Legal Reservation of Ownership Pact
Legal Reservation of Ownership Pact
The legal reservation of ownership establishes that ownership is not transferred to the buyer until the price is paid. It has practical usefulness in credit sales, fulfilling a protective function for the seller who hasn't given a deadline for payment of the price.
In Uruguay, two doctrinal positions have been found. One argues that this "pactum reservatii dominii" or "pactum reservati domini donex pretium solvatur" hinders the transfer of ownership, based on the needs of legal traffic and its commercial, economic, and social requirements regarding special deadline obligations, where other guarantees such as mortgage do not fulfill the purpose of satisfaction.
The other posits that this agreement acts as a more intense real guarantee, as the first seller retains ownership.
Gamarra argues that this clause is null; however, new doctrine, followed by Del Campo, argues that it is admissible for this agreement to be lawful, within the category of atypical agreement according to article 1732 of the Uruguayan Civil Code.
The seller is protected by creditor protection institutes, whether of legal credit origin such as the "pauliana action" and subrogation action, or of contractual origin such as mortgage, bond, penalty clause, and depending on the position adopted, the legal reservation of ownership in credit sales with a payment deadline where delivery is advanced to payment and the seller reserves ownership, keeping it in their patrimony.
While the application of this legal reservation of ownership is debated in Uruguay, in other countries such as Spain we can observe that there is acceptance for its application in the area of movable goods, although it is not regulated in its Civil Code, it is mentioned in the Law of Sale of Movable Goods Payment Plans, article 7 and also in laws 483 to 485 of the NAVARRA Regional Compilation. It is important to note the system under analysis in the positions. The Uruguayan code remained within the guidelines of classical Roman law, as did Germany, Spain, Chile and Argentina.
In Roman law, the contract had obligational efficacy but not real efficacy. In the French regime, the convention, the contract was constitutive of obligations. article 1247 dates back to the time of Justinian (530-565 AD approx.) and is a restricted concept.
The Uruguayan regime is a mixture of the French regime ("conventional constitutive of obligations") with the Roman regime ("distinction between title and mode"), the French law after the Napoleonic Code (1804) adds to the contract in addition to the obligational efficacy, REAL EFFICACY. The Italian Code of 1865 adheres to the modification made in France by the Napoleonic Code, but unlike this and the Uruguayan code, it incorporates within the contract the extinctive and modificatory legal transactions, ratified by the Italian Code in 1942.
Positions in Doctrine:
Negative Position.
Following Gamarra, with Art 1732 of the Uruguayan Civil Code, it has been said that this clause is not valid. It is argued in this position that the right to dispose is never affected, even if the buyer becomes the seller, and the contract will be integrated as if this clause had never existed.
Positive Position.
Following Del Campo, with Art 769 of the Uruguayan Civil Code, which establishes the conditions in its final clause. However, this agreement goes beyond the obligations stage and operates in the transfer of ownership.
Mantero notes that it is explicitly referred to in Law 16.072.
According to Gamarra, the doctrine has noted a contradiction between Arts. 769 and 1732 of the Uruguayan Civil Code. article 769 states that if the price is not paid, the seller remains the owner of the sold item. Conversely, article 1732 states that ownership is transferred even if the price is not paid.
Guillot, followed by Amézaga and Cestau, propose that the applicable hypothesis must be determined, and they distinguish between:
a- CASH SALES: STIPULATED TERM. [Reservation of ownership cannot be agreed upon] . article 769 of the CCU applies in case a term for payment has not been stipulated.
b- CREDIT SALES: TERM OR GUARANTEES GIVEN. [Reservation of ownership cannot be agreed upon] . If a term has been stipulated or a real guarantee has been given, whether it be a pledge, mortgage, or mortgage, the ownership is transferred. That is, it cannot be agreed upon.
However, this author proposes that the seller has a right of repossession for failure to pay the price when it was due to be paid upon delivery and it has been verified, therefore, the application of article 1732 of the CCU is not necessary in case a term for payment has not been stipulated.
According to Gamarra, there is no contradiction but rather an interpretation has been made of what Narvaja took, on the one hand the Art 769 CCU. of Acevedo and on the other the Art 1732 CCU. of the Chilean Code. The norm of Art 769 CCU. sets a principle and an exception, and Art 1732 CCU. refers to cases of exception. This is also understood by Del Campo in reference to Art 17 CCU. in that when the law is clear its literal tenor is not disregarded on the pretext of consulting its spirit.
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