show the buyer you mean business. 

Filing a Lawsuit Against a U.S. Buyer 

If the buyer still refuses to pay, filing a lawsuit may be your best option. Here’s how the process works: 

1. Determine Jurisdiction: Your contract should specify the jurisdiction for legal disputes. If it doesn’t, you may need to file the lawsuit in the buyer’s home state or in the state where the transaction occurred.
2. Hire an Attorney Experienced in International Business Law: An attorney familiar with cross-border trade disputes can navigate the complexities of international law and ensure you meet all legal requirements.
3. Elements of a Breach of Contract Lawsuit: In your lawsuit, you’ll need to prove that:

• A valid agreement existed. 

• The buyer failed to uphold their payment obligations. 

• You suffered financial harm as a result. 

4. Stay Organized: When dealing with international sales or service agreements, there are often times hundreds, if not thousands, of pages of documents relating to the business relationship. Before the lawsuit, and while the lawsuit is ongoing, it is important to keep these documents or communication records organized for both your records and those of your attorney. This can help minimize confusion and expedite the litigation process.
5. Collect on the Judgment: Assuming the court rules in your favor, congratulations! However, you will still need to collect on your judgment. Sometimes, the parties simply come to an agreement post-judgmentas to how payment will be made, however in other instances, often times with less established parties, you will need to go through formal collection procedured. You can enforce the judgment through methods like garnishing the buyer’s bank accounts or placing liens on their property.

How Can Exporters Avoid Payment Disputes in the Future? 

Preventing disputes is always better than resolving them. Here are steps you can take to protect your business: 

1. Use Detailed Contracts: Include clear payment terms, delivery schedules, and jurisdiction clauses in every agreement.
2. Require Advance Payments or Letters of Credit: These payment methods provide greater security and reduce the risk of nonpayment.
3. Work with Reliable Buyers: Conduct due diligence to verify the buyer’s reputation and financial stability before entering into an agreement.
4. Consult an Attorney Before Finalizing Agreements: Our experienced attorneys can review your contracts and advise you on the best ways to protect your interests.

We Can Help 

At Ayala Law, we are experienced in assisting South American exporters enforce payment agreements and protect their businesses in the U.S. Our team has deep experience in international business law and cross-border disputes, ensuring that you have the best possible representation. 

If you need help drafting contracts, recovering payments, or resolving disputes, contact one of our experienced attorneys at 305-570-2208. You can also email our lead attorney Eduardo directly at eduardo@ayalalawpa.com.   

We at Ayala Law PA are passionate about helping those in legal need, so please don’t hesitate to schedule a case evaluation with us online here.  

[The opinions in this blog are not intended to be legal advice. You should consult with an attorney about the particulars of your case].