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Why Enforcing Contracts Matters ?

Doing Business Methodology : Enforcing Contracts Doing Business in Mexico 2008 Training for IMCO July, 2007. Why Enforcing Contracts Matters ?. Stimulate business activities Expands the network of business people willing to do business with each other. Increases employment opportunities .

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Why Enforcing Contracts Matters ?

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  1. Doing Business Methodology :Enforcing Contracts Doing Business in Mexico 2008Training for IMCO July, 2007

  2. Why Enforcing Contracts Matters ? • Stimulate business activities • Expands the network of business people willing to do business with each other. • Increases employment opportunities The economy benefits from an efficient judicial system:

  3. Contract Enforcement: How is data collected? We collected data by sending surveys completed by local litigation lawyers and through the study of the codes of civil procedure and other court regulations.

  4. What do we measure?Enforcing Contract MethodologyThe Case • Value of claim: 200% of GNI per capita • It is a commercial case • Creditor and debtor: local companies • Creditor delivers goods to debtor • Debtor does not pay creditor • Debtor opposes claim • Judgment in favor of creditor • No appeal • The debt is collected through the sale of the defendant’s movable assets at a public auction.

  5. What do we measure?Assumptions commonly misunderstood by respondents Notice and filing/Trial and judgment • The value of the claim is equals 200% of the country’s income per capita • It is a commercial case • There is no appeal Enforcement • The debt is collected through the sale of the defendant’s movable assets • The goods are sold at a public auction.

  6. What do we measure?Enforcing Contract Methodology Contract Enforcement must be Fast, Fair and Affordable

  7. Enforcing Contracts: time • Recorded in calendar days. • Time is counted from the moment the plaintiff files the lawsuit in court until payment. • The respondents make separate estimates of the average duration of different stages of dispute resolution.

  8. Enforcing Contracts: cost • Cost is recorded as a percentage of the claim. • Only official costs are recorded. • The cost of corruption is not included. • Doing Business measures separately the: • Average attorney’s fees • Court fees • Enforcement fee.

  9. Enforcing Contracts: What is a procedural step? • The DB survey lists 100 procedural steps. This includes: • Steps to file the case, • Steps for trial and judgment • Steps necessary to enforce the judgment. • A procedural step is defined as any interaction mandated by law or court regulation between the parties, or between them and the judge (or administrator) or court officer.

  10. Days to enforce a contract in Mexico

  11. Cost to enforce a contract in Mexico(% of the debt value)

  12. Doing Business in Mexico Thank you!

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