Limitations and exclusions of liability in business to business contracts in Mexico

Contractual limitations and exclusions of liability between commercial parties in Mexico are primarily governed by the Commercial Code (Código de Comercio) and, on a supplementary basis, by the Federal Civil Code (Código Civil Federal), both of which recognise the principle of free will (autonomía de la voluntad). Commercial parties may freely allocate contractual risks and agree on limitations of liability, exclusions of damages, indemnities, and liability caps, provided such provisions do not violate mandatory law, public order, or good customs.

Yes. Under Mexican law, certain limitations or exclusions of liability may be deemed void or unenforceable if they contravene mandatory legal provisions, public order, or good customs. Mexican law does not permit the prior exclusion or waiver of liability arising from defects affecting the validity of consent (vicios del consentimiento), such as mistake (error), wilful misconduct (dolo), bad faith, or violence, as such limitations may be deemed unenforceable. In particular, pursuant to Article 2106 of the Federal Civil Code, liability for wilful misconduct is enforceable in all obligations, and any prior waiver thereof is void.

Likewise, courts may refuse to enforce provisions that attempt to exclude liability for illegal acts or violations of mandatory statutory obligations. In this regard, Article 1910 of the Federal Civil Code provides that any person who, acting unlawfully or contrary to good customs, causes damage to another, is obligated to remedy it.

Mexican law does not expressly recognise “consequential,” “indirect,” or “special” damages as separate or independent categories of recoverable damages.

Pursuant to Article 2110 of the Federal Civil Code, recoverable damages must be the immediate and direct consequence of the relevant breach of contract. Accordingly, Mexican law already limits recoverable damages to those that are direct and immediate, thereby excluding, as a general rule, remote or indirect damages.

Notwithstanding the foregoing, Mexican courts have recognised the concept of punitive damages (daños punitivos) in exceptional cases, particularly in connection with moral damages. In this regard, the First Chamber of the Supreme Court of Justice, in Amparo Directo 30/2013, held that moral damages under Article 1916 of the Federal Civil Code may serve both a compensatory and a sanctioning or deterrent function (función sancionadora o disuasoria), thereby incorporating elements akin to punitive damages. However, their application is exceptional in nature and typically requires the existence of an unlawful act giving rise to moral damages; there is no systematic regulation of punitive damages as an independent category of loss.

Mexican law expressly recognises “prejudice” (perjuicio), understood as the deprivation of any lawful gain that would have been obtained upon performance of the obligation, pursuant to Article 2109 of the Federal Civil Code. Accordingly, parties may generally agree to limit or exclude liability for loss of profits, subject to the limitations applicable to wilful misconduct, bad faith, or unlawful acts.

By contrast, concepts such as loss of revenue, loss of data, or anticipated savings are not specifically regulated or independently recognised under Mexican law.

With respect to goodwill or reputational harm, Mexican law recognises the concept of moral damages (daño moral), which, pursuant to Article 1916 of the Federal Civil Code, includes the harm a person suffers to their feelings, affections, beliefs, decorum, honour, reputation, private life, physical appearance, or the esteem in which they are held by others. As moral damages are protected under mandatory legal provisions and public order principles, exclusions of liability relating thereto are not enforceable, and, as a matter of public order, cannot be waived or excluded by agreement of the parties.

Yes. Financial caps on liability are commonly used and generally enforceable in B2B agreements under Mexican law, particularly when they are negotiated between commercial parties and clearly drafted.

In addition, Mexican law expressly recognises contractual penalty clauses, which are distinct from liability caps, although both mechanisms may coexist in the same agreement and serve different purposes.

A liability cap generally limits the overall financial exposure of a party for potential breaches or claims. By contrast, a contractual penalty clause establishes a predetermined amount payable in the event of breach.

Where a contractual penalty is agreed, pursuant to Article 1840 of the Federal Civil Code, damages and losses may not be claimed in addition thereto, unless expressly stipulated otherwise. Likewise, pursuant to Article 1846 of the Federal Civil Code, the affected party may, as a default rule, claim either enforcement of the principal obligation or payment of the penalty, but not both; however, this is a default rule that the parties may modify by agreement. In any event, both remedies are available in cases involving delay (mora) or where the obligation was performed in a manner different from that agreed.

In addition, pursuant to Article 1843 of the Federal Civil Code, contractual penalties are reduced proportionally in cases of partial performance and cannot exceed the value or amount of the principal obligation, whether in value or quantity.

However, liability caps or penalty limitations may be unenforceable to the extent they attempt to limit liability arising from wilful misconduct or unlawful acts.

Under Mexican law, the concept of “exclusive remedy” clauses is not expressly regulated or specifically recognised as such. However, the penalty clause regime under Articles 1840-1847 of the Federal Civil Code provides an analogous framework, as it permits parties to stipulate a predetermined consequence for breach that, absent contrary agreement, precludes additional claims for damages. Pursuant to the principle of party autonomy (autonomía de la voluntad), parties may generally agree to limit the remedies available in the event of breach to specific contractual remedies, thereby excluding other potential claims or forms of compensation.

Accordingly, exclusive remedy clauses are generally enforceable in B2B agreements, provided they are clear, unambiguous, and do not contravene mandatory law, public order, or good customs. As with penalty clauses, the parties’ freedom to structure remedies is subject to the same public order limitations.

However, Mexican courts may refuse to treat an exclusive remedy clause as exhaustive where the relevant limitation derives from wilful misconduct (dolo), bad faith (mala fe), illegality, or vices affecting consent (vicios del consentimiento) including mistake (error) or violence (violencia). These limitations mirror those applicable to penalty clauses and liability caps, as outlined above.

