By Samuel Peña Guzman Foreign Investment Coodinator State of Nuevo Leon

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It is common in these days to see contracts entered by and among multinational companies, inter-government organizations or national and international companies and institutions. However, the main characteristic is that these are "rules" that do not have a direct state origin, i.e., they are obligations or laws to which the parties agree in their juridical relationships and are therefore compulsory for both parties. These are rules accepted by organizations as part of the market, which general use eventually makes them compulsory for parties.

Even if there is legislation, in this case a mercantile one, many of these agreements are mainly characterized by the individual obligation of the parties, known as "lex mercatori," which de facto could turn them into Contracts of Adhesion (contract accepted by one party without negotiation). The characteristic of these contracts is the adhesion to one institution and/or set of previously established rules. This in practice translates into an act where the economically stronger institutions or companies have a larger power on the other party and therefore become institutions exercising coercion, some times to the disadvantage of one of the parties.

Even if de jure a "lex mercatori" is an agreement entered with the will of both parties (an essential element in both kinds of agreements), de facto it is not necessarily so, because it is the law of the stronger one that prevails over the weaker party and the contract is entered mainly due to the adhesion of the weaker party to the conditions established by the stronger institution.

How many times have some of us been a party in this type of agreements? As a matter of fact when, for example, a credit agreement is entered by and between a bank and a natural or juridical person, even if, in theory, it is an agreement between both parties, the reality is that it is actually a "Contract of Adhesion." In practice there is not much negotiation between the parties, and the applicant is actually playing a role of adhesion to the guidelines and rulings previously set in this case by banks.

Maybe the institutions will argue that there is not such adhesion, because both parties are willing to enter the agreement, which is an essential element for the juridical enforcement of the agreement. They are right, but unfortunately people who need the services of the institutions mentioned as examples are "forced" to adhere in practice to previously established conditions, turning therefore from a "lex mercatori" into an adhesion contract de facto.

The question arising from the above-mentioned example is if there is nowadays a difference between "lex mercatori" and a Contract of Adhesion.

This is but an example of what happens in every-day life with this type of contracts. Maybe this is one of the disadvantages some of the parties have. In most cases it is economic power that will define the type of relationship between the parties.

Coercion comes not only from an institution or rule arising from a state law, or from the contract's clauses, but also from the institutions' economic power.

The larger the globalization of the world, the more similarities and less differences between a Contract of Adhesion and a "lex mercatori."

For the advantage or disadvantage of the parties, this could transform the juridical nature of relationships arising from said contracts.

Proliferation of Contracts of Adhesion practically restricts the limitations to one of the parties upon entering said contract; as we have already mentioned, one of the disadvantages of this type of agreements is the impossibility to negotiate their contents or amend them. To this purpose there are legislations such as Federal Consumer' s Protection Act.

This all leads to the main remark: Is there a way to neutralize this type of contracts that - in spite of the juridical nature that differentiates them - are more similar every day and the division line between both types of contracts is practically disappearing?

Hector Samuel Peña LL.M, MPA Currently works as a Foreign Investment Coordinator for the State Government of Nuevo León, he has LLM Masters in Law from American University, Washington, College of Law, and a Masters in Public Administration from the George Washington University and has advised foreign companies who are expanding operations in to Mexico. He is also a professor at the State University of Nuevo Leon in Monterrey, Mexico and a Member of the Consejo Mexicano de Asuntos Internacionales COMEXI. The point of view is strictly from the author and does not represent the vision on any of the author institutions relationships. He can be reached at: samuel.pena@mexicoglobal.com