The CCN Mexico Report™ is now available in audio format. Listen to the podcast and follow us on Spotify or wherever you get your podcasts.
The use of computer programs or software in business operations has become indispensible, thus making compliance withsoftware agreements necessary, including the necessity of strict compliance with most applicable Mexican laws andregulations governing this area. The improper use of software in Mexico is sanctioned by various provisions of the FederalCopyright Law (Ley Federal del Derecho de Autor), Federal Criminal Code (Código Penal) and international copyrighttreaties to which Mexico is a party, all of which protect the owners of software programs concerning the unauthorized useor reproduction of such intellectual property. The Mexican government and owners of valuable copyrights have been veryactive in the defense of this class of intellectual property rights, which has led many companies to receive visits seeking toverify proper use of licensed software. Penalties that may be incurred for improper use of software may be of a financialnature and, on occasion, imprisonment, along with damages and losses that may be claimed in high amounts, depending onthe alleged infraction committed. For all these reasons, it is very important to maintain current all software use licenses andensure that personnel working within a company refrain from installing unauthorized computer programs, since theinstallation of such software could cause serious legal repercussions to the business or owner of the equipment.
The government of Mexico’s Federal District announced a modernization program for the Public Registry of Property thatwill last through the year 2011, after investing 92 million pesos on top of the approximately 200 million pesos investedsince the year 2008. The program has three main objectives: i) digitalizing the registry; ii) reducing response time; and iii)implementing security measures. All of these measures are being taken in order to achieve a level ISO-9000 qualitycertification. The digitalization project contemplates the creation of electronic records (folios) consisting of digital imagesgenerated from existing transactions and all documents recorded in books, as well as all new registrations that will takeplace once the system has been completely implemented. Eventually, the electronic record will completely replace the useof paper and will generate a database that is much easier to access and maintain, giving the system higher integrity andcertainty for property owners or interested parties. An immediate consequence of the digitalization project will be thereduction in time for carrying out transmittals and obtaining responses. Applicants will be able to not only file documentselectronically, but will also be able to follow up on such filings from remote locations without actually appearing personallyat the Public Registry of Property to follow up on such responses. It also opens the possibility of consulting electronicrecords and applications of remote registries. Finally, with respect to security, these electronic security requirements will beimplemented for officers who have access to the registration system including the use of a third party security monitoringservice to review and report activity and transmittals carried out at the registry. One should note that the program refersexclusively to the real property section of the Public Registry of Property, and forms part of efforts that the government ofthe Federal District has undertaken since the year 2000 to improve the operation and services of the registry, including anadministrative restructuring, decrease in transmittal times, prevention and combating of corruption and technologicalmodernization effort. The modernization effort is not exclusive to the Federal District, as similar efforts have beenundertaken in the states of Morelos, Veracruz, State of Mexico, Baja California, Coahuila, Colima, Quintana Roo andJalisco, among others. While the program is a necessary part of improving this vitally important area of service to thecountry, it will likely not resolve other issues that have presented themselves over the years, as in the case of whenregistration documents and books are lost, thus necessitating property owners to replace their property ownershipinformation with the Public Registry of Property.
On January 22nd , reforms to Mexico’s Civil Code for the Federal District (Código Civil para el Distrito Federal or CCDF)were published in the Official Journal of the Federation adopting the theory of unforeseen events in agreements that aresubject to time, condition or compliance within a certain time. The reform entered into force on the day following itspublication. The reform assumes that the parties in these types of commercial contracts will be willing, if necessary, toamend a previously signed and finalized agreement if extraordinary events, of a national character, which are impossible toforesee and which make the obligations of one of the parties more onerous under the contract (article 1796 of the CCDF). Inthis case, the affected party has the right to request a reformation of the contract before a judge and the other party, so longas such request is made within thirty days following the occurrence of the alleged extraordinary events, explaining in suchapplication the facts of the matter. An important characteristic is that exercising the action does not suspend the parties’obligation under the contract. Upon giving notice of the alleged unforeseen event, the parties will have thirty calendar daysto reach an agreement and, if unable to do so, the defendant may accept the determination made by the judge if theconsequences are valid and thus determine new conditions of the contract, or, conversely, terminate the contract (article1796 Bis of the CCDF). It is also important to note that in modifying contractual obligations, if such occurs, does not applyto obligations that apply to the time prior to the contractual modification and this action may not be invoked against thosewho are late in complying with the contract, or acting in bad faith (article 1796 Bis. of the CCDF). As one may observe, theprocedure and form adopted by the legislature opens many lines of debate, as well as a substantial window for initiatinglitigation in the future interpretation of contracts governed by the Civil Code of the Federal District or subject to civil law ingeneral. It is important to note that the Civil Codes of the states of Jalisco, Morelos, Coahuila, Chihuahua and the state ofMexico already provide for the theory of unforeseen events, which requires parties to be careful in drafting and enteringinto contracts governed by the state laws of such states, and now including Mexico’s Federal District.
Recently, Mexico’s Supreme Court of Justice (Suprema Corte de Justicia de la Nación or SCJN) published in the JudicialWeekly of the Federation case decision Number VI.2o.C.J/315 entitled “Endorsements. Requirements when made by alegal entity.” In such case, the SCJN held that when a legal entity (such as a corporation) endorses a negotiable instrument,said endorsement must contain the entity’s name, as well as the nature of the legal authority of its individual representativewho signs the endorsement. The foregoing, according to Mexico’s highest court, is designed to allow the signatory to beidentified, even if the signature itself is illegible. The SCJN in this case, notwithstanding the clear policy goal thatnegotiable instruments be freely transferable in circulation in order to facilitate commercial transaction without necessarilyhaving to prove the authenticity of signatures or identification, which would give security and solidity to the transfer ofsuch negotiable instruments and facilitate their circulation. This would in no way imply that when the final endorsing partyis a legal entity, that such endorsement does not need to meet the above requirements which must not cause uncertainty orrestrict the circulation of such documents; on the contrary, the requirements provide security to those responsible for payingthat the party presenting the negotiable instrument for payment is the duly authorized representative of the entity holdingsuch document.
