Short answer
To collect from a distributor, start with the distribution contract and the guarantees it signed when its credit line was opened: pagarés, guarantors (avales) or bonds. With a matured pagaré, the executory commercial lawsuit is generally available, with attachment from the outset (Commerce Code arts. 1391 section IV and 1392). If there is a risk the distributor will hide assets, retention of assets can be requested (art. 1168). Before suing, a formal demand and a written settlement may resolve the account.
What we review in each account
- Distribution contract or credit application: limit, term, interest, jurisdiction and termination grounds.
- Pagarés, guarantors and bonds: requirements, maturity and limitation period (three years for a pagaré, LGTOC art. 165).
- Invoices, purchase orders and signed delivery receipts.
- Correspondence in which the distributor acknowledges the balance.
- Merchandise on consignment or under retention of title.
- Known assets of the distributor and its guarantors.
Prevention: what your contract should include
Guarantees
A pagaré meeting all requirements, a guarantor and, where appropriate, a bond or collateral.
Suspension
The right to suspend deliveries and credit lines for non-payment.
Jurisdiction
Courts of Guadalajara or Zapopan agreed expressly (Commerce Code art. 1093).
Termination
Grounds, notice and return of inventory and branded materials.
Typical situation
Distributor network with past-due accounts
A manufacturer has distributors in several states; some are building up balances and others have closed. Accounts are classified by guarantee and status, settlements are negotiated with those still operating and those who do not respond are sued.
The scenarios on this page are typical situations that illustrate how we work. They do not describe real clients or results.
Frequently asked questions
How do you collect from a distributor that does not pay?
We review the distribution contract or credit application, the pagarés or guarantees signed, the invoices and the delivery receipts. With that we decide whether to negotiate a settlement, sue in executory proceedings on the pagaré or in oral or ordinary proceedings on the invoices, and whether to request retention of assets.
Should we stop deliveries?
It depends on the contract. If it allows suspending deliveries for non-payment, doing so in writing and on time protects the company. If it does not, review it before acting.
What happens to consignment inventory?
If there is merchandise on consignment or under retention of title, the contract defines how to recover it. It is one of the first points we review.
How long do we have to sue on a pagaré?
As a rule, the direct action on a pagaré prescribes three years after its maturity date (LGTOC art. 165). Do not let that period run while negotiating.
Related: enforcing a pagaré · distribution contracts · precautionary attachment · customer in concurso mercantil · all guides · versión en español