AE34 (BUSINESS LAW & REGULATIONS)

Coverage: Article 1489-1492

Chapter 2 CAPACITY TO BUY OR SELL

Activity No. 2
I. Definitions
Define or give the meaning of the following:
1. Necessaries – those things which are needed for sustenance, dwelling, clothing and medical
attendance, in keeping with the financial capacity of the family of the incapacitated person
2. Compromise - contract whereby the parties, by reciprocal concessions, avoid a litigation or
put an end to one already commenced. It is the amicable settlement of a controversy.

II. Discussions
1. Are husband and wife allowed to sell property to each other?
No, the husband and the wife or live-in couples cannot sell property to each other,
except: (1) When a separation of property is agreed on marriage settlement and (2) When there
has been a judicial separation of property.
2. Under the law, who may enter into a contract of sale?
As a general rule, all those who may oblige themselves may enter into a contract of sale.
Except when minor, insane, demented and deaf-mute who do not know how to write.

III. Problems Explain

Explain the rule or reason for your answer
1. B, a minor bought a pai of imported shoes worth P3,000.00 from a department store. Can F,
father, cancel the sale on the ground of minority of B?
Held: It depends, when the minor has no capacity to act. Therefore, the minor is oblige to pay a
reasonable price.
2. H and W are husband and wife. After selling his property to W, H borrowed a big amount of
money from C. It appears that H is now bankrupt. Has C the right to question the sale of H's
property to W in order to have said property answer for H's indebtedness to him?
Held: No, there is a prohibition on that right. But the law prohibits the husband and the wife or
live-in couples cannot sell property to each other, except: (1) When a separation of property is
agreed on marriage settlement and (2) When there has been a judicial separation of property.