Understanding Different Types of Contracts: A Comprehensive Guide
Types of Contracts
Depending on its Form:
Verbal Contracts:
Agreements made through spoken words.
Written Contracts:
Agreements documented in writing.
According to its Legal Regulation:
Traditional Contracts:
Explicitly regulated by the Civil Code, Commercial Code, or special laws.
Atypical Contracts:
Created by the parties’ will and not specifically regulated by law. Governed by the rules of the most similar typical contracts and general contract principles.
According to Applicable Law:
Civil Contracts:
Made between individuals who are not traders. Regulated by the Civil Code.
Commercial Contracts:
Concluded between traders and businessmen in their work. Regulated by the Code of Commerce.
Administration Contracts:
Contracts involving public or private companies. Governed by the law of government contracts.
Labor Contracts:
For workers who voluntarily provide paid services to an employer. Governed by the Workers’ Statute.
According to the Position of Strength of Parties:
Equal Contracts:
Both parties negotiate terms to reach an agreement, e.g., sales contracts.
Accession Contracts:
Terms set by one party, the other can only accept or reject, e.g., utilities contracts.
The Purchase Agreement
An agreement where one party delivers a specific item, and the other pays a price in money or its equivalent.
Commercial sales involve personal property for resale, either in the same form or a different one, with the aim of profit.
Seller’s Obligations:
- Preserve and safeguard the sold item in perfect condition until delivery.
- Deliver the item at the agreed time and place. If no place is specified, delivery is assumed to be at the seller’s premises. Late delivery allows the buyer to choose between contract fulfillment or termination, with potential compensation for damages.
- Provide a guarantee or compensation for eviction and hidden defects.
Buyer’s Obligations:
- Pay the price at the agreed time and place, or upon delivery if not specified.
- Pay interest on the price if payment is delayed, typically the legal interest rate on the owed amount.
- Receive the purchased goods. If the buyer refuses without justification, the seller can choose between contract fulfillment or termination.
- Pay transportation costs unless otherwise agreed.
Hire-Purchase Agreement
Part of the price is paid upon delivery, with the rest paid in periodic installments.
Leasing Agreement
Also known as finance lease, allows companies to use goods for a specific period by paying periodic fees.
Options at the end of the lease term:
- Return the asset to the leasing company.
- Enter into a new lease.
- Purchase the asset for the residual value agreed upon in the contract.
Leasing involves three parties: the provider, the user, and the leasing company. The user selects equipment from a provider, the leasing company purchases it, and then leases it to the user with a potential purchase option at the end of the lease term.
Lease
A full-service rental of property, including machinery, vehicles, and electronic equipment.
Does not include an option to purchase the rented property.
Factoring Contract
A company transfers its clients’ debts to a specialist firm that handles collection, financing, and credit guarantees.
Purchase Orders
When a company needs goods, it issues purchase orders to selected suppliers.
A purchase order is a formal request from a business or professional to a supplier for specific goods or services.
Formalization of Orders:
Processed by the company’s purchasing department, starting with a request and monitored until the goods reach stock.
Order formulation methods:
- Letter, fax, or email.
- Purchase order form.
- Phone call.
- Commercial agent or representative.
Types of Orders:
Firm Order:
Buyer and seller agree on the transaction terms, often pre-negotiated in a contract.
Conditional Order:
Buyer sets conditions, and the order’s fulfillment depends on reaching an agreement with the seller.