Recent Jurisprudence – Commercial Bond

March 18, 2009
Recent Jurisprudence – Commercial Bond

The First Chamber of Mexico’s Supreme Court of Justice (SCJN) recently published in the Weekly Judicial Journal of the Federation civiljurisprudence number Ia./J.95/2008 under the heading Commercial Bond. In order for an action for collection to proceed, the surety company mustshow it gave notice to the obligor, or the applicant, joint obligors or indemnitors of the surety company, concerning a claim for payment made by thebeneficiary of such bond. The highest court of the nation held that a surety company must establish that it provided notice to the obligor, or, as the casemay be, to the applicant, joint obligors or indemnitors of the surety company, of a beneficiary’s claim on such bond before moving forward with anaction for collection. Such notice allows obligors, or whichever party contracted an obligation through such bond, to intervene in the correspondingproceedings and to provide them an opportunity to assert their rights and interests as they deem appropriate. To support its holding, the SCJNexplained that in the absence of notice to obligors with respect to claims made by beneficiaries on bonds, such claims may result in the inappropriatecollection of bond payments, either because the obligors may have already met their obligations guaranteed by the bond or because payment on suchbonds would not be justified.

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