Update information 2023 of Colombia about Purchase of property, stocks, and other common assets.
Esteban Rada
Colombian attorney
email: info@lawyerscolombia.com
telephone 57-311-7693976
During my 18 years of experience dealing with US citizen who have business in Colombia, I have seen hundreds of cases in which a good business supported in a contract, ends with a breach or failure to meet by the Colombian side.
I decided in this article to provide a summary of the law regarding breach of contract in Colombia for US citizens. If you have a case like this, please contact us for consultation.
Overview:
A breach of contract occurs when one party fails to fulfill their obligations under a valid contract. Colombian law recognizes contract breaches and provides legal remedies for injured parties, including US citizens who have entered contracts in Colombia.
Applicable Laws:
The Colombian Civil Code governs contract law in Colombia but also the commercial code is part of the law when one party is recognized as businessman and is registered in chamber of commerce.
Contract Formation:
To create a valid contract in Colombia, the following elements must be present:
- Mutual Consent: Offer and acceptance of terms by both parties.
- Legality: The contract must have a lawful purpose and comply with Colombian law.
- Capacity: Both parties must have the legal capacity to enter the contract.
- Formalities: Some contracts may require specific formalities as determined by Colombian law.çTypes of Contract Breaches:
There are three main types of contract breaches in Colombia:
- Complete Breach: Occurs when a party fails to perform the total obligation under the contract, resulting in significant harm or loss to the injured party.
- Minor Breach: Occurs when a party fails to perform a minor or ancillary obligation, resulting in relatively minor harm or inconvenience to the injured party but contract can be executed.
- Both party’s breach: all party failed to perform their obligations, in consequence contract can be voided and things are returned to the state before the contract.
Legal Remedies:
In case of breach of contract, the injured party may seek one or more of the following legal remedies:
- Specific Performance: The court may order the breaching party to fulfill its contractual obligations according to the terms of the agreement.
- Damages: Monetary compensation for actual losses suffered because of the breach.
- Termination: The non-breaching party may terminate the contract in response to a material breach.
- Restitution: If one party has already performed its obligations, they may seek restitution of what they have given or return of what they have lost.
- Penalty Clauses: Contractual penalty clauses agreed upon by the parties may be enforced.
Legal Proceedings:
When a breach of contract occurs, the injured party has the right to initiate legal proceedings in Colombia. It is crucial to engage a Colombian attorney familiar with contract law to navigate the local legal system.
In general terms, I always start contacting the other´s party attorney and look to reach an agreement. In some cases, parties agreed some money to be returned from main payment of contract and a resolution contract is signed.
Mediation
If direct contact fails, I proceed with mediation. Same as US, we need to provide full evidence to mediator and this third party will look for an agreement.
Dispute Resolution:
In Colombia, litigation in court can take years and based on the amount of claim, sometimes it is not worth it.
Arbitration may be a viable alternative if the contract contains an arbitration clause.
Additional Considerations:
US citizens involved in breach of contract disputes in Colombia should consider potential issues, such as language barriers, cultural differences, the choice of law, and the enforceability of judgments in their home jurisdiction.
I have seen US citizens who decided to save some lawyers fees and at the end they get punished, declared guilty and had to pay more than what they were expecting to recover.
Please if you are having a legal issue, contact us for consultation.
It is important to remember that this legal text is a general overview, and specific circumstances may warrant different legal approaches. For comprehensive legal advice, consult with an experienced attorney specializing in Colombian contract law.
Esteban Rada
Colombian attorney
email: info@lawyerscolombia.com
telephone 57-311-7693976
