Legal Contracts: Definitions, Classifications, and Sales Agreements
Understanding Contracts: Types and Elements
Defining Contracts and Parties
Contract Definition
A contract is a verbal or written agreement between two or more persons who are obliged to give, do, or refrain from doing anything or providing any service.
Individuals
Individuals are natural persons who possess personality, rights, and obligations.
Legal Entities
Legal Entities include partnerships, corporations, associations, and foundations with a legal personality separate and distinct from their members. These members can be natural persons or other legal entities. Legal entities act through representatives or administrative/management bodies composed of natural persons.
Types of Contracts
By Form
Verbal Contracts
These take place by word of mouth.
Written Contracts
These are reflected in a written document.
By Legal Regulation
Typical Contracts
These are regulated by the Civil Code, Commercial Code, or special laws.
Atypical Contracts
These are created by the will of the parties and do not conform to the characteristics of typical contracts regulated by law.
By Applicable Law
Civil Contracts
These are private agreements concluded between parties who are not merchants. They are regulated by the Civil Code.
Commercial Contracts
These are concluded between traders or entrepreneurs in their professional business. They are regulated by the Commercial Code.
Administrative Contracts
These are agreements between public administrations and companies. They are governed by public administrative law.
Labor Contracts
These involve workers voluntarily offering their services for remuneration to an employer. They are regulated by labor law, which governs the status of workers.
By Bargaining Power of the Parties
Equal Contracts
Both parties negotiate and agree on the terms until an agreement is reached.
Adhesion Contracts
The contract terms are set by one party, and the other can only accept the terms without modification or choose not to contract. Examples: water, telephone, gas supply, etc.
The Sales Contract: Key Aspects and Obligations
The Tangible Sales Contract (CV)
Object of the Contract: The Property
The property refers to the tangible item the seller delivers to the buyer, known in trade as goods or merchandise.
The Price
The price is paid in cash or a representative instrument (check, bill of exchange, promissory note, etc.). It can also be paid partly in money and partly in an instrument. The price must be genuine, a fixed amount at the time of contract award, or determinable later without a new contract.
Elements of a Sales Contract: Parties
Seller and Buyer
Based on how the price is set, two classes of sales emerge:
Fixed Price
The price is set at the time of contract award and cannot be modified later, even if agreed conditions have changed.
Variable Price
The parties may allow for price variations based on factors such as market circumstances.
Obligations Arising from a Sales Contract
Seller’s Obligations
- Preserve and guard the item in perfect condition.
- Deliver the item at the agreed time and place.
- Provide warranty against eviction and hidden defects (when the item sold is defective and the defects are not visible to the naked eye).
Buyer’s Obligations
- Pay the price at the agreed time and place.
- Pay off the price if payment is deferred.
- Receive the purchased item.
- Pay for transportation, unless otherwise agreed.
Special Sales Contracts
Installment Sale
This is where part of the price is paid upon delivery of the goods in generally equal or periodic fractions.
Place-to-Place Sale
This arises when merchandise is transferred from one locality to another. These contracts often utilize a number of clauses called Incoterms (EX WORKS, FAS, FOB, C&F, CIF, and Free at Home) or international commercial terms.
Supply Contract
A contract where one party provides successive and periodic deliveries of specific goods to another for a fee.