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Purchase and Sale Agreement: Obligation to Pay a Given Monetary Price

Written By: Adrián Salgado and Marimar Pérez-Cacheaux

Cacheaux Cavazos & Newton

Mexico

The Federal Civil Code states that “a purchase and sale shall occur when one of the contracting parties agrees to transfer ownership of an item or a right, and the other agrees to pay for such, a given monetary price.” With respect to such matter,  the Supreme Court of Justice of the Nation has published legal opinion number XXI/2014 (10ª) titled “Purchase and sale agreements.

Obligation to pay a given monetary price,” issued by the First Chamber. According to such legal opinion, the term “given” is not limited to the fact that the price be definite, but also means that the price should be fair, serious and real; in other words, it should not be simulated, fictitious or ridiculous.   The price is ridiculous if there is no proportionality between it and the real value of the item being sold. Beyond what is established, the court explained that it is not mandatory for the price to be the exact true value of the item, but that there must be a certain degree of proportionality between one and the other, because if such is not the case, the transaction would not involve a purchase and sale agreement, but a gratuitous gifting arrangement.

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The general information contained herein is intended for informational purposes only. It is not intended to be, and should not be construed as, legal advice or legal opinion on any specific facts or circumstances.

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