ANNULMENT OF AGREEMENT
The annulment of agreement happens when the influence of an error may be annulled, which means that it will be deemed never to have existed. In that case, all acts must be reversed. In the event of a takeover, this means, for example, that the purchase price paid to the seller must be repaid and that the purchaser must transfer the shares back to the seller. All other actions taken in that respect must likewise be reversed until the situation is the same as before the takeover.
The same applies if an act has been undertaken on the basis of an agreement which subsequently turns out not to exist because it has been annulled. In such a case, too, all consequences of the act must be undone. This is why it is important to seek legal advice before taking any measures in relation to an agreement which may have been concluded under the influence of an error.
Under Mexican law, purchase agreements usually exclude the option to annul. Besides, purchasers will not always benefit from an annulment of agreement, either. Purchasers will often prefer to retain the shares they have acquired. In such cases, purchasers will benefit more from amending the conditions of the agreement, for example an adjustment of the purchase price.
The annulment of agreements is regulated by the Mexican Civil Code and the Federal Law of Civil Procedures. In general, an annulment can be requested when:
- The agreement was concluded under the influence of an error.
- The agreement was concluded under the influence of violence.
- The agreement was concluded under the influence of fraud
- One of the parties to the agreement was incapacitated at the time of the agreement was concluded.
- The annulment of agreements is a complex legal process that should only be undertaken with the assistance of a qualified lawyer.
Annulment of an agreement is not always beneficial to the purchaser. In some cases, purchasers will prefer to retain the shares they have acquired. This is often the case when annulment of the agreement would result in significant financial losses for the purchaser. In such cases, it may be more beneficial for the purchaser to amend the conditions of the agreement, for example by adjusting the purchase price. However, annulment of an agreement may still be preferable in some circumstances, such as when the shares were acquired through fraud or misrepresentation.
The law offers a solution for this, as the agreement can be amended to remedy the loss suffered as a result of the error. This can be achieved by a proposal made in good time by the other party, but also by the court at the request of one of the parties, In practice, it is advisable to seek the assistance of a law firm in Mexico like LawInCabo to ensure that your interests are protected.
When negotiating a purchase agreement, parties often devote a lot of time and effort to defining the concept of loss and the contents of the guarantees and indemnities. The law provides for various ways in which the court may determine or estimate the extent of the loss suffered as a result of the error. In practice, we see that parties often apply principles to calculate the purchase price.
However, there are also ways for the court to determine or estimate the extent of the loss suffered as a result of the error. For example, in Los Cabos, Mexico, courts have been known to follow the principles applied by the parties to calculate the purchase price. In addition, courts have also looked at other factors, such as the nature and extent of the mistake, to determine whether to annul the contract.