Undoubtedly, one of our state’s most commonly used contracts is the purchase and sale contract. Even more important than the lease contract (which my law firm discussed in the entry Everything You Need to Know About the Lease Contract Agreement in Mexico). And how could it not be if transactions between people are the order of the day, whether acquiring goods for self-consumption or simply to earn a living.

Despite this daily occurrence, the truth is that many people still make multiple mistakes in their transactions. The first and most important thing is not to buy through written contracts. Other mistakes come from there, such as signing the contract in writing but not before a notary public or containing the most important clauses to safeguard the legal business.

That is why we decided to write an entry outlining the ABC of the purchase and sale contract in the state of Chihuahua so that the layman in the law knows what to expect and what the Civil Code of the State of Chihuahua stipulates. However, this general information cannot replace more personalized advice to analyze the specific case, so I encourage you to contact my law firm and seek guidance.

Without further ado, let’s start.

List of Contents

• 1) General Rules of the Contract of Sale
• 2) Sale to Different Persons
• 3) Subject of the Sale
• 4) Who Can Buy and Who Can Sell
• 5) Obligations of the Seller
• 6) Delivery of the Thing Sold
• 7) Obligations of the Buyer
• 8) Form of the Contract of Sale
• A) General Rules
• B) Private Contract
• C) Public Deed
• D) Effects Against Third Parties
• 9) Types of Sale
• A) Non-Sale Agreement
• B) Repurchase
• C) Sale of Future Things
• D) Sale in Installments
• E) Retention of Title
• 10) Litigation of the Contract of Sale

1) General Rules of the Contract of Sale

The sale, which essentially consists of an agreement of wills where one of the contracting parties is obliged to transfer the ownership of a thing or a right, and the other in turn is obliged to pay for them a certain price in money, can, as we will see below, have multiple modalities. However, there are some general rules stipulated by the Congress of the State of Chihuahua that would be worth taking into account, namely:

I.- As a general rule, the sale is perfect and obligatory for the parties when they have agreed on the thing and its price, even if the first has not been delivered, nor the second paid.

II.- If the price of the thing sold is to be paid partly in money and partly with the value of another thing, the contract shall be a sale when the cash part is equal to or greater than that paid with the value of another thing. If the cash part is lower, the contract shall be a barter.

III.- The contracting parties may agree that the price shall be in effect on a given day or place or the one set by a third party designated by them in the contract or later.

IV. Once the third party sets the price, the contracting parties may not reject it except by mutual agreement.

V.- If the third party does not want or cannot set the price, the contract shall be void unless otherwise agreed.

VI.- The price setting cannot be left to the discretion of one of the contracting parties, the buyer, or the seller.

VII.- The price of fruits and cereals sold on credit to non-merchants and for their consumption may not exceed the highest price of those goods in the place in the period running from delivery to the end of the following harvest.

VIII.- Purchases of things customarily tasted, counted, weighed, or measured shall not take effect until after the objects sold have been tasted, counted, or measured.

IX.- When it comes to selling specific and well-known articles, the contract may be made on samples.

In the event of disagreement between the contracting parties, 2 appointed experts, one for each party and a third in case of dispute, appointed by them or by the judge if they do not agree, shall decide on the conformity or non-conformity of the articles with the samples or qualities that served as a basis for the contract.

X.- When the item is sold by number, weight, or measurement with an expression of these circumstances, the buyer may request the rescission of the contract if, in the delivery, there is a deficiency that the seller cannot or does not want to make up for or an excess that cannot be separated without harming the item.

XI.- If the sale was made only at sight and by stock, even when it is of things that are usually counted, weighed, or measured, it shall be deemed to have been made once the contracting parties agree on the price, and the buyer may not request the rescission of the contract alleging that he did not find in the stock the quantity, weight or measurement that he estimated.

It’s understood that the sale is made by stock when it falls on a set of things that are not estimated individually but as parts of a whole.

XII.- There will be grounds for rescission if the seller presents the stock as being of a homogeneous species and conceals in it species of inferior class and quality than those that are in sight.

XIII.- If the sale of one or more properties is made for a lump sum and without specifically estimating its parts or measurements, there shall be no grounds for rescission, even if there is a shortage or excess in the delivery.

This action prescribes (statutes of limitations) in one year.

XIV.- The costs of writing and registration in the Public Property Registry shall be borne by the buyer unless otherwise agreed. In the case of the respective taxes, the provisions of the relevant laws shall apply.

XV.- Sales that produce the concentration or hoarding, in one or a few hands, of articles of necessary consumption and that have the purpose of obtaining an increase in the prices of these articles are void.

2) Sale to Different Persons

If the same thing is sold by the same seller to different persons, the following shall apply:

I.-  If the thing sold is movable, the sale made first in date shall prevail; if it is impossible to verify the priority of the latter, the sale made to the person in possession shall prevail.

II.- If the thing sold is an immovable, the first registered sale shall prevail, and if no one has been registered, the sale made to the person in possession of the immovable.

