Code of Commerce of Ecuador: Key Mercantile Law Concepts and Contracts

Comprehensive practice flashcards defining core legal terminology, commercial contracts, negotiable instruments, and maritime and transport provisions codified in the Ecuadorian Code of Commerce (Código de Comercio).

Comerciante (Merchant / Trader)

Under Article 2, natural persons with legal capacity to contract who make commerce their habitual occupation, companies constituted under mercantile laws, and foreign corporations or their agencies and branches that perform acts of commerce within the national territory.

Actividades Mercantiles (Mercantile Activities)

Under Article 7, all acts or transactions that necessarily involve the continuous or habitual production or exchange of goods or provision of services in a given market, executed with an economic purpose, as well as acts involving entrepreneurs or merchants when at least one party seeks economic benefit.

Mercadería o Mercancía (Merchandise / Goods)

Under Article 9, any tangible or intangible movable property that can be the object of legal mercantile transactions.

Empresa (Enterprise)

Under Article 14, the economic unit through which personal, material, and immaterial elements are organized to develop a determined commercial activity.

Establecimiento de Comercio (Commercial Establishment)

Under Articles 14 and 16, an integral part of an enterprise comprising the set of goods organized by the merchant in a specific location to carry out the enterprise's objectives, including real property/premises, existing inventory, and furniture/equipment.

Comercio Electrónico (Electronic Commerce)

Under Article 74, any commercial transaction involving digital or non-digital goods or services carried out in whole or in part through information systems or electronic means.

Contrato Inteligente (Smart Contract)

Under Article 77, an agreement produced by computer software used by two or more parties that agree on clauses and subscribe electronically, executing contractual terms automatically when pre-programmed conditions not subject to human evaluation are triggered.

Títulos Valores (Securities / Negotiable Instruments)

Under Article 78, physical, dematerialized, or electronic documents that embody a literal and autonomous right incorporated within them, enabling the legitimate holder to exercise the specific right stated therein.

Títulos a la Orden (Order Instruments)

Under Articles 104 and 105, negotiable instruments where the underlying obligation must be performed to the order of the designated initial payee or the last transferee/legitimate holder, transferred by endorsement.

Títulos al Portador (Bearer Instruments)

Under Article 110, instruments that do not designate any person as holder or that explicitly contain a bearer clause; legitimate possession is demonstrated by simple exhibition and ownership is transferred by mere delivery.

Letra de Cambio (Bill of Exchange)

Under Article 113, a credit instrument whereby a drawer (girador/librador) orders a drawee (girado/librado) to make an unconditional payment of a specific sum of money to a third-party payee/holder at a determined date and place.

Aval

Under Articles 92 and 143, a commercial guarantee provided on a credit instrument or attached document whereby a guarantor (avalista) binds themselves jointly and solidarily to guarantee full or partial payment on behalf of an obligated party.

Pagaré a la Orden (Promissory Note to Order)

Under Article 186, a credit instrument whereby a maker (otorgante/suscriptor) unconditionally promises to pay a determined sum of money to another person (tomador/beneficiario), to their order, or to bearer.

Carta de Crédito (Letter of Credit)

Under Article 191, a commercial contract between a drawer (dador) and a recipient (tomador) that facilitates a conditional exchange contract, perfected when the recipient utilizes the credit line opened in their favor.

Factura Comercial Negociable (Negotiable Commercial Invoice)

Under Articles 200 and 203, a physical or electronic sales voucher containing an unconditional order to pay that constitutes an executive title when accepted expressly or tacitly by the buyer after receiving goods or services to full satisfaction.

Prestación Irrisoria (Derisory Consideration)

Under Article 217, contractual consideration that is trifling, inequivalent, or thoroughly unbalanced relative to the counter-performance, resulting in absolute nullity of the commutative contract.

Venta con Reserva de Dominio (Sale with Retention of Title)

Under Article 356, an installment sale of singularized, identifiable movable goods wherein the seller retains ownership of the item until the buyer completes full payment of the agreed price.

Contrato de Suministro (Supply Contract)

Under Article 397, a contract whereby one party obligates itself, in exchange for consideration, to provide another party with independent periodic or continuous deliveries of goods or services.

Arrendamiento Mercantil o Leasing (Commercial Leasing)

Under Article 427, a written and registered contract of movable or immovable property with a mandatory initial term where rental payments plus the purchase option exceed the purchase cost, granting the lessee alternative purchase, renewal, or residual value rights upon termination.

Contrato de Comisión (Mercantile Commission)

Under Article 441, a species of mandate whereby a principal (comitente) entrusts a professional agent (comisionista) with executing one or more mercantile acts over a given time in return for economic remuneration.

Contrato de Agencia (Agency Contract)

Under Article 481, an agreement where an independent commercial agent assumes a stable and permanent engagement to promote, exploit, or conclude business in a specific territory on behalf of a principal for economic remuneration without assuming operational risk.

Contrato de Corretaje (Brokerage Contract)

Under Article 501, a contract whereby a party engages a professional broker (corredor) to act as an independent intermediary to connect two or more parties for the execution of a commercial deal, earning remuneration upon success.

