📌 Freedom of Contract in Commercial Agreements and Its Limits on Early Termination ⚖️📜

In commercial matters, parties have the freedom to negotiate contractual terms, provided they comply with applicable laws and public order, in accordance with Article 78 of the Commercial Code.

The First Chamber of the Supreme Court of Justice of the Nation (SCJN) reviewed a direct amparo proceeding arising from an ordinary commercial lawsuit that challenged the validity of an early termination clause in a supply contract.

The clause in question stated that the contract could be terminated if the supplier’s rates were not competitive compared to those offered by third parties. However, the client was obligated to inform the supplier of such competing rates, giving them 24 hours to match or beat them. If the supplier failed to do so, the contract would be terminated.

📌 SCJN’s Ruling on the Disputed Clause

📌 Freedom of contract and its limits
🔹 The principle of contractual freedom allows parties to define their agreements, as long as they do not violate mandatory legal provisions.
🔹 According to Article 1797 of the Federal Civil Code, which applies subsidiarily to commercial matters, a contract’s fulfillment cannot be left entirely at the discretion of one party.

📌 SCJN’s Determination
✅ The appellate court misinterpreted the clause, as it failed to maintain contractual balance.
✅ The term “inform” needed to be clarified, ensuring that the client must provide complete details of the third-party offer, including:
✔️ Identity of the bidder (to verify authenticity).
✔️ Conditions and specifics of the offer.
✔️ All relevant terms and circumstances enabling the supplier to genuinely assess whether they could match or improve the offer.

📌 Conclusion
The SCJN emphasized that contractual clauses must ensure fairness between the parties and cannot grant absolute discretion to one party, aligning with the principles of legal certainty and equity in commercial agreements.

📢 Conclusion

📌 Freedom of contract in commercial matters is broad but must respect principles of fairness and legality.
📌 Early termination clauses must not be interpreted in a way that grants unilateral advantages.
📌 The SCJN reaffirms that transparency and contractual certainty are essential for valid commercial agreements.

📚 Official Sources

📌 Full SCJN Ruling: 🔗 SCJN - Rulings
📌 Commercial Code: 🔗 Consult here
📌 Federal Civil Code: 🔗 Full text