In Mexico Articles 273 to 308 of the Commercial Code (Código de Comercio “(CC”)), enacted in 1889, set out the rules governing commercial agency agreements (contratos de comisión mercantil). These rules are quite flexible.
Under Mexican law, an agency agreement is considered to be a contract, involving a mandate or power of attorney, to carry out specific business transactions. The principal is known as a “comitente” and the agent as a “comisionista”.
The Commercial Code gives the parties a wide discretion to agree on the terms of the commission. However, there are certain mandatory provisions protecting each of the principal and the agent, respectively.
Under Mexican law, there are no specific statutory provisions applicable to termination. Subject to the payment of the agent’s services, the principal may effect termination at any time.
Furthermore, the parties are free to agree on the causes and implications of the termination. Breach of the agent’s contractual obligations is contemplated within the statute as grounds for the principal to sue for loss and damages (nothing prevents the agent from doing the same in the opposite scenario under the Federal Civil Code).
Choice of Law and Jurisdiction
The Commercial Code is a federal statute and thus, state law is not relevant. The parties may submit to the jurisdiction of (i) the domicile of either party, (ii) the place of rendering or payment of the services, or (iii) the location of the items which are the object of the contract.
The agent has to perform his duty alone and may not delegate his responsibilities without the principal’s authorisation. The agent may hire employees for the performance of the agreement at his sole responsibility.
When the agent executes an agreement expressly on behalf of his principal, the principal will be directly obligated by this agreement (Article 285 of the CC).
In order to minimize the risk that an individual may successfully claim that he is an employee (and not an agent) of the principal, detailed drafting of the contract may be required.
1) Is it possible to have a restraint of trade clause operating during the agency agreement and, if so, is it subject to any qualifications?
The Commercial Code is silent on this issue. However, restrictions of this nature are governed by statutes such as the Federal Law on Economic Competition (Ley Federal de Competencia Económica) (the “LFC”). Under the LFC a restraint of trade (“non-compete” clause) may be considered as a vertical restraint in certain cases. Mexico’s competition agency, the Federal Competition Commission (Comisión Federal de Competencia) (“FCC”), has issued guidelines applicable to non-compete clauses.
2) Is it possible to have a restraint of trade clause operating following the termination or expiry of the agency agreement and, if so, is it subject to any qualifications?
While it is possible to include a post-termination restraint of trade clause on the agent, the FCC guidelines include restrictions on such clauses.
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