Contract law: property sector (mortgages)

In order to determine whether a contract is commercial in nature, it is necessary to refer to Article 2 of the Spanish Commercial Code, which provides that ‘the acts set out in this Code and any other acts of a similar nature shall be considered acts of commerce’.

It therefore follows from that article that the concept of commercial contract encompasses both the contracts referred to in the Commercial Code and contracts which are of the same nature but not referred to in that code.

• Definition of commercial contract: a commercial contract is a contract for the provision of services in which the parties are professionals or undertakings that are cooperating independently.
• Commercial contracts are regulated by commercial law.
• The commercial nature of a contract is determined by Article 2 of the Spanish Commercial Code, which provides that the acts of commerce covered by that Code and those of a similar nature are commercial acts.
• New forms of contractual arrangements known as ‘company contracts’ have emerged, which classify as commercial:
  • contracts comprising the productive or commercial activity carried out by an undertaking using its range of human and material resources,
  • contracts that meet the formal requirements, and
  • contracts that establish or give rise to the undertaking as such.

In the light of Article 50 et seq. of the Commercial Code concerning the general rules of the Civil Code, reference should be made to the following:

Completion of the contract

• Contracts are completed:
  • with the consent of the parties (Article 1262 of the Civil Code),
  • if an agent or broker is involved, a contract is completed when the contracting parties have accepted the proposal of the agent or broker (Article 55 of the Commercial Code).
• Consent is when the offer made by one of the parties concerning the subject matter and purpose of the contract has been accepted by the other party. In addition to that general rule, which has not been amended in the commercial sphere, a number of special features have emerged.
• Consent is governed by Article 54 of the Commercial Code. It provides that consent arises from the moment that:
  • the party making the offer is aware of the acceptance,
  • in cases where acceptance has been conveyed, only a person not acting in good faith could be unaware of it. In this situation, the contract shall be deemed to have been concluded at the place where the offer was made.

Form of the contract

Commercial contracts are valid and binding and actionable (Article 51 of the Commercial Code):

• whatever their form or the language in which they are entered into,
• regardless of the category to which they belong and the scope of their subject matter, provided that their existence is proven by any of the means established by civil law.

Exceptions (Article 52 of the Commercial Code):

• Contracts which by law must be in writing or require certain specific forms in order to be effective (for example, a notarial instrument).
• Contracts entered into abroad where the law requires specific instruments, forms or formalities in order to be valid, even if these are not required under Spanish law.

Proof of contract

• The Commercial Code has specific rules on this matter, but they apply only to the extent that they are compatible with Law 1/2000 of 7 January on Civil Procedure.
• In that context, this matter is governed by Article 25 to Article 33 of the Commercial Code.
• Article 31 of the Commercial Code states that the probative value of an undertaking’s books and other accounting documents is to be assessed by the courts in accordance with the general rules of law.

Interpretation of contracts

• The specific rules for the interpretation of contracts are governed by Articles 57, 58 and 59 of the Commercial Code.
• In the alternative, the rules on the interpretation of contracts set out in Articles 1281 to 1289 of the Civil Code apply.

Those rules are, in essence, the following:

• Contracts must be executed and performed in good faith, according to the terms in which they were made and drafted, without distortion by arbitrary interpretation of the proper and usual meaning of the words and without limitation of the effects naturally deriving from the manner in which the contracting parties have set out their intentions and contracted their obligations.
• If a public official (e.g. a notary public) was involved and there is a discrepancy between the copies of the contract, the version contained in the records of the public official prevails.
• If doubts arise which cannot be resolved by application of the legal rules relating to trade practices, the question must be resolved in favour of the party burdened by the obligation (principle of favouring the debtor).
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The following are some examples:

• Contract of commercial sale
• Commercial exchange contract
• Commercial land transport contract
• Insurance contract
• Commercial guarantee
• Bills of exchange, cheques, promissory notes and letters of credit
• Special contracts for maritime trade (charter contract, bulk contract and maritime insurance contract)
• ‘Company’ contracts (more commonly ‘partnership’ agreements)
• Joint venture agreement
• Commercial commission contract (and other forms of commercial mandate)
• Agency contract
• Commercial deposit contract (and the various banking contracts)
• Commercial loan agreement (including securities-backed lending) regulated by Articles 312 et seq. of the Commercial Code