Contrato de Distribución (Distribution Contract)

Under Article 524, a contract whereby a grantor or principal grants a distributor the right to market and sell manufactured or distributed goods and services in a determined territory as an independent merchant assuming the operational risks.

Contrato de Franquicia (Franchise Contract)

Under Article 558, an agreement whereby the owner of a business, trademark, or commercial designation grants a franchisee the right to commercially exploit intellectual property rights, trade secrets, and business models in exchange for remuneration.

Licencia de Know-How (Know-How License Agreement)

Under Article 577, a mercantile contract whereby the holder of unpatented, confidential, undisclosed, and individualized technical or industrial knowledge authorizes a licensee to exploit that knowledge in exchange for a royalty or agreed fee.

Empresa Conjunta o Joint-Venture

Under Article 585, an associative contract whereby two or more natural or legal persons agree to jointly exploit a common business for a specified duration, sharing the resulting profits, liabilities, and losses.

Consorcio Mercantil (Mercantile Consortium)

Under Articles 601 and 605, a contract executed by public deed whereby two or more persons or enterprises join together to participate univocally in a tender, project, or contract; it does not constitute an independent legal entity but is treated as a partnership for tax purposes.

Asociación en Participación (Participation Association)

Under Article 607.1, an agreement in which a merchant grants one or more persons a participation share in the profits or losses of one or more commercial transactions or of their entire business enterprise.

Crédito Revolvente (Revolving Credit)

Under Article 610, a credit arrangement establishing a single legal obligation covering multiple transactions, entitling the parties to demand only the net settlement balance derived from mutual offset upon early termination.

Cuenta Corriente Mercantil (Mercantile Current Account)

Under Articles 611 and 612, a contract whereby parties record mutual credits and deliveries arising from reciprocal business transactions without immediate settlement, rendering only the final net offsetting balance payable at closing.

Prenda Agrícola e Industrial (Agricultural and Industrial Pledge)

Under Article 637, a non-possessory security right constituted over designated agricultural assets (livestock, crops, timber) or industrial assets (machinery, tooling, installations), allowing the debtor to retain possession.

Contrato de Factoring (Factoring Contract)

Under Article 667, a transaction where an authorized company advances funds to clients in exchange for assigned credit instruments or negotiable invoices, assuming debt collection management, supplier financing, or debtor insolvency risk.

Contrato de Operación Logística (Logistics Operation Contract)

Under Article 682, a contract whereby a logistics operator commits to organize, plan, control, and execute the movement of inventory, raw materials, or supplies for a client in exchange for agreed remuneration.

Contrato de Seguro (Insurance Contract)

Under Article 690, a consensual contract whereby an insurer, in exchange for a premium, agrees to indemnify the insured or beneficiary for a loss caused by an uncertain event or to pay a capital or annuity if a stipulated contingency occurs.

Siniestro (Loss / Casualty)

Under Articles 695 and 722, the occurrence of the recognized insured risk or uncertain event stipulated in the insurance policy that triggers the insurer's obligation to pay indemnity.

Reaseguro (Reinsurance)

Under Article 789, a contract whereby an insurer (cedente) transfers a portion of the risks assumed directly under an insurance policy to another authorized corporate entity termed the reinsurer (reasegurador).

Carta de Porte o Guía de Remisión (Waybill / Consignment Note)

Under Articles 795 and 811, the official transport document that evidences the transfer and legitimate possession of merchandise to a ground carrier, setting forth terms of transit, cargo details, and liability boundaries.

Armador o Naviero (Shipowner / Vessel Operator)

Under Article 862, the natural or legal person—whether proprietary owner or not—who undertakes the nautical management and commercial operation of a vessel either directly or through an authorized representative.

Capitán (Ship Master / Captain)

Under Articles 870 and 872, the supreme authority on board a vessel responsible for nautical governance, order, navigation, and commercial representation of the shipowner, operator, and cargo interests during the maritime venture.

Hipoteca Naval (Naval / Ship Mortgage)

Under Articles 896 and 897, a real security right constituted by public deed and registered in the vessel registry, directly binding an enrolled ship or ship under construction to secure fulfillment of an obligation.

Fletamento a Casco Desnudo (Bareboat Charter)

Under Articles 948 and 980, a maritime lease of an unmanned vessel whereby the charterer assumes full possession, operational control, manning, and the legal status of shipowner (armador).

Conocimiento de Embarque (Bill of Lading)

Under Article 992, a maritime transport document proving the existence and terms of a carriage contract, certifying receipt of goods on board and obligating the carrier to deliver them at destination against presentation of the original document.

Avería Gruesa o Común (General Average)

Under Articles 1079 and 1087, all damages and extraordinary expenses deliberately incurred by the master to preserve the vessel, cargo, or both simultaneously from a real, imminent, and common maritime peril.

Avería Simple o Particular (Particular Average)

Under Articles 1079 and 1083, any accidental damage, loss, or extraordinary expense borne exclusively by the owner of the affected ship or cargo, not qualifying as a voluntary act of general average.

Operador de Transporte Multimodal (Multimodal Transport Operator)

Under Article 1333, any person who executes a multimodal transport contract across two or more transport modes acting as a principal, assuming direct responsibility for the total carriage from custody receipt to destination delivery.