Introduction

Contracting with public sector entities often presents risks and legal specificities that many companies and professionals overlook. A common, and delicate, mistake is assuming that including certain clauses with "civil" or "commercial" language will render the contract void of its administrative nature. This mistake often leads to challenges to these types of contracts in civil or commercial courts.

However, the involvement of a government entity radically alters the nature of the conflict, as most acts issued by the government, even those related to contracts, are administrative acts. Therefore, in many cases, only the contentious-administrative avenue will be appropriate for claiming rights or challenging actions arising from those contracts. This aspect is supported by binding jurisprudence from the Supreme Court of Justice of the Nation (SCJN) and other federal courts, so failure to do so can lead to the irreparable loss of the right to collect or other legitimate interests.

What is an administrative contract and how to identify it?

The administrative nature of a contract is defined -mostly-, by the set of the following elements:

• The intervention of a public authority or entity as a direct party.

• The existence of a predominant public or social interest in the object of the contract.

• Legal regulation under administrative rules.

• Frequent inclusion of exorbitant clauses, which confer unilateral powers on the contracting State or entity.

Thus, a contract entered into with any department, municipality, federal or local entity, decentralized agency, or parastatal company, even in commercial form and terminology, must be legally treated as an administrative contract whenever such elements are present, so that any challenge to acts arising from this contractual relationship must be through administrative channels.

Key Case Law: Non-compliance as an Administrative Act

The Second Chamber of the Supreme Court of Justice of the Nation, in the jurisprudence with the heading “ADMINISTRATIVE CONTRACTS. NON-PAYMENT IS ADMINISTRATIVE IN NATURE" has been clear in ruling that non-payment to the counterparty by the government or its entities is not a civil or commercial dispute, but rather an administrative one. The reason is that all the economic, legal, and operational clauses of a contract must be analyzed as a legal unit, and if the contract is administrative, everything related to its execution and compliance is of the same nature. The core of this jurisprudence is as follows:

"...The fact that the claimed service is the failure to pay a consideration to a private contractor does not preclude the conclusion that this non-compliance is administrative in nature, since the document that originated the service is an administrative contract. Consequently, disputes related to stipulated non-payment must be resolved in the respective administrative trials...[1]"

Therefore, attempting to litigate a debt arising from an administrative contract before a civil or commercial court will usually be unsuccessful, since it is not the appropriate avenue, and the claim will be dismissed, and the opportunity for defense and the right to collection will be lost.

What does administrative litigation entail?

The regulation of administrative trials is radically different from that of commercial trials, the main distinctions being the following:

• Deadlines: Depending on whether the lawsuit is federal or local, the deadline varies between 15 and 30 business days to file the administrative claim.

• Specialized courts: Jurisdiction falls to administrative courts, whether federal (such as the Federal Court of Administrative Justice) or local.

• Administrative Act: As a general rule, administrative proceedings are only admissible against final acts of authority that affect the rights of individuals; therefore, procedural or intermediate acts cannot be challenged. This point is important, as contracts usually provide a series of steps to determine whether a default has occurred.

• Optional means of defense: In many cases, the individual can choose between filing an administrative appeal with the authority itself or directly pursuing a lawsuit in court.

• Non-immediate enforcement: Even if the judge determines compliance, administrative judgments may not be immediately enforceable and may be subject to various appeals.

Practical recommendations for companies and contractors

To limit the risk of taking an inappropriate route, such as a commercial one, it is essential:

• Always analyze the real nature of the object, specifically, whether its purpose is aimed at addressing issues of general and/or social interest.

• Identify whether the other signatory is a public entity exercising functions of the State.

• Review and understand the legislation under which the contract is signed. This may vary depending on the level (federal, state, or municipal) and type of contract.

• Analyze the contractual procedure to obtain a final administrative decision. It is important to note that there are many instances where the authority's silence, after a certain period of time, can be interpreted as a final decision that can be challenged.

Nuances: Are there exceptions?

Although most contractual relationships with state entities are administrative in nature, not all public sector interventions are. There are cases in which the judiciary has determined that the entity acts as a private individual, and that the legal relationship is governed by private law. This is especially true in sectors where the state participates under conditions of free competition or without exercising authority.

An example that has been repeatedly analyzed by the Judiciary is that of electricity supply contracts entered into between private individuals and the Federal Electricity Commission (CFE). In the jurisprudence with the heading “FEDERAL ELECTRICITY COMMISSION. IT IS NOT THE AUTHORITY FOR THE PURPOSES OF THE AMPARO TRIAL AGAINST ACTS PROVIDED FOR IN THE ENERGY SUPPLY CONTRACT.”, the Supreme Court of Justice of the Nation resolved that:

"...the relationship arising from the energy supply adhesion contract does not place the CFE in a position of supra-subordination to the user, nor does it imply an arbitrary imposition of conditions... Consequently, disputes arising from this relationship must be processed through ordinary commercial channels...[2]"

This criterion was later supplemented by the First Collegiate Court on Administrative Matters of the Seventh Circuit, which established that administrative and commercial acts may coexist within the same contractual relationship. Thus, in the case of the CFE notice-receipt, it determined that:

• The order to cut off or warn of suspension of service does constitute an administrative act, as it comes from an authority and unilaterally establishes legal consequences.

• However, the collection of electricity service fees derived from the contract is a commercial act, so it cannot be considered an act of authority and must be claimed through ordinary channels.

