Essential Business Agreement Types

Commercial Contract Types Explained

Sales Contract

In a sales contract, one party agrees to deliver a specific item, and the other agrees to pay a certain price in money or a sign representing elements of the object.

Buying Considerations

The object of the sale must be lawful for trade, and this is determined legally. The price is the primary obligation of the buyer.

Obligations of Buyer and Seller

• Seller: Must deliver the item. This includes ensuring the buyer has legal and peaceful possession of the item sold and responding to hidden defects or flaws the item may have had (sanitation).
• Buyer: Must pay the agreed price.

Exchange Contract

An exchange contract is a contract transferring ownership in which each party agrees to transmit to the other an item or right in exchange for the other party agreeing to convey something in return. In this type of contract, there is no monetary price involved.

Lease Contract

In a lease contract, the obligations of the lessor (landlord) are to deliver the item and maintain the tenant in peaceful enjoyment of the item throughout the entire duration of the lease. The lessor has an obligation to perform necessary actions to maintain the conditions for the intended use of the property.

Lessee (Tenant) Obligations

The lessee must:

• Pay the agreed rental price.
• Use the leased property only for the agreed purpose, refraining from acts that cause injury to the landlord.
• At the end of the contract, return the property in the same condition it was received (allowing for normal wear and tear).

Distribution Contracts

These are contracts in which the dealer purchases goods for resale on their own behalf, while also pledging to defend the interests of the manufacturer within the framework of an integrated network. Distribution contracts include three main categories:

• Selective: Takes place through dealers granted an exclusive area by the manufacturer.
• Exclusive: Occurs through a franchised dealer.
• Franchised: Done through franchisees.

Agency Contract

Through an agency agreement, a natural person or legal entity, called the agent, is obligated to another party on a permanent or stable basis, for remuneration, to promote commercial acts or transactions for others. The agent acts as an independent broker and does not assume the risk and peril of such operations, unless otherwise agreed.

Agency Contract Characteristics

• Term: Can be agreed upon for a fixed time or indefinitely.
• Parties: Typically a contract between businesses (both parties are commercial entities).
• Object: To promote business on behalf of a principal who is represented.
• Payment: It is a paid contract.
• Remuneration: Depends on the agreement and usually relates to the results of the agent's management.
• Nature: Consensual and typically involves costs (expensive).