Perdizo, Miljane P.

1. Distinguish between option money and earnest money.

Option Money

- Separate and distinct consideration

- applies to a sale not yet perfected
- Prospective buyer is not required to buy
- If sale did not materialized, cannot be recovered
Earnest Money

- Part of purchase price

- given only when there is already a sale
- when it is given, the buyer is bound to pay the balance
- If buyer does not decide to buy, must be returned

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

Yes, Article 1462 future goods to be manufactured, raised, acquired by seller after
perfection of the contract or whose acquisition by seller depends upon contingency. So
therefore, it is valid only as an executory contract to be fulfilled by the acquisition and delivery
of goods specified.

3. Is a sale of undivided interest valid? Explain.

Yes, for the reason a sale of undivided interest can be made to a third party if the co-
sharers reach a settlement for division of said property by metes and bound and give an NOC
for the same. In absence of division by metes and bounds, a sale remains valid and only the
possession of joint estate cannot be enjoyed by the vendee unless the property which is subject
matter of sale has a character of exclusivity.

4. Discuss traditio.

Traditio (delivery) is regarded as a means of conveyance of the Jus Gentium, but it did
have a place, a restricted one, in the oldest Roman law. The oldest civil method of conveyance
was in lure cessio. This was a formal mode of conveyance which could be applied to all kinds of
property. It consisted of a fictitious real action or vindication in which the parties appeared in
public before a magistrate of the Roman people. The plaintiff, alienee, would make a claim
upon the defendant, alienor; and the alienor admitted the claim. The magistrate would then
declare that the property belonged to the alienee, and thus the transfer was completed.

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

Not necessary, as a rule, the notarization of a contract is not required for its validity.
Article 1356 of the Civil Code clearly states that contracts are obligatory, in whatever form they
may have been entered into, provided all the essential requisites for their validity are present.
Further, Article 1318 of the same code which enumerates the requisites of a contract does not
mention notarization.
6. Discuss the effects of insufficiency of consideration in the contract of sale.

Shoummo promises to give tk.5, 000 to build mosque. It is not contract because there is
no consideration. Consideration may be paid in future and it is not sufficient but in a contract
must have consideration. The effect is if “no consideration no contract.

7. Discuss the remedy of the buyer in the event the seller cannot deliver.

When the seller wrongfully neglects or refuses to deliver the goods to the buyer, the
buyer may sue the seller for damages for non-delivery. This is in addition to the buyer's right to
recover the price, if already paid, in case of non-delivery.

8. Buyer acquired a house and lot from the Seller. The latter used his land as the collateral for
worth 10 million with the agreement of 10-times instalments basis. The Buyer failed to pay 2
consecutive times of instalment, then the Seller demanded the full payment to the Buyer but
the Buyer raised his defence that in Obligations and Contracts, Term or Period benefits both
the debtor and creditor. Is the defence of the Buyer correct?

Yes, Foreclose the chattel mortgage on the thing sold. He shall have no further action
against the purchaser to recover any unpaid balance of the price. In this case, if one has been
constituted, should the vendee's failure to pay cover two or more installments . The buyer has
the right to continue the unpaid installments due without additional interest provided that the
buyer must pay within the grace period. The grace period provided is one month for every one
year of installments paid.

9. Distinguish between inadequacy of price and simulated price in the contract of sale.

Inadequacy of price

Article 1470, stated that gross inadequacy of price does not affect a contract of sale, except as it
may indicate a defect in the consent, or that the parties really intended a donation or some
other act or contract .

Simulated Price
Art. 1471, the sale is void but the contract of donation is valid.

10. Seller sold his Mercedes-Benz car to the Buyer amounting to 26th million from Luzon to
Mindanao, FOB Destination. In transit, lightning stroke, car died. Is the obligation
extinguished? What are the rights of the Buyer and the Seller?

Yes, the obligation is distinguished due to fortuitous event and the thing delivered is a
determinate thing. The general rule is that there is no liability in case of a fortuitous event.
The buyer has no right to demand from the seller.