Background
Through a promissory agreement one or both parties agree to execute within a period of time, a given contract that the parties do not want or may not execute at the moment. It is also known as preliminary agreement, promise of contract, promise to enter into a definitive agreement.[1]
Therefore, promissory agreements may be executed for the purpose of entering into a future contract, such as a purchase and sale agreement, a donation agreement, an exchange agreement, among others, these contracts are independent from the promissory agreement because they contain the definitive agreement.
One of the most common promissory agreements is the purchase and sale, either of real estate or personal property. This type of agreement is known as “promise of purchase and sale agreement” whereby the promissory buyer commits to purchase, and the promissory seller commits to sell a given good in the future.
According to the Federal Civil Code (the “Law”) in order for the promissory agreement to be valid, it shall be in writing, contain the main elements of the definitive agreement and be limited to a certain period of time. [2]
However, a Federal Court has ruled that when it comes to a promissory agreement, in order for the consent to become valid, the offer and the acceptance may either be express or tacit, which is a vital element for the agreement to become binding. Below you will find the rationale of such a decision.
Facts
A “promissory buyer” claimed from a “promissory seller” the rescission of a promise of purchase and sale of a real estate property, plus the refund of an advance payment and the payment of damages. The defendant (the “promissory seller”) argued that the claim was inadmissible since he had never agreed to execute it, therefore the contract never existed.
Furthermore, he had not received the advance payment, but an intermediary real estate agent did, who had already put the advance payment at the disposal of the promissory buyer.
The Judge who heard the case acquitted the Promissory seller, by concluding that since no acceptance has been given by the promissory seller, then an inexistent contract may not be rescinded.
Therefore, the promissory buyer filed a writ of amparo, arguing that even though the promissory agreement had to follow a written form, the promissory seller had implicitly accepted to execute it.
The above, since the real estate intermediary was the one who had carried out the necessary procedures and formalities before the notary public office where the deed that would formalize the definitive agreement was to be executed.
Court’s rationale
The Fifth Collegiate Tribunal in Civil Matters (the “Court”) determined that even though the promissory agreement shall be in writing, the offer and acceptance to execute it, may be granted expressly [3] or tacitly. [4] This means that, for the parties’ consent to be established, it is not necessary that it is in written form. However, once the consent has been given, it must be formalized in the form required by the law.
The Court justified its decision on the grounds that the Law establishes the consent as an essential element of a contract, which can be express or tacit. Thus, when the Law requires an agreement to have a certain formality it does not mean that the offer and acceptance must be given in the same way.
Likewise, the court held that, for the agreement to be valid, it’s necessary that the parties execute it in the form required by the law. Otherwise, it would be null and void partially, [5] although it will continue be existent. [6]
The Court concluded that for the promissory agreement to exist, it is sufficient that the offer and the acceptance are expressly or tacitly manifested. [7]
Conclusion
Regarding the requirements of existence or validity, both are essential elements for reaching and executing an agreement, but they have the following characteristics:
Existence requirements: requisites without which the agreement cannot be formed nor exist in legal life, specifically 1) consent of the parties 2) subject matter of contract.[8]
Validity requirements: essential elements that allow the contract to be made: 1) capacity of the parties, 2) the contract conforms to the form prescribed by the law, 3) consent from the parties should not be obtained by coercion, misrepresentation, fraud, undue influence, or mistake and, 4) the subject matter of the contract must be lawful. [9]
According to the Court, the offer and the acceptance that occur individually in two persons when they intend to enter into an agreement, when one of them offers to sell a good and the other party accepts it, therefore the will is formed, and jointly it constitutes the consent, which is an element of existence in any agreements.
Consequently, the Court concludes that in the promissory agreement the will does not necessarily have to be given in writing, and the lack of a writing form does not prevent its legal existence.
In addition, the Law gives the parties the right to claim from the other party the granting of the necessary formality to those contracts that are not in writing, even when the law requires such formality.
[1] Treviño García, R. (2008) Los Contratos Civiles y sus Generalidades, México: McGraw-Hill Interamericana
[2] Article 2246 of the Federal Civil Code.
[3] Express: whenever the intent is stated either orally or in writing, by the use of electronic or optical means or any other technology or by unequivocal signs.
[4] Tacit: result from any actions or circumstances which either presuppose such consent or allow such consent to be inferred.
[5] Relative nullity: when the contract exists legally but does not comply with any formality established by the law. Nevertheless, it can be remedied by ratification or by the lapse of time.
[6] Inexistence: When the contract no does not come into existence in legal life due to the lack of one or some or all of the essential elements of a contract – consent and subject matter-
[7] https://sjfsemanal.scjn.gob.mx/detalle/tesis/2026802
[8] Article 1794 of the Federal Civil Code.
[9] Article 1795 of the Federal Civil Code.
[10] Article 1833 of the Federal Civil Code.
by Monserrath Bustamante
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