Under Mexican law, there is no express statutory “blue-pencil” doctrine as recognised in common law jurisdictions. However, pursuant to Article 2238 of the Federal Civil Code, the nullity of one of the clauses of a contract does not entail the nullity of the contract itself, unless that clause was the determining motive (móvil determinante) of the will of both contracting parties. Accordingly, Mexican courts may preserve and enforce the valid portions of a contractual provision where the invalid portion was not essential to the parties’ agreement.

Accordingly, if a limitation or exclusion of liability clause is deemed invalid only in part (for example, because it attempts to exclude liability for wilful misconduct or bad faith), courts may uphold the remainder of the clause, provided the invalid portion was not the determining motive of both parties when entering into the agreement.

For this reason, commercial agreements governed by Mexican law commonly include express severability clauses (cláusulas de divisibilidad or cláusulas salvatorias) intended to preserve the enforceability of the remaining contractual provisions. Such clauses serve as express evidence of the parties’ intent that no single provision constitutes the determining motive of the agreement, thereby reinforcing the application of Article 2238 of the Federal Civil Code. However, even with a severability clause, courts may decline to preserve the agreement if the invalid provision is found to be essential to its purpose or if enforcement would produce unjust results.

Under Mexican law, statutory limitation periods for claims are matters of public order and therefore cannot be modified or waived in advance by agreement of the parties.

Accordingly, parties cannot validly agree to shorten or extend statutory limitation periods for bringing claims where the applicable legal term is mandatorily established by law.

Nevertheless, pursuant to the principle of party autonomy, parties may validly agree on contractual notice periods, claim procedures, conditions precedent to the exercise of contractual remedies, and contractual periods during which certain obligations, representations, warranties or indemnification undertakings remain enforceable, provided that such provisions do not contravene mandatory law or public order principles. Such mechanisms are distinct from statutory prescription and are generally enforceable.

Such mechanisms do not modify the applicable statutory limitation period, but rather define the contractual scope, procedure or temporal applicability of specific contractual rights, obligations or remedies. It is important to distinguish between: (i) prescription (prescripción extintiva), which extinguishes the right of action but not the underlying right, must be raised as a defense, and is subject to interruption and suspension; and (ii) forfeiture (caducidad), which extinguishes the right itself, operates automatically, and is generally not subject to interruption.

For example, the parties may validly agree that any claim relating to a breach of contract, warranty or indemnification obligation must be notified within a specified contractual period, failing which the relevant contractual remedy will no longer be available under the agreement, even though the applicable statutory limitation period remains unchanged. Such contractual deadlines operate independently of prescription and are enforceable as conditions to the exercise of contractual rights.

Notwithstanding the general rule that statutory limitation periods cannot be waived in advance, certain periods that condition the exercise of specific remedies, rather than general rights of action may be contractually modified. For example, Article 2149 of the Federal Civil Code establishes a six-month period to exercise warranty claims for hidden defects (vicios ocultos), counted from delivery of the good. Pursuant to Article 2158 of the Federal Civil Code, parties may restrict, waive, or expand their liability for hidden defects (vicios redhibitorios), provided there is no bad faith (siempre que no haya mala fe). This period is more properly characterized as a forfeiture or warranty exercise period (plazo de caducidad or plazo de saneamiento), rather than a statutory limitation period (prescripción), as it conditions the availability of a specific warranty remedy rather than extinguishing a general right of action.

Yes. Under Mexican law, contractual limitations or exclusions of liability in B2B agreements remain subject to public order limitations and mandatory legal principles.

In particular, pursuant to Article 6 of the Federal Civil Code, the will of private parties cannot exempt them from compliance with the law, nor alter or modify it; only private rights that do not directly affect the public interest may be waived, provided such waiver does not prejudice third-party rights. Likewise, pursuant to Article 8 of the Federal Civil Code, acts executed contrary to prohibitive laws or laws protecting the public interest shall be null and void by operation of law.

Accordingly, Mexican courts may refuse to enforce limitation or exclusion of liability clauses where they attempt to exclude or limit liability arising from wilful misconduct, bad faith, illegal acts, violations of mandatory statutory obligations, or matters affecting public order or third-party rights.

Mexican courts will generally respect the parties’ choice of governing law pursuant to the principle of free will, including in relation to limitation of liability provisions. This is supported by Article 13, Section V of the Federal Civil Code, which recognises the validity of choice of law clauses, except where otherwise provided by law.

Accordingly: (a) where a contract is governed by Mexican law, Mexican legal principles regarding limitations and exclusions of liability will apply even if the relevant goods or services are supplied abroad; and (b) where a contract is governed by foreign law, Mexican courts will generally recognise and apply such foreign law, even if the goods or services are supplied in Mexico. 

In this regard, Article 14 of the Federal Civil Code provides that foreign law shall be applied as the corresponding foreign judge would apply it, and that the foreign substantive law shall apply unless, given the special circumstances of the case, Mexican conflict-of-law rules must exceptionally be taken into account.

However, in both cases, Mexican courts may refuse to enforce contractual provisions or foreign law principles that are contrary to Mexican public order, mandatory legal provisions, or prohibitive laws, particularly in matters involving fraud, wilful misconduct, regulatory compliance, or third-party rights. This is grounded in Article 15 of the Federal Civil Code, which provides that foreign law shall not be applied when its provisions or the result of their application are contrary to fundamental principles or institutions of Mexican public order.