Clickwrap agreements and other web-based and non-web-based agreements that incorporate external terms by reference into the body of a contract are routinely enforceable in the U.S. In Mexico, however, restrictions on freedom of contracting contained in the Federal Civil Code may make certain provisions of these contracts unenforceable when they are governed by Mexican law.
The following is a summary of the permitted and non-permitted uses of incorporation by reference under Mexican law based on my discussions with Mexican attorneys. Also included is a translation of the relevant Mexican statutes on which the summary is based.
1. What Types of Incorporation by Reference Are Permitted Under Mexican Law?
Under Mexican law, the parties to a contract may agree to incorporate terms into the body of the contract by reference to:
(a) an existing external document (such as an “Exhibit A” to the contract that is attached to the contract in full); and/or
(b) a non-existing external document that will come into existence upon the execution by both parties to the contract of a future agreement.
2. What Types of Incorporation by Reference Are Not Permitted Under Mexican Law?
Under Mexican law, a provision of a contract that incorporates an external document by reference and allows one party to unilaterally modify a material term of the external document may not be enforceable. Mexican law does not specify which terms are material terms that are not permitted to be modified unilaterally by a party and which terms are non-material terms that are permitted to be modified unilaterally by a party. However, the more likely it is that a term could be viewed as material to the transaction, the more likely that unilateral modification would not be permitted and that the resulting modification would be unenforceable under Mexican law.
In a sale of goods transaction, these material terms might include warranties, delivery terms, price terms, and other similar terms. For example, a contractual provision that allows a party to unilaterally modify its terms and conditions of sale by update to such party’s website may not be enforceable.
Given that there is no bright line rule on this subject under Mexican law, when a contract is governed by Mexican law, it is probably prudent to include all contractual provisions within the body of the contract and its exhibits (notwithstanding the inconvenience of doing so) and to avoid any incorporation by reference in the style described in this section 2. When feasible, the preferred approach is to have the contract governed by the laws of a U.S. state where there is less or no doubt as to the contract’s enforceability.
3. What Mexican Laws Govern the Principle of Incorporation by Reference?
The discussion in sections 1 and 2 above is based on the following provisions of Mexican codified laws:
(a) Freedom of Contract Principles:
(i) Article 78 of the Mexican Commerce Code: “In commercial contracts each party is bound in the manner and to the terms terms that it is evident that such person wished to be bound to. The validity of the commercial act idoes not require the observance of any formalities or requirements.”
(ii) Article 1832 of the Mexican Federal Civil Code: “In civil contracts each party is bound by the terms and conditions with which it has agreed, and the validity of the contract does not require any formality other than those expressly required by law.”
(b) Limits on Freedom of Contract Principles:
(i) Article 1797 of the Mexican Federal Civil Code: “The validity and performance of contracts cannot be vested in one of the contracting parties.”