HENRY JAMES B.

NEPOMUCENO
BSA-202
LAW ON SALES AND SPECIAL CONTRACTS

1. Differentiate Option money and Earnest money.

-Earnest money form part of purchase price thus, it is deductible to the latter, while
option money is the money given as a separate and distinct consideration for an option
contract or it is not part of the purchase price.
-Option money is paid for a sale that is yet to be perfected while
Earnest money is paid upon the birth of a contract of sale.

2. Is a sale of future property valid? Explain.

- Yes, it is allowed under Art. 1461 that, thing having a potential existence can be the
subject matter of the contract of sale. Thus, it is not necessary that the seller must be
the owner at the time of sale. However, he must have ownership over the thing before
or at the time of delivery arises otherwise the contract of sale will not be effective in the
absence of object or subject matter.

3. Is a sale of undivided interest valid? Explain

–Yes, provided that the seller is the sole owner of the thing. It is stated in Art. 1463 that,
the sole owner of a thing may sell an undivided interest therein.
4. Discuss traditio
-Traditio is a mode of getting ownership by which the subject matter of the contract is
put in the control and possession of the vendee, either actually or constructively.
Delivery simply means of possession. In the Law of Sales, delivery, whether actual or
constructive contemplates, transfer of ownership. As to the kinds of delivery there are
three kinds, which are, first Actual/real delivery, second is constructive or legal delivery
which consist of five subtitles which are, by legal formalities, symbolic delivery, tradition
longa manu, tradition brevi manu and tradition constitutum possessorium. And the third
one is Delivery of incorporeal property( quasi-traditio).

5. Is the execution of public instrument necessary for the validity of the sale of real
property?

-No it is not necessary; sale of real property is valid even if it is made orally assuming
that all the essential elements are present. However the contract will be unenforceable
 if the other party refused to perform the contract because it cannot be proved and it is
also required by the Law that it should be in writing to be enforceable.

6. Discuss the effect of insufficiency of consideration in the contract of sale.

-Insufficiency of consideration may prevent the existence of a valid contract, because in
the insufficiency of consideration there is an absolute absence of agreement with
respect to the price so in effect it renders the contract invalid.
7. Discuss the remedy of the buyer when the seller fails to deliver.
-The buyer may demand for an action of specific performance because the seller fails to
deliver. However if the seller fails to deliver due to fortuitous event he will be released
from the obligation provided that he is not in fault and not guilty for delay. But if the he
is, the buyer has the right to demand for damages and cancel the contract.

8. Buyer acquired a house and lot from the seller. The buyer used his land as collateral for
worth 10,000,000 with the agreement of 10 times installment basis. The buyer failed to
pay two consecutive times of installment, then the seller demanded the full payment
thereof but the Buyer raised his defense that in obligations and contracts, term or
period benefits both the debtor and the creditor. Is the defense of the buyer correct?
-No, the buyer loses every right to make use of the period because he violates an
undertaking, in consideration of which the creditor agreed to the period. (Art. 1198 par.
4.) But the buyer can raise a defense that the claim of the seller will only apply to sale of
personal property on installment. Here the subject matter is classified as real property
therefore the Maceda Law shall apply.
9. Differentiate Inadequacy of price and simulated price in the contract of sale.
-Inadequacy of price does not affect a contract of sale, except as it may denote a
vitiated consent, while simulated price render the contract void.
10. Seller sold his Mercedes-Benz car to the Buyer amounting to 26 million from Luzon to
Mindanao. F.O.B Destination. In transit, lightning struck, car died. Is the obligation
extinguished? What are the rights of the Buyer and Seller?
-Yes, the obligation is extinguished provided that the seller is without fault and he did
not incurred in delay. He will bear the risk of loss, because he is the owner of the thing
(res perit domino) since it is F. O.B. Destination.
As to the buyer, if the seller incurred in delay or has a fault, the seller will be liable to
the buyer. Hence the buyer has the right to suspend the payment of the price or if the
buyer has already been paid the price he has the right to demand for the payment he
have done.