Contract – Concept, parts and types of contract

We explain what a contract is and the types of contracts that can be made. In addition, its parts and its difference with an agreement.

A contract is a pact of obligations and rights between two legal or natural persons.

What is a contract?

It is called a contract to a legal document that expresses a common agreement between two or more characters trained to do so (known as the parties to the contract), who are bound by this document towards a certain purpose or thing, the fulfillment of which must always be bilateral, or otherwise the contract will be considered broken and invalid.

In other words, a contract is a covenant of obligations and rights between two persons (legal and / or natural) who undertake to respect the terms agreed in writing, and submit to the laws of the country to resolve any dispute arising out of the terms of the agreement. In each country or region of the world there are different requirements for the elaboration of a contract, but its essence is always more or less the same.

The contracts are an inheritance of the legal system of the Roman Empire, in whose law the convent (agreement), which included two forms of manifestation: the pactum when there was no name and no cause, and the contract when there were. The latter were typified and named in Roman Law and are the predecessors of our current documents.

Contract types

Nominated or typical contracts are those provided and regulated by law.

The contracts can be classified into:

  • Unilateral and bilateral. The contracts will be unilateral when only one of the parties involved is the one that acquires the obligations, while in bilateral contracts both parties acquire obligations of reciprocal fulfillment.
  • Onerous and free. Onerous contracts are those in which there are liens and reciprocal benefits between the parties, and at the same time both undertake a certain amount of sacrifice, as in the case of sales and purchases. The free ones, on the other hand, provide the benefit for only one of the parties, leaving the obligations to the other, as in loan contracts.
  • Commutative and random. This classification applies only to bilateral contracts, since commutative contracts are those in which the benefits promised by the parties are true from the moment the legal act is celebrated, such as in the sale of a property. In random cases, on the other hand, the benefit will depend on some future or fortuitous event, such as wills.
  • Main and accessories. The main contracts are autonomous pieces of jurisprudence, they do not depend on anyone, while the accessory contracts are supplementary to a main contract on which they depend.
  • Instantaneous and successive tract. Instant or single-tract contracts are those that are fulfilled at the very moment they are signed, while successive contracts are fulfilled in a specified period and that may or may not be periodic, with interruptions or intermittent, according to mutual agreement of the parties.
  • Consensual and real. Consensual contracts are those in which the manifest agreement of the parties is sufficient and unnecessary to establish the agreement; while the real contracts conclude when one party delivers to the other the thing on which the agreement is to be seen.
  • Private and public. This classification depends on whether it is whether the people who sign it are private entities (third parties), or whether it is a contract with the State, respectively.
  • Formal, solemn or not solemn and informal. Contracts are formal when the law orders that the consent between the parties is manifested by a certain means to validate the agreement, and they will be informal when this is not necessary. At the same time, formal contracts will be solemn when it also requires certain rites to take effect (such as marriage) and not solemn when it does not require it.
  • Nominated and outliers. Nominated or typical contracts are those provided and regulated by law, while unnamed or atypical contracts may be hybrids between several contracts or perhaps novel forms of the same, not yet contemplated in any respective legal code.

Parts of a contract

Contracts commonly present a lot of formal freedom, as long as all the relevant and necessary information is included in them. However, they usually have sections such as the following:

  • Qualification. Where the nature of the contract is indicated.
  • Substantive body. First section where the parties involved are identified and contextual information is provided such as the contract signing date, the intervening representations, the identification of the committed objects or services, etc.
  • Exposition. Where there is a list of the antecedents and recorded events, and the necessary explanatory clauses are included later.
  • Normative body. Where the agreements signed between the parties and the possible sanctions, if any, are detailed.
  • Closing. End of contract formula that includes the signatures of the parties.
  • Annexes. If necessary.

Difference between contract and agreement

The agreements are mutual agreements established by people without intervention of the law.

At first, all contracts are agreements, but not all agreements are contracts. This is because the agreements are mutual agreements established by people and that oblige them to comply with the commitment, but without the intervention of the law. For this reason, they are usually oral and depend on the commitment and the ethical and moral disposition of those involved.

Contracts, on the other hand, are made in front of the law and therefore are protected by the legal institutions of the State. For that reason they are duly written and registered.