What Is a Contract?
A contract is an agreement entered into by two or more parties, intended to be legally enforceable by a court of law. A contract between a buyer and a seller is known as a sales, commercial, business, or mercantile contract — the buyer is prepared to pay a price, while the seller is prepared to give out the good.
Types of Sales Contracts
- Simple contracts: don’t need any special formality, and can be made orally, in writing, or published. The parties lay down the terms and are obliged to respect them; if broken, the court can order damages. In the absence of an oral or written form, terms follow the sale of goods acts of 1893.
- Specialty contracts: require special formalities to be enforceable in law, such as sales-of-land contracts and hire purchase. These must include the names of the parties, the price, and signatures.
Characteristics of a Contract of Sale
- Consensual: perfected by mere consent of the parties, with no further act needed.
- Bilateral: both parties are bound to fulfil obligations toward each other — the seller to deliver, the buyer to pay.
- Onerous: the thing sold is given in consideration of the price, and vice versa.
- Commutative: the thing sold is considered the equivalent of the price paid.
- Aleatory: in a sale of hope, one or both parties bind themselves to give or do something contingent on an uncertain future event.
- Nominate: the contract is given a special name or designation in the Civil Code.
