Contracts in Costa Rica.
A business lawyer is always recommended for contract drafting in Costa Rica. Our law firm can help you with this, and with contract review. Contract formation is key for legal security. Most contracts in Costa Rica, are not susceptible to forms and formalities. If what the contracting parties convene does not constitute a violation of Costa Rica business laws, it will be legally binding. Thus, the legal system will protect you in case of a contractual breach.
How are contracts in Costa Rica defined?
Under Costa Rica business laws, the definition of a contract is a legally binding pact between two or more people. The object of the contract is the obligation of the parties. The object and the cause of the agreement must be legal. This means that contracts that carry out illegal commitments are not protected by law and are null and void. Another essential factor of any contract is that it can be legally enforced or resolved through litigation. You should know that contractual obligations may consist in:
A. Doing something.
B. Giving something.
C. Not doing something.
How are contracts formed and perfected in Costa Rica?
Contract formation in Costa Rica is perfected by mere consent. However, in some contracts, certain formalities are sometimes required by law. So, mere consent is sometimes not enough. This, however, is the exception since contractual freedom is the norm.
In this article, I will be able to offer several links to descriptions of the different agreements in Costa Rica that I can help you with as a business lawyer. I will also provide links to other pages where I cover what to do in case of contractual breaches, which can end in civil litigation.
Can contracts be annulled or executed through litigation?
Yes. Contract annulments are possible through a civil process of anulability. In case of a contractual breach, you can file for contract enforcement or contractual resolution. In both scenarios, civil damages, and interest, can also be requested. These procedures can even be filed in different jurisdictions. The civil jurisdiction is the norm for these types of proceedings, but, there are exceptions. For example, the Agrarian Jurisdiction must execute or resolve an agricultural contract. Contracts with the Public Administration (State of Costa Rica) are the subject matter of the Administrative Judge.
The Civil Code is the Costa Rica law that regulates the formation, execution, and termination of contracts. Under Costa Rican law, agreements must be entered voluntarily, in good faith, and executed by their terms. However, it´s essential to know that there are instances where civil law does not regulate contracts. For example, when a commercial actor, such as a corporation, makes a contract. In such cases, the Commercial Code of Costa Rica governs the situation. Therefore, knowing what law applies is essential if you end up exercising a civil action due to a breach of contract.
Business law contracts in Costa Rica that our law office can assist you with:
Donations
Asset donations may include vehicles and properties. My law office can draft this for you.
Property and car sales. Options to purchase
Mortgages are business law contracts my law office can assist you with.
Due Diligence Agreements
When you buy your property, we guide you through all the steps beginning with due diligence.
Car liens
Loan and credit transfers
Guarantee Fiduciary Agreements
Rentals
Types of contracts in Costa Rica business laws:
Unilateral agreements:
They are unilateral when only one of the parties obligates himself to perform a determined obligation for the benefit of another. Bonds, powers of attorney, donations, and mortgages are examples of unilateral deals.
Bilateral contracts:
Unlike unilateral ones, bilateral agreements have reciprocity of obligations regarding distinct obligations by both parties. Examples are sale agreements, rental arrangements, and some mutually agreed-on divorces.
Consensual and Solemn commitments:
The mere consent of both parties perfects consensual contracts; the written word and certain formalities are accidental to the agreement. For example, the sale of a property gets perfected by the mere consent given by the seller to sell and the consent given by the buyer to buy for a determined price. The contract becomes perfect with that consent, and the written form (escritura), is something adjacent or accidental to the deal, which has already been perfected. On the other hand, solemn deals are perfected by certain solemnities that the law establishes. An example is donations, which can only be done in public scripture by a business attorney who must be a notary public.
Recordable Contracts:
Sometimes, the written form of the agreement must also be registered in the Public Registry. This is not an essential condition for the agreement´s validity but rather to give publicity to third parties. An example is when you buy a property: the public scripture must be registered so that third parties know there has been a change in the proprietor. If this is not done, the original or primitive owner remains as such in the Registry, and continues to be, to all third parties. This presents huge problems for the buyer, that may even lose the property. Your business lawyer must be on top of the proper registration of the public scripture.
Nominated and unnominated:
Nominated deals have been given a determined name and legal treatment under the law. You must remember that we have codification in our legal system. Nominated contracts are established by the law itself, like property sales agreements, mortgages, fiduciary agreements, and donations. All of these contracts have law-specific regulations in the law. Unnominated arrangements are not specified directly by codified laws, but people can create them under contractual freedom. This is where the business lawyer´s academic freedom comes into place.
Dr. Christopher Pirie.
Business lawyer and attorney in Costa Rica.
Law office in San José, Costa Rica.