In legal practice, it's common to see contracts whose names don't correspond to their actual content. This raises an important question: what happens when the name of a contract doesn't match what was actually agreed upon?
Under the rules of contract interpretation, the name or designation given by the parties to the agreement does not define its nature. In fact, Article 1851 of the Federal Civil Code establishes that if the terms of a contract appear to be contrary to the parties' evident intention, the latter shall prevail.
It would be meaningless for the parties to be able to arbitrarily modify the rights and obligations they assume or acquire in a contract, simply by changing its name or title.
So how do you determine the true nature of a contract and, therefore, the obligations each party assumes?
Our highest courts in the country have indicated that the following aspects must be addressed to unravel the true nature of a contract:
- The intention of the parties when contracting;
- The content of the contract and;
- The facts and acts carried out by the parties.
Thus, applying this rule, our courts have determined, for example, that "promises of sale," in which the price and the item have already been agreed upon, are in fact definitive sales contracts. This is because, according to the law, a sales contract exists from the moment there is an agreement on the price and the item; therefore, regardless of the name the parties give to the agreement, it will be a definitive sales contract.
Or, another example could be, if a contract called a "lease agreement" establishes that the alleged landlord is obligated to transfer ownership of a property, the alleged tenant agrees to pay a certain sum of money for it and, furthermore, in the execution of the contract the parties act in accordance with those obligations, it is clear that the intention of the parties was to enter into a sale, so it is logical that it is not a lease agreement.
In conclusion, there are cases in which the name or title of a contract is not consistent with what is actually agreed upon in it, so it should always be considered that the true legal nature of the contract is determined by its content, the intention of those who sign it, as well as the facts and acts performed by the parties, and we should not be guided simply by the heading that appears in the document.