3) Subject of the Sale

Although it may seem obvious, it is pertinent to clarify that no one can sell anything other than his property unless he is representing another and has sufficient powers of domain to do so.

In this sense, the sale of another’s property is affected by absolute nullity, and the seller is responsible for damages and losses even if he has acted in good faith.

However, the contract shall be revalidated if the seller acquires the ownership of the thing sold by any legitimate title before the eviction takes place and if the legitimate owner of the property expressly ratifies the contract.

Finally, the sale of things or rights in dispute is not prohibited, but the seller who does not declare the circumstance that the thing is in dispute is responsible for damages if the buyer suffers eviction and is also subject to the respective penalties.

4) Who Can Buy and Who Can Sell

Not all people can sell and buy property in our state. Above all, those who have some special connection or link with third parties, such as the following cases:

I.- Foreigners and legal entities cannot buy real estate, except in accordance with the provisions of article 27 of the Political Constitution of the United Mexican States and its regulatory laws. For this purpose, I recommend the entry where I dealt with the subject of foreign investment in Mexico in Foreign Investment in Mexico.

II.- Magistrates, judges, agents, and assistants of the Public Prosecutor’s Office, official defenders, lawyers, attorneys, and experts cannot buy the property that is the subject of the trials in which they intervene. Nor may they be assignees of the rights held over the aforementioned property.

III.- Children who are subjected to parental authority from their parents.

IV.-  Owners of undivided property may not sell their respective share to strangers except in compliance with the right of first refusal (preemptive rights)

V.- The following may not buy the goods whose sale or administration they are in charge of:

A) Guardians and curators.

B) Agents, unless the principal has expressly authorized it in the instrument in which the mandate is recorded.

C) Testamentary executors and those appointed in the case of intestacy.

D) Intervenors appointed by the testator or by the heirs.

E) Representatives, administrators, and intervenors in case of absence.

F) Public servants.

VI.- Experts and brokers may not buy the goods in whose sale they have intervened.

5) Obligations of the Seller

The seller is obliged:

I.- To transfer ownership of the sold good.

II.- To preserve and guard the good while delivering it.

III.- To deliver the sold goods to the buyer.

IV.- To be responsible for any hidden defects or flaws in the sold goods.

V.- To guarantee the buyer peaceful possession of the sold goods.

VI.- To be responsible for the indemnity in the event of eviction.

VII.- To provide the buyer with the legal documents required to formalize the contract, in addition to those established by tax laws.

6) Delivery of the Thing Sold

In particular, the delivery of the thing sold can be real, legal, or virtual.

Real delivery consists of the material delivery of the thing sold or the delivery of the title if it is a right.

On the other hand, there is legal delivery when, even if the thing is not materially delivered, the law considers it received by the buyer.

Finally, from the moment the buyer accepts that the thing sold is at his disposal, it shall be considered as having been virtually received, and the seller who keeps it in his possession shall only have the rights and obligations of a depositary.

In addition to these, the following rules must be observed in the delivery of the thing sold:

I.- The delivery costs of the thing sold are the seller’s responsibility, and those of its transport or transfer are the buyer’s responsibility unless otherwise agreed.

II.- The delivery of the thing sold must be made within the agreed period.

The seller is not obliged to deliver the thing sold if the buyer does not pay the price unless a term for payment has been specified in the contract.

He is also not obliged to deliver, even if he has granted a term for payment if after the sale it is discovered that the buyer is insolvent so the seller runs an imminent risk of losing the price unless the buyer gives him a guarantee to pay at the agreed term.

III.- The seller must deliver the thing sold in the state in which it was when the contract was perfected.

IV.- The seller must also deliver the yields produced since the sale was perfected, as well as the shares and titles of the thing.

V.- If the boundaries have been designated for the sale of a property, the seller shall be obliged to deliver everything within them, even if there is an excess or decrease in the measurements expressed in the contract.

VI.- Delivery of the thing sold must be made at the agreed place, and if there is no place designated in the contract, at the place where the thing was located at the time it was sold.

VII.- When the thing sold has hidden defects or flaws, the seller shall be liable according to the remedy for eviction.

7) Obligations of the Buyer

The law sets out the following minimum obligations of the buyer:

I.- The buyer must comply with everything he has committed and pay the item’s price at the agreed time, place, and manner.

II.- If no time and place have been set, payment shall be made at the time and place in which the item is delivered.

III.- If there is doubt as to which of the contracting parties must make the delivery first, both parties shall deposit the payment with a third party.

IV.- The buyer must pay interest for the time between the delivery of the item and the payment of the price in the following cases:

A) If it has been so agreed upon.

B) If there has been default.

V.- In sales on credit, without stipulating interest, the buyer does not owe interest for the reason of the interest, even if he receives the fruits of the thing in the meantime, since the term was part of the contract itself and it must be presumed that this consideration increased the price of the sale.

VI.- If the term was granted after the contract, the buyer must pay the interest unless otherwise agreed.

