Contract Law: Essential Elements, Types, and Sales Agreements
Contracts: Definition and Key Elements
A contract is formed when several people agree on a declaration of common resolve to regulate their rights. A convention includes any expression of intent; it is a generic term. A contract, however, is a convention that aims to create property rights and duties.
Elements of Contracts
Contract elements are classified as:
- Essential: Indispensable for the existence of a contract, such as capacity, consent, object, and, in some cases, form.
- Natural: Implicit but can be removed or modified by the parties.
- Accidental: Dependent on the parties’ will; not necessary for the existence of a contract (e.g., condition, term, or post).
Essential Elements
- Capacity: The parties must be capable in fact and law. Those with absolute or relative disabilities, where expressly forbidden, cannot contract. Excluded individuals can contract with certain people. Professed religious individuals can only contract when buying property for their convents. Bankrupt merchants are also excluded.
- Consent: The manifestation of will in which two people agree. Consent can be express (verbal, written, or by unmistakable signs) or tacit (resulting from events or acts that presuppose it). Consent can be made between present or absent parties (through agents).
- Purpose: Benefits to be met by the parties (to give, do, or not do). In obligations, things given must be in trade, including future things (e.g., crops), but subordinate to the fact that they come into existence. For moral reasons, a future inheritance cannot be the subject of a contract. Things can be contracted on a mortgage, pledge, or seized without prejudicing creditor rights, and things outside. The bad faith act of hiring things outside as one’s own, or free items, constitutes a crime called estelionato. In obligations to do or not do, the facts must be legally possible, not harmful to others, and not contrary to morals and good customs.
- Form: Contract provisions regarding the form of legal acts must be noted. Certain contracts must be made in public documents.
Effects of Contracts
- Principle of autonomy.
- The effects of contracts and liabilities extend to heirs and universal successors.
- Contracts cannot harm others and must be made in good faith.
- In bilateral contracts:
- If the provision by one party becomes excessively onerous, the aggrieved party may sue to terminate the contract. The other party may impede the resolution by offering to improve the impact of the contract equitably (theory of unpredictability).
- No party can claim compliance if they have not fulfilled their obligation or offered to comply.
- If one party gives a sign, they can repent, losing it, or, if they regret returning it, it is doubled.
In bilateral contracts, the civil code implies the power of either party to terminate the contract (condition precedent) if the other fails in its delivery. If this option is contained in the contract, it is an express commissory pact. In that case, the contract is terminated when the party that met its delivery notifies the other of its intention to terminate it. If the commissory pact is not included in the contract, it shall be implied.
The place of performance shall be as set out in the contract’s content, the nature of the obligation, or the debtor’s domicile.
Evidence of Contracts
Contracts may be approved by public instruments, private instruments, the confession of parties, legal or judicial presumptions, or witnesses. Other evidence includes expert witnesses and reports.
If contracts have a form determined by law, no judge can test them if they do not comply with the prescribed manner, unless:
- It would have been impossible to obtain evidence designated by law.
- There was a written test principle in contracts that can be made by private instruments.
- The question concerns vices of legal acts or the falsity of the instrument in which the contract is comprised.
- One party had received some benefit and refuses to perform the contract.
Classification of Contracts
- Unilateral: Create obligations for one of the parties (e.g., donation).
- Bilateral or Sigmatic: Create obligations for both parties (e.g., sales).
- Onerous: The latest matches directly; to the provision of one party, there is consideration from the other (e.g., location).
- Gratuitous: There is no payment (e.g., donation).
- Consensual: Perfected by mere consent of the constants (e.g., society).
- Real: Need to deliver the thing to be perfected (e.g., deposit).
- Commutative: The latest matches directly; certain benefits are known from the time the contract is made (e.g., buying).
- Random: The latest matches directly; one or both benefits are subordinate to the fulfillment of chance (e.g., insurance).
- Instant Effect: Satisfied in a single act (e.g., cash sale).
- Successive Chain: The latest matches directly; true benefits are realized over time (e.g., hire-purchase).
- Nominated or Unnamed: According to whether the law designates them under a special name or not. Parties entering into contracts may not fit exactly in the code payroll.
- Adhesion: Clauses are established in advance by one party, without the other having the possibility of discussing them (e.g., insurance or transport).
- Free Discussion: Clauses are discussed and agreed upon by the parties.
Sale Agreements
A sale occurs when one party transfers the property of a thing to another, and the latter is obliged to receive it and pay a certain price in money.
Characteristics of a Sale
Bilateral, onerous, commutative, consensual, and non-formal (except for the purchase of property).
Elements of a Sale
- Capacity of the Parties: Everyone who owns property can sell it, and anyone capable of binding can buy, with exceptions. Sales are prohibited between spouses, parents and guardians with those under their custody or care, rulers against the property of their constituents, public employees regarding property whose administration or sale they were responsible for, judges, prosecutors, public defenders, and prosecutors regarding property in dispute before the court before which they exercise or have exercised their respective ministry, among others.
- Consent: Agreement of the parties’ will, unless there is a forced sale with an obligation to sell.
- Object: Everything that can be covered by contracts can be sold, even future events, as long as their alienation is not prohibited. Things that cannot be sold include those outside the market, indeterminate non-existent items, future inheritances, undivided whole things without the consent of all joint owners, and anything expressly prohibited by law.
- Price: Must be in cash, certain, and serious. The true price may be determined or determinable. The latter is left to a third party. Earnest money is given to the value of the thing sold.
Duties in a Sale
- Buyer: Receive the thing, pay the price at the agreed time and place, and pay the delivery costs.
- Seller: Retain the thing until the time of delivery, deliver the thing at the agreed place and time, receive the money, pay the delivery costs, ensure the free availability of the thing, and guarantee against hidden defects.
Special Clauses in a Sale
These clauses tend to modify the natural effects of the contract.
- Clause Not to Alienate: To a particular person (the prohibited clause is not to alienate to anyone).
- Sale Agreement of Redemption: Allows the buyer to recover the thing sold, returning the price received to the buyer, with an increase or decrease.
- Covenant of Resale: Allows the seller to return the thing purchased, receiving the price paid, with an increase or decrease.
- Covenant of Best Seller: A stipulation that the sale is undone if another buyer submits a better price.
- Covenant of Preference: A stipulation for the seller to recover the thing sold and delivered to the buyer, preferring it to any third party for the same price.