MEXICO Law and Practice Contributed by: Roberto Cannizzo, Carlo Cannizzo, Stefano Amato and Mauricio Moreno-Rey, Cannizzo
Deposit and guarantee terms vary based on lease negotiations and local regulations.
to modify the work to be performed and, as a consequence, the price and time also change. 7.2 Assigning Responsibility for the Design and Construction of a Project In Mexico, responsibility for design and con - struction varies by contract. If the contractor develops the design and engineering, they are liable for: • construction defects, errors and malfunctions, including structural damage; • labour issues; • material shortages; and • equipment failures. They must guarantee the work during the con - tract term and typically 12 months post-com - pletion (guarantee period). If defects arise, the contractor must repair them at their own cost, extending the guarantee as agreed. If the contractor does not design the project, they are responsible for construction defects but not for design errors, which remain the client’s liability unless otherwise stated. Responsibility and indemnification clauses in construction contracts typically protect the cli - ent, requiring the contractor to indemnify against damages, claims, legal actions and costs, including attorney fees. These provisions ensure risk allocation between parties, safeguarding the client’s interests while holding contractors accountable for their scope of work. 7.3 Management of Construction Risk In Mexico, several means are used to manage construction risk on a construction project. The most common ones are: • bonds;
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 “change clause” that allows the owner
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