In a July 24, 2008 post, Mexico Law Blog questioned the viability of the ambitious 6,000-unit Loreto Bay tourist development project called Loreto Bay, located on around 8,000 acres adjacent to the hamlet of Loreto on the east coast of the Baja peninsula.  Although the project, particularly its goal of self-sustainability, is impressive, its timing is unfortunate.

The San Diego Times has reported that the project developer, TSD Loreto Partners, S. En C. por A. (”TSD“), has sold fewer than 800 units and suspended construction and operations.  The report also said that Fonatur, Mexico’s tourism development agency, was asking for “custody” of the project so that it could reopen a golf course and a hotel while TSD searches for a buyer.  The principal lender for the project is Citigroup Property Investors.  Whether TSD has breached its loan covenants is unknown, but highly probable. 

StarkSilverCreek.com reports that TSD is subject to a lawsuit in Arizona, in which Baja Developments, LLC, a New York limited liability company, alleges breach by TSD of a services agreement and seeks damages in excess of $7,000,000.  According to a detailed article about the Loreto Bay project in the Phoenix Business Journal, Baja Developments, LLC was a company formed by The Trust For Sustainable Development (note the “TSD” initials), a Canadian non-profit, federally chartered land and community development corporation, that arranged financing for the Loreto Bay project.

The U.S. Commercial Service in Guadalajara, Mexico has issued a report discussing opportunities for foreign companies in Mexico’s agribusiness industry.  A copy of the report is available here.

The report says that there are opportunities for foreign companies seeking to sell products and services in the following areas of Mexico’s agriculture sector:

• harvesting sysems, used and OEM machinery
• consultancy on integration of agriculture with agribusiness
• sustainable production models to reduce pollution sources in soil, air and water
• biotechnology
• transformation and distribution systems
• packaging technologies
• infrastructure for slaughterhouses (waste water plants, cold chain, cut)
• irrigation systems
• organic fertilizers
• agrochemicals
• dairy processing equipment (dryers, pasteurizers, cold chain)

Volume 17, Number 2 of The California International Law Journal (available here) contains three articles on Mexico as follows:

1. “The Legal Implications of Nearshore Outsourcing to Mexico”, by Renee Dopplick;
2. “Going Verde – Renewable Energy in Mexico”, by J. Anthony Griolami; and
3. “Importance of Understanding Mexican Culture When Doing Business in Mexico”, by Lizbeth H. Flores.

I recently wrote a very short article for a newsletter published by the Greater Hispanic Chamber of Commerce of Austin, Texas discussing a few of the key issues businesses should consider when contracting with sales representatives and distributors in foreign markets.  An excerpt from the article is below:

Many businesses successfully expand their international sales of goods and services by contracting with sales representatives or distributors in foreign markets. These arrangements involve special considerations.

Know Your Partner.  Before drafting any contract, research and investigate prospective foreign business partners’ expertise and financial capability to perform the duties under the contract. Is the prospective business partner a good citizen? A thorough inquiry enables many companies to avoid disastrous international business relationships.

Be Specific.  The contract should clearly specify the duties to be performed by the sales representative or distributor as well as the rights and obligations of both parties. For example, it should include comprehensive provisions regarding protection of intellectual property, confidentiality, purchase orders, manner and method of payment for goods or services (e.g., letters of credit), shipping and risk of loss of goods, compliance with local laws, warranties and disclaimers of warranties, management of customer warranty claims, breach of contract and remedies for breach, termination, dispute resolution, governing law, and other provisions.

Understand Your Remedies.  If a business partner is located in a foreign jurisdiction, enforcement of contractual rights and guaranties may be limited by law, expense, time, or other factors. The only practical remedy in certain situations may be to terminate the contract. 

 

The U.S. Commercial Service in Mexico City has released a market research report on the Mexican apparel industry, a copy of which is available here. 

The report discusses market size and demand drivers, Mexican apparel manufacturing companies, market prospects, barriers to entry, trade events, and provides other useful apparel industry information.