During the 1985 Michoacan-Guerrero earthquake, a significant number of foundation problems were reported in Mexico City. Large permanent movements and, in some cases, actual bearing capacity failures affected floating piles foundations as well as shallow foundations. These observations were the motivation of an extensive research. The objective was to understand the behavior of foundations during earthquakes, to derive new bearing capacity formulae with due account of the soil inertia forces and to propose modifications to Mexico City seismic code. On the one hand, the bearing capacity of strip shallow foundations has been derived within the framework of the yield design theory in which four independent loading parameters are applied to the foundation: the vertical force, the shear force, the overturning moment and the inertia forces within the soil mass. Simple analytical formulae were established which reflect the influence of the four parameters. Moreover, two simplified methodologies, based on different assumptions, were derived to compute the foundation permanent displacements. On the other hand, information on buildings that experienced foundation failures was gathered and their seismic responses during the 1985 earthquake was computed with finite element analyses. These analyses yielded the applied seismic forces which were used together with the theoretical results to evaluate the seismic behavior of their foundations. It appears that the effect of the soil inertia forces can be disregarded, provided the foundation exhibits an adequate safety with respect to static loads, and that permanent displacements cannot be tolerated because the foundation behavior becomes unstable.