This criterion was included in the jurisprudence “NOTICE RECEIPT CONTAINING THE ORDER OR WARNING TO CUT OFF THE ELECTRICITY SUPPLY AND THE CHARGE FOR THAT SERVICE. WHEN BOTH ACTS ARE CLAIMED IN THE AMPARO, THE ONE OF AN ADMINISTRATIVE NATURE AND THIS ONE OF A COMMERCIAL NATURE, THE EFFECTS OF THE CONCESSION IN THE FACE OF A LACK OR INSUFFICIENT FOUNDATION AND MOTIVATION ONLY LEAD TO THE NON-SISTENCE OF THE FIRST, SINCE ARTICLE 124, LAST PARAGRAPH, OF THE AMPARO LAW IS NOT APPLICABLE TO THE SECOND." with the following summary:

“…when the protection claim involves acts of a different nature—such as the court order (administrative) and the collection of the service (commercial)—the effects of granting the protection must be differentiated, since Article 124 of the Protection Law only applies to the materially administrative act…”

This approach avoids procedural confusion and allows the parties to pursue their claims through the correct channels, in accordance with the true nature of the contested act. It also reaffirms the need for a case-by-case analysis, especially when a single legal relationship includes both public and private components.

Conclusion

Recent case law from the Supreme Court of Justice of the Nation and Circuit Courts requires all parties involved in public sector contracts to meticulously validate the appropriate procedural avenue. An error in choosing the court or judicial avenue can result in the complete loss of the right to collect or perform. Understanding and applying these criteria is essential for every lawyer, company, or professional who enters into contracts with the public sector in Mexico.

[1] In this regard, see the jurisprudence with the heading “ADMINISTRATIVE CONTRACTS. NON-PAYMENT IS ADMINISTRATIVE IN NATURE” with digital registration number 2016318.

[2] See the jurisprudential thesis titled "ADMINISTRATIVE CONTRACTS. NON-PAYMENT HAS ADMINISTRATIVE NATURE", published under digital registry number 2016318.

On July 9, 2025, the First Chamber of the Supreme Court of Justice of the Nation ("First Chamber"), when resolving the direct Amparo under review 1426/2020, issued the jurisprudences 1a./J. 76/2025 (11a.) and 1a./J. 78/2025 (11a.), which introduce relevant criteria for corporate practice, particularly in relation to the manner in which calls to shareholders' meetings should be made.

In these cases, the First Chamber expressly validated the possibility of publishing the first and second call to a shareholders' meeting in a single publication issued through the Ministry of Economy's Electronic Publications System. This is a practice that some companies had already adopted, but its legal validity was questionable.

In this regard, for years, the prevailing interpretation in the corporate sphere was that, pursuant to Article 191 of the General Law of Commercial Companies ("LGSM"), the second call to a shareholders' meeting must be published on a different date and after the first.

This is because the aforementioned article requires that the second call “express the circumstance"which meant that the meeting could not be held at the first call. Under this logic, it was understood that the failure to hold a meeting at the first call was a prerequisite for the second call to be validly published, and that its anticipation implied an undue presumption of a lack of quorum.

Some of our Collegiate Courts even declared the nullity of assemblies whose calls were made in the same publication, as occurred in the matter that led to the isolated thesis II.2o.C.229 C, considering that this contravened article 191 of the LGSM.

Now, the First Chamber breaks with this paradigm by establishing that it is also valid for the first and second calls to a shareholders' meeting to be published in the same publication, provided that the publication clearly establishes the scenarios under which the first call and, where applicable, the second call will be held.

In the opinion of the First Chamber, under the principle of free will, it is up to each company to decide, including through its bylaws, whether to make a single publication or two separate publications.

Therefore, these new jurisprudential criteria represent a significant change for both corporate practice and corporate litigation, as they expressly recognize the validity of both methods of publishing shareholder meeting notices: either through separate publications or in a single publication. This new interpretation provides legal certainty to companies that already adopted the single publication method, by eliminating the risk of meetings held based on this practice being declared void.

In legal practice, it's common to see contracts whose names don't correspond to their actual content. This raises an important question: what happens when the name of a contract doesn't match what was actually agreed upon?

Under the rules of contract interpretation, the name or designation given by the parties to the agreement does not define its nature. In fact, Article 1851 of the Federal Civil Code establishes that if the terms of a contract appear to be contrary to the parties' evident intention, the latter shall prevail.

It would be meaningless for the parties to be able to arbitrarily modify the rights and obligations they assume or acquire in a contract, simply by changing its name or title.

So how do you determine the true nature of a contract and, therefore, the obligations each party assumes?

Our highest courts in the country have indicated that the following aspects must be addressed to unravel the true nature of a contract:

1. The intention of the parties when contracting;
2. The content of the contract and;
3. The facts and acts carried out by the parties.

Thus, applying this rule, our courts have determined, for example, that "promises of sale," in which the price and the item have already been agreed upon, are in fact definitive sales contracts. This is because, according to the law, a sales contract exists from the moment there is an agreement on the price and the item; therefore, regardless of the name the parties give to the agreement, it will be a definitive sales contract.

Or, another example could be, if a contract called a "lease agreement" establishes that the alleged landlord is obligated to transfer ownership of a property, the alleged tenant agrees to pay a certain sum of money for it and, furthermore, in the execution of the contract the parties act in accordance with those obligations, it is clear that the intention of the parties was to enter into a sale, so it is logical that it is not a lease agreement.

In conclusion, there are cases in which the name or title of a contract is not consistent with what is actually agreed upon in it, so it should always be considered that the true legal nature of the contract is determined by its content, the intention of those who sign it, as well as the facts and acts performed by the parties, and we should not be guided simply by the heading that appears in the document.