VII.- When the buyer on credit or with the expectation of the price is disturbed in his possession or right or has a just fear of being disturbed, he may suspend payment if he has not already done so, while the seller assures him of possession or gives him security unless otherwise agreed.

VIII.- The lack of payment of the price gives the right to request the rescission of the contract, even if the sale was made on credit.

IX.- If the buyer is in default of receipt, he shall pay the seller the rent for the warehouses, granaries, or vessels in which the goods sold are contained, and the seller shall be released from the ordinary care of preserving the goods, and shall only be responsible for fraud or gross negligence.

8) Form of the Contract of Sale

A) General Rules

The contract of sale does not require any special formality for its validity, except for real estate. This means that contracts on movable property (such as a car), even verbal ones, are valid for being sued in court.

If one of the contracting parties does not know how to write, another person with legal capacity shall sign in his name and at his request, and none of the witnesses may sign in that capacity.

B) Private Contract

The sale of real estate whose price, appraisal value, or cadastral value, at the time of the transaction does not exceed the equivalent of 1,500 times the daily value of the Measurement and Update Unit, as well as the constitution or transfer of real rights estimated up to the same amount, may be granted in a private document, which shall be ratified by the law.

C) Public Deed

If the price, appraisal value, or cadastral value exceeds 1,500 times the daily value of the Unit of Measurement and Update at the time of the operation, the sale shall be granted in a public deed.

D) Effects Against Third Parties

The contract for the sale of real estate shall have effects against third parties from the date of its registration in the Public Registry of Property.

9) Types of Sale

Different forms of sale may result depending on the object and the parties. I list the most important ones in Mexico below:

A) Non-Sale Agreement

It may be agreed that the purchased thing shall not be sold to a certain person, but the clause stipulating that it cannot be sold to any person is void.

However, if this agreement is violated, the responsible party is obliged to pay the damages and losses that arise to the person with whom he contracted without invalidating the second contract.

B) Repurchase

A sale with a repurchase agreement or any other agreement that imposes on the purchaser the obligation to transfer the property to the seller is prohibited.

However, it may be stipulated that the seller enjoys the right of preference in the event that the buyer wishes to sell the thing that was the object of the contract of sale.

In this sense, if the thing is movable, the seller shall have 3 days to exercise his right of preference after the buyer has informed him of his decision to sell and the price at which he intends to do so, under penalty of losing his right if he does not exercise it within that time. If the thing is immovable, he shall have a term of 8 days to exercise the right under the same penalty.

The right of preference shall be subject to the following rules:

I.- It must be expressly stipulated in the contract and registered in the Public Property Registry so that it takes effect concerning third parties.

II.- In the case of a sale, the person in whose favor it was established shall have the right to be preferred on equal terms with a third party.

III.- It cannot be transferred or transmitted by inheritance.

The breach of the preference agreement only causes the obligation to pay the damages and losses that have been generated.

C) Sale of Future Things

If future things are sold, with the buyer assuming the risk that they shall not come to exist, the contract is random and is governed by the provisions of the chapter relative to the purchase of hope.

D) Sale in Installments

The sale authorizes the buyer to pay the price in installments and immediately transfers ownership of the sold goods to the buyer.

However, if the sale relates to real estate, it may be agreed that the non-payment of one or more installments shall cause the rescission of the contract. The rescission shall produce effects against the third party acquiring the goods in question, provided the rescission clause has been registered in the Public Registry.

If the sale is rescinded in installments, the seller and the buyer must return the services that have been made to each other, but the seller who has delivered the sold thing may demand from the buyer, in his claim or in the corresponding trial, for the use of it, the payment of a rent that experts will fix, and an indemnity also fixed by experts, for the deterioration that the thing has suffered.

Furthermore, the buyer who has paid part of the price is entitled to legal interest on the amount he has paid. If the contract stipulates a rate for the buyer to pay interest during the period set for settling the price, if the transaction is rescinded, the buyer shall be entitled to have the sums paid returned to him with interest at the same rate agreed upon.

E) Retention of Title

It may be validly agreed that the seller reserves ownership of the sold item until the price is paid.

However, as long as the period for paying the price has not expired, the seller cannot transfer the thing sold with retention of title, and a preventive note shall be made on the margin of the respective sales registration in which this ownership limitation is recorded.

Finally, in the sale with retention of title, as long as the ownership of the thing sold does not pass to the buyer, if the latter receives the thing, he shall be considered a lessee of the same unless the parties have agreed otherwise.

10) Litigation of the Contract of Sale

An ordinary civil trial must be filed to demand the mandatory enforcement of the contract of sale, its relative or absolute nullity, rescission, and even civil liability. The entry Basics of the Ordinary Civil Trial in Chihuahua discusses this trial in detail. I invite you to read the whole series about it.

By Omar Gómez

Mexican Tax, Administrative and Constitutional Attorney

Partner at belegalabogados.mx

Visit my personal website at ogomezabogado.com