The execution of an agreement is an activity we frequently engage in. Whether we are aware of it or not, we regularly enter into contracts of carriage, purchase and sale agreements, and even lease and loan agreements, among others.
Regardless of whether the parties to an agreement are obligated to comply with the terms they themselves agreed upon [1], it is also desirable that, although there is not an absolute balance between the duties and rights assumed, at least one of them does not abuse their financial superiority or the influence they may exert in a given market.
Usury is the typical example where one party obtains an abusive benefit over the person and property of another through the charging of excessive interest derived from a loan. [2] Similarly, a clause that indicates that the debtor has received an amount greater than what was actually delivered could also be analyzed under the lens of usury, in accordance with Article 21.3 of the American Convention on Human Rights (“ACHR”). [3]
However, usury was typically analyzed by Mexican Courts regarding interest rates agreed upon in a loan or credit contract. Any other contract that did not involve the delivery of money and the obligation to repay it along with interest, commissions, and accessories was excluded from examination under the lens of possible usury.
Federal courts guided their rulings following a criterion of the First Chamber of the Supreme Court of Justice of Mexico issued in 2018, which stipulated that usury was not constituted when the agreed penalty, deemed excessive, derived from a lease agreement. [4]
New ruling of the First Chamber of the Supreme Court of Justice of Mexico
Recently, a ruling by the First Chamber of the highest court was made public, which reviewed a case [5] that came to its attention after a tenant was ordered by a first-instance judge to pay, among other things, late payment past-due interest for failing to pay rent.
The judgment was confirmed by the appellate court, whereupon the tenant filed a constitutional trial (amparo), arguing that regarding the payment of past-due interest to which she was condemned, the clause that contemplated them was usurious.
However, the amparo court did not grant this, determining that usury cannot be framed within lease agreements. In response, the tenant filed a review appeal that the Court received.
In its reasoning, the First Chamber determined that Article 21.3 of the ACHR did not exclusively refer to usury derived from the collection of excessive interest in loan or credit agreements. It also extends to other types of agreements, even those of a non-commercial nature, including leases.
Regardless of the fact that in the past the First Chamber had decided matters in which it determined that usury was not applicable to agreements such as leasing, the Chamber also emphasized that, in agreements other than loans or credit, their analysis can be based on the general prohibition of the exploitation of man by man. The same that establishes the second part of Article 21.3 of the ACHR.
However, not every conventional penalty or interest stipulated in an agreement necessarily implies the existence of exploitation of man by man. There must also be an excess or disproportion between the duties and rights agreed upon by the parties in the contractual relationship, in such a way that an economic abuse by one of the contracting parties can be appreciated.
When one of the parties obtains an excessive benefit by agreeing to an abusive interest or penalty, the dignity of the harmed contracting party must also be affected so that the exploitation prohibited by the ACHR can be confirmed.
The impact on the dignity of the contractor implies a financial subjugation or domination by the person who gains excessive benefit. [6]
The First Chamber returned the case file to the collegiate court to determine whether the interest agreed upon in the lease contract amounted to any form of exploitation and to issue a new judgment in accordance with the indicated guidelines.
What is the usefulness of this new ruling for the conclusion of our contracts?
From what the Court has resolved, we can conclude the following, which will be extremely useful when drafting, negotiating, or seeking to enforce our contracts:
a) Usury may only arise in loan or credit agreements in cases where the agreed interest rates (ordinary or past-due) are excessive or disproportionate for the debtor. In which case, the judge may reduce them equitably.
b) In the rest of the agreements, whether commercial or civil, such as leases, conventional penalties, or disproportionately agreed-upon interest rates, they will not be analyzed from the perspective of usury, but rather through the lens of the exploitation of man by man. Which is also prohibited by the ACHR.
c) Not all agreements in which there is a lack of equity in the duties and rights of the parties will necessarily involve a form of exploitation. In those cases, there are already controls in the civil legislation itself to prevent any patrimonial abuse by one of the parties.
d) However, when a judge determines that the dignity of the abused party in the contract was also harmed, it can then be concluded that exploitation prohibited by the ACHR and the Mexican Constitution indeed occurred.
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[1] Principle of free will to contract
[2] Isolated Thesis I.4o.C.84 C (10a.)
[3] “Both usury and any other form of exploitation of man by man must be prohibited by law.”
[4] Isolated Thesis 1st.CXXXI/2018 (10th).
[5] Direct amparo under review 1285/2024.
[6] Thesis: 1st. CXCIII/2015 (10th), Tenth Era, Digital Record: 2009281.
