1. What is the best way of securing payment when selling goods into Mexico on open account credit terms, without a formal written contract?

Although a written agreement is not necessary in Mexico to consider a commercial transaction or a related contract as valid and enforceable in court, documentary evidence IS going to help you bring a stronger case upon collection, and maybe even relieve you from having to bring witnesses into trial, which makes for shorter proceedings.

That is why we have to avail our sale of goods with a formal written contract, or at least try to support every detail about our transaction with the use of relevant documents; details such as: 1) the debtor's identity; 2) terms of sale; and 3) fulfillment of the parties' obligations. Such conditions can be achieved by implementing the following:

· Credit application. This represents the most essential document to support our claim. It will be important to include -among other things- terms of sale, considering CISG as well as Mexican law (in some cases); and debtor's identity, including authorized personnel to make purchase orders, and personal guarantees by key shareholders. An original signed copy of such application must be requested at some point during the initial stages of the transaction.

· Purchase orders (PO's). Equally important is to have documents that prove that certain goods where requested (thoroughly specified), that buyer promised to pay on certain terms, and to received such goods on a specific location. Such PO's are only to be considered if submitted and signed by appropriate personnel (as authorized in the credit application), and must be requested by fax or mail. (The carrier can also help request the original signed PO).

· Receipt of goods sold. This requirement is fulfilled by handling and requesting a proper bill of lading by the carrier. It is important to instruct the carrier to specify the date of delivery, and to obtain the full name of the person receiving the goods, besides his signature. If there is no carrier in the picture because buyer is taking care of freight or transportation, a receipt for such goods must still be considered.

· Promissory notes. It is a good idea to have debtors sign promissory notes (pagarés) for past due accounts. This helps by limiting defensive arguments and excuses a debtor may have in responding to a claim in court. This also enables a creditor to obtain an immediate writ of attachment upon filing his complaint. (Please contact us and request the free brochure "Simple Steps to Drawing Up a Pagaré that will be Enforceable in Mexico". It includes an example form).

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