MEXICO Law and Practice Contributed by: Roberto Cannizzo, Carlo Cannizzo, Stefano Amato and Mauricio Moreno-Rey, Cannizzo
be made to the security deposit. Though some - what uncommon, landlords accept other forms of security, such as letters of credit. Addition - ally, bond policies ( fianzas ) issued by specialised bonding institutions are commonly accepted as a way to guarantee due performance by a tenant of its obligations under the lease. 7. Construction 7.1 Common Structures Used to Price Construction Projects The most common structures used in Mexico to price construction projects are: • unit-price construction agreements; • lump-sum construction agreements; and • refundable costs construction agreements. Unit-Price Construction Agreements Under the unit-price construction agreement, the parties agree on a price per construction unit and the total value of the contract will be the sum of the units multiplied by the value of each unit. Each unit must include a value that represents the value of the contractor’s remuneration. Lump-Sum Construction Agreements Under the lump-sum construction agreement, the contractor provides the fixed price of the work, regardless of the effective costs of the work it incurs during execution of the project. Usually, the cost is higher than in other con - struction contracts, since the contractor tends to have a margin in case of cost variations for material, equipment and subcontractors. Refundable Costs Construction Agreements Under the refundable costs construction agree - ment, the price that the contractor receives will
be that resulting from the expenses assumed in the execution of the project plus a profit. Mexican construction contracts commonly include a “change clause” that allows the owner to modify the work to be performed and, as a consequence, the price also changes. 7.2 Assigning Responsibility for the Design and Construction of a Project In Mexico, different methods are used to assign responsibility for the design and construction of a project. If the contractor developed the design and engineering of the project, they are respon - sible for the correct construction of the project and for any defect, error, failure or malfunction. Therefore, the contractor is required to guaran - tee all the construction work and activities per - formed thereunder against defects (including hidden defects), malfunctions, deficiencies and damage of any kind, including (but not limited to) structural damage, design and engineering errors, labour problems, availability of materi - als, malfunctions of equipment and installations, during the term of the construction agreement and commonly 12 months after the termination date of the construction (the guarantee period). If any defect is detected during the guarantee period, the contractor, usually at their own cost, shall immediately remedy any such defect, and the guarantee for the defective work shall be extended, as agreed by the parties. See also 1.3 Proposals for Reform . If the contractor does not develop the design and engineering of the project, unless provided otherwise, it is responsible for defects, errors, failures or malfunctions, but shall not guarantee the design and engineering defects, which are the client’s responsibility.
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