Comparing French and German Sales Contract Systems & Brazilian Law
French System
The contract of sale transfers the property immediately. The transfer of ownership occurs on the same day of the obligation, which is based on the contract. Even before paying and receiving the good, once the contract is signed, the ownership is transferred, and the good belongs to the buyer. Example: If a person signs a purchase and sale agreement for a car, whether they have paid for it or not, or even if the car has not been delivered, the buyer is already the owner. If a tree falls on this car, the damage is the new buyer’s responsibility, even if they have not yet received or paid for it.
German System
The buying and selling process only requires the seller to give (or deliver) the thing, not necessarily transfer ownership immediately. The buyer does not own the good until its tradition or delivery by the seller. The contract or the act of buying and selling alone is not sufficient. The transfer of ownership occurs through tradition for movable property and registration in the property office for immovable property. Brazil uses the German system (Art. 481). Example: In the sale of a house, if A sells a house to B, and then B sells the same house to C within a few days, and C registers the property first, C becomes the owner. B can only seek damages but cannot claim the property because they no longer own it. In the French system, B would be the owner as the property transfer occurred upon signing the contract.
Legal Nature of Purchase and Sale
- Bilateral: Creates reciprocal obligations.
- Consensual (in general): Formed from the manifestation of the will of the parties. Unlike actual contracts, it does not require the delivery of the thing.
- Paying: Both parties derive benefit: one receives payment, the other receives goods and payment.
- Commutative (in general): The content of the payments is immediately known (how and when to pay and receive). Exception: Aleatory contracts, where the object is subject to future events or risks (CC Art 483: Emptio spei: future thing; Emptio rei speratae: expected thing). In aleatory contracts, parties agree on terms such as paying for a crop whether it exists or not, usually at a lower price, to mitigate risk for the producer.
- Single execution: Agreement can be immediate or deferred execution (payable upon the act or with a longer payment period). However, benefits can be divided over time without converting the contract into a fixed-term or continuous one.
Elements of Purchase and Sale
Consent
Represents the volition to transfer ownership rights over the thing for a price, while the other party commits to payment. Requires parties’ capacity to sell and buy, and must be free and spontaneous, otherwise it is null. Consensus concerns the thing and the price, with the seller’s interest on the price and the buyer’s on the thing.
Thing
The good the seller transfers to the buyer. Must meet three requirements:
- Existence: Something that exists or will exist (Emptio rei speratae). Example: a collection.
- Individualization: Something determined or determinable (e.g., 5 bags of coffee).
- Availability: Cannot be legally inalienable things (court objects), personality rights, or body parts.
Price
Without pricing, the sale is void. Usually determined by free discussion among contractors, according to market laws (conventional price). If not immediately determined, it must be determinable by objective criteria established by the contractors.
Limitations on Purchase and Sale
- Sale of upward and downward (CC art. 496).
- Acquisition of property by person in charge of safeguarding the seller’s interests (art. 497).
- Sale by undivided condominium (art. 504).
Note: Buying and selling does not alienate immovable property; property registration does! For movable property, it is the tradition.
Termination of Contract
Termination involves returning the property and receiving the money back.
Corpus Ad: Buying something without specification, e.g., buying “the farm on Happy Road” as stipulated (permitted for private instruments with properties valued below a certain threshold?). If so, there is no claim regarding exact measurements. Resolution of the contract means cancellation.
Special Provisions in Purchase and Sale
Retrovenda (Art 505 to Art. 508)
The seller reserves the right to recover the property within a certain period, restoring the price plus costs incurred by the buyer. The retrovenda clause is based on the parties’ will, not law, and can be waived. It is an accessory compact; its invalidity does not invalidate the principal obligation. It is an express condition precedent, unwinding the sale and returning the parties to their previous state. It is not a resale and does not affect INPOST transmission. Only applies to property, not goods like phones. The 3-year term (deadline for the seller to reclaim the property) does not apply to the absolutely incompetent but is valid for the relatively incompetent. Retrovenda is currently in disuse. Previously, Terracap used it for property sales in South Lake, requiring construction within a period; otherwise, they could reclaim the lot. These were called “retrovenda houses.” Three years is a reasonable time; after that, the property cannot be reclaimed.
Sale on Satisfaction
The buyer’s contentment determines if the thing is considered transferred. Example: tasting wine before buying. The contract is under a condition precedent during the trial period. Only after acceptance is the contract completed. This applies to foodstuffs, drinks, and tailored clothes. The sale is perfect only when the buyer expresses satisfaction. Tradition transfers direct ownership, not domain, under a suspensive condition. The condition precedent occurs when the buyer accepts the product.
Preemption
The buyer is obligated to offer the thing back to the seller if they decide to sell it in the future. Preemptive rights are exercised only when the buyer intends to sell. The period begins when the former seller (now buyer) receives notice. Retrovenda differs from preemption: in retrovenda, the original seller has the right to repurchase regardless of the buyer’s intention, while in preemption, the right is only triggered if the buyer intends to sell. Retrovenda: Seller’s right to repurchase at the original transaction value; applies to real estate; no notification needed; transferable to heirs. Preemption: Right of first refusal can be granted to anyone; creates a new relationship; not transmitted to heirs; requires notification and a time limit; applies to furniture and buildings.
Sale with Domain Reservation
A special type of sale of movable property where the seller retains ownership as a guarantee of payment. Only possession is transferred to the buyer. It is a contract of sale subject to a condition precedent: the payment of the last installment. It differs from liens; it aims to give greater assurance to traders, while fiduciary acts as intermediaries. The buyer never takes the position of a trustee as in fiduciary sales. Example: stores selling appliances in installments.
Sale of Documents
Widely used in international trade. It gives flexibility to trade and applies to movable objects. There is a symbolic tradition; upon delivery of documentation, the seller discharges their obligation, and the buyer must pay. The buyer cannot claim to inspect the goods; they are assumed to be given and correct. The buyer pays upon delivery of the representative document and can claim against the seller for any defects. It is a contract where parties agree to exchange one thing for another, other than cash.