Contract Law Essentials

What is a Contract?

A Contract is a basic pillar of the economy. Through it, the sharing and distribution of goods and services are made. The parties do so freely and voluntarily. It is an agreement of wills between two or more persons designed to create obligations between them.

Key Elements of a Contract

• Consent: Is the common wish of the parties.
• Purpose: The object or subject matter upon which the contract lies.
• Cause: Is the justification for the obligations of the parties to the contract. Without cause, there is no contract.

Types of Contracts

• Typical: Have legal regulation.
• Atypical: Without specific legal regulation.
• Unilateral: Only obligations for one party.
• Bilateral: Obligations for both parties.
• Onerous (Costly): Both parties seek a benefit.
• Gratuitous (Free): One party benefits without giving something in return.
• Principal: Has independent existence.
• Accessory: Depends on a principal contract.
• Commutative: The benefit is certain and known at the time of contracting.
• Aleatory (Random): The benefit depends on an uncertain event.
• Consensual: Perfected by mere consent.
• Formal: Requires a special form for perfection.
• Real: Requires the delivery of the thing for its perfection.
• Mortis Causa: Made during life with effect after death.
• Inter Vivos: Made and effective during the parties' lives.
• Adhesion Contract: One party accepts conditions imposed by the other.
• Civil Contracts: Those generally made by consumers.
• Commercial Contracts: Contracts made by companies, seeking profit.
• Development Contract: Preliminary contracts involving offer, acceptance, and negotiation.

Effects of Contracts

Contracts establish binding relations. These obligations have the force of law. Contracts produce effects between the contracting parties and also with their successors (causahabientes). The contract's binding force creates obligations.

Interpretation of Contracts

Contracts can be interpreted taking into account the willingness of the parties. If there are omissions in a contract, it is interpreted by the clauses that are related to that point and in that type of contract. The principle of good faith is always applied.

Contract Inefficiency

Inefficiency refers to situations where a contract does not produce its intended effects.

Invalidity

Invalidity occurs when the contract is void or voidable. This can be due to issues like vitiated consent (e.g., violence, error, or fraud).

Rescission

Rescission applies when a contract, valid in principle and producing effects between the parties, can be dissolved if a third party with a demonstrated interest seeks its termination.