New Contracts Regime in the Unified Code

The new Argentine Civil and Commercial Code (the “new Code”) that will enter into force in 2016 provides a definition of contract in the same terms as the current one: “contract is the legal act by which two or more parties express their consent to create, adjust, modify, transfer or extinguish legal relationships relating to property rights”.
 
The new Code sets out legal principles, which are essentially:

i. freedom of contract (Article 958). Allowing parties to enter into and establish the contents of the contract freely within the limits of the law, public order, morality and generally accepted standards;

ii. binding effect of the contract or principle of autonomy (Article 959). Validly constituted contracts shall be binding among parties and shall only be modified or terminated by them or as provided by law. Article 960 provides that judges may only amend the terms of a contract at the request of a party when authorized by law or as ordered by the judge when the contract clearly affects public order;

iii. good faith when entering into, interpreting and executing a contract (Article 961). The consequences of the contract are binding as well as all the consequences reasonably derived from the agreement for any diligent person. 

iv. preservation of the contract to obtain the intended economic result. This principle provides that in the event of doubt about the effectiveness of a contract or any of its provisions, the interpretation in favor of the contract and its clauses should prevail;

v. relative effect (articles 1021 to 1024). As a general rule the contract has effect on the contracting parties. It will only cause effects against third parties in the cases provided by law. The last part of Article 1195 of Velez´s Code (i.e. the current Civil Code), “contracts cannot damage others” is replaced in the new Code with the expression “the contract does not give rise to obligations on third parties”, unless otherwise provided by law. New Article 1023 defines “party” as the one who: (a) enters into the agreement in his/her own name, although he/she may act on behalf of others; (b) is represented by a grantor who acts for his/her own benefit, and (c) evidences a will to enter into the agreement, even if it is transmitted by a broker or an agent without representation. Finally, the effects of a contract are extended actively and passively to universal successors, unless it is an obligation inherent to a certain person or the transmission is incompatible with the nature of the obligation, or is prohibited by a clause in the contract or law.
 
Classification of contracts. The classification of contracts as: unilateral, bilateral and multilateral; onerous and gratuitous; random and commutative, formal and nominees and unnamed contracts are maintained. But the distinction between consensual and real (in rem) contracts is removed. The general rule is that contracts are consensual except in cases where the law requires certain specific formalities.
 
Consent. Contractual negotiations are based on three principles: freedom of negotiation, good faith and confidentiality (Articles 990 and 992).
 
The general rule is that a contract exists when the other party accepts the offer or when the behavior of the parties evidences the existence of an agreement (Article 971). In accordance with the predominant criterion in comparative law, the new Code leaves aside the theory of remission (article 1154 of Velez´s Code) and chooses the theory of reception.   It is considered that there is evidence of will (whether because it was oral, a document was received or any other evidence) when the party knows or was supposed to know about such will (Article 983).
 
Acceptance must be in full compliance with the offer to conclude the contract. Any amendment to the offer shall be understood as a new contract, which must be admitted by the offeror (Article 978).
 
Preliminary Contracts. “Letters of intent” are included among the various documents that parties can enter into when starting negotiations. Article 993 defines them as the instruments used by parties to express a willingness to negotiate on certain bases, with respect to matters that may be included in a future contract. Letters of intent should be interpreted restrictively and only if they contain all the elements of an offer should they be compulsory.
 
Preliminary contracts, with the purpose of allowing the parties to make progress towards the final contract, are regulated in Articles 994 to 996. Preliminary contracts must contain an agreement on the particular essential elements that will identify the definitive contract. Their duration is of one year or less depending on the intention of the parties, who can renew this term periodically. The parties can also agree to bind themselves to enter into a future contract, that will be subject to the regime of “to do” obligations (obligaciones de hacer) (Article 995). Option agreements are considered to be preliminary contracts (Article 996).
 
Special Agreements and Clauses. The right of first refusal has been classified as an obligation to carry out a certain behavior consisting of entering into a future contract with the other party or parties. The rights and obligations under this provision may be transferred to third parties by following the procedures that have been stipulated. The new Code provides that this obligation may be included in all contracts and not just in purchase and sales contracts (Article 1368 of Velez´s Code).
 
Article 999 establishes that a contract that depends on conformity or authorization of a third party shall be treated as an agreement subject to the rules of conditions precedent.
 
With regards to the down payment (seña), unlike the previous system, it will be interpreted as a confirmation of an act, unless the parties agree otherwise (Article 1059). If the down payment is of the same type of what should be given under the contract, the down payment shall be considered as given as part of payment.
 
Other types of agreements in the new Code are, for example, the long-term contract, which is regulated in Article 1011. This agreement is described as an agreement in which time is of the essence to fulfill the purpose of the contract. The effects desired by the parties or the purpose of the agreement shall be satisfied only after a certain term has gone by.
 
Finally, the new Code regulates “related agreements” in Articles 1073 to 1075, as those in which two or more independent contracts are linked by a previously established common economic purpose, so that one of them was decisive for the other agreement to occur.
 
In conclusion, the new Code generally follows the guidelines of the current code on various issues, especially those relating to incapacity and inability to enter into contracts, object of a contract, purpose, form and interpretation. The new Code introduces proposals that have been discussed by scholars and economists.