This Study Resource Was: Name: Course: Section: Subject: Activity Title

Name: Ericka V.
Dumanhog
Course: BS Accountancy
Section: D
Subject: Special Commercial Laws
Activity Title: Basic Concepts of the Contract of Sale
1. The essential requisites of the Contract of Sale.

Those without which a contract of sale would not exist.
a. Consent
▪ The definite agreement between parties with respect to the thing (object)
and price (cause); both parties having legal capacity.
b. Object or Subject matter
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▪ The determinate thing to be sold.
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c. Cause or Consideration
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▪ the price certain in money or its equivalent.
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2. Distinctions of the following:
a. Sale vs Barter;
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Sale Barter
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The cause or consideration is in The cause or consideration is another

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money. thing.
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However, where the consideration is partly in money and partly in another

thing, the following rules shall be observed to determine whether the contract
is a sale or barter:
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1. The contract shall be one of sale or barter depending upon the intention
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of the parties.
2. If the intention of the parties not clearly appear:
i. The contract is one of barter if the value of the thing given as part
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of the consideration exceeds the monetary consideration.

ii. The contract is one of sale if the value of the monetary
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consideration is more than or equal to the value of the thing given

as part of the consideration.
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b. Sale vs. Agency to Sell;
Key Point Sale Agency to Sell

Transferred to the buyer upon Retained by the owner
Title delivery of the thing sold. despite the delivery of the
goods to the agent.
The buyer is required to pay The agent is required to turn
the price. over to the principal the price
Price
of the goods which he
received from the buyer.
The recipient of the property The principal retains control of
Control may do with the property as the property.
he pleases.
c. Sale vs. Dacion en Pago;
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Key Point Sale Dacion en Pago
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Pre-existing None There is
credit
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Obligation Creates Extinguishes
rs e Debtor’s POV: The
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Seller’s POV: Price extinguishment of the
obligation.
Cause or
Buyer’s POV: Object
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consideration
Creditor’s POV: The delivery
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of the object given in place of

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the credit.
There is a greater freedom in There is a less freedom
Fixing the fixing the price. because of the amount of the
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Price pre-existing credit which the

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parties seek to extinguish.

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d. Contract of Sale vs. Contract to Sell;

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Key Point Contract of Sale Contract to Sell

The title of the property Ownership is, by agreement,
passes to the vendee (buyer) reserved to the vendor (seller)
Ownership upon the delivery of the thing and is not pass to the vendee
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sold. (buyer) until full payment of

the purchase price.
Non-payment of the price is a Full payment of the purchase
Payment negative resolutory condition, price is a positive suspensive
i.e., the vendor (seller) loses condition, i.e., title remains in
ownership of the property and the vendor (seller) if the
cannot recover it until and vendee (buyer) does not
unless the contract of sales is comply with condition
resolved or rescinded. precedent of making payment
at the time specified in the
contract.
In other words, failure to pay
the price is not a breach but
an event that prevents the
obligation of the vendor to
convey title from becoming
effective.
Risk of Loss On the buyer (vendee) On the seller (vendor)
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e. Earnest Money vs. Option Money;
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Key Option Earnest Money Option Money
The money given as part of The consideration paid for the
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the purchase price and as purpose of holding one to his
rs e proof of the perfection of the promise to buy or sell a
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contract. determinate thing for a certain
period, which consideration is
Definition
It is also called “arras” or separate and distinct from the
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something of value to show purchase price.

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that the buyer was really in

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earnest and given to the seller

to bind the bargain.
Paid upon the perfection of a Paid for a sale that is yet to be
Paid
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contract of sale. perfected.

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f. Emptio Rei Speratae vs. Emptio Spei;

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Key Points Emptio Rei Speratae Emptio Spei

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Other term Sale of an expected thing Sale of the hope itself

The sale of a future thing Deals with present thing –
Thing
hope or expectancy.
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The thing sold must come The sale produces effects

into existence; otherwise, the even if the thing hoped for
Existence sale will not be effective. does not come into existence.
However, the sale vain hope
or expectancy is void.
g. Absolute Sale vs. Conditional Sale;
Key Point Absolute Sale Conditional Sale

The only condition of the The property transfer will only
transaction is the payment of happen when the buyer or
Condition
the property price. seller meets certain
conditions.
h. Absolute Capacity vs. Relative Capacity;
Key Point Absolute Capacity Relative Capacity

This applies to certain persons who,
under circumstances, cannot
purchase certain property.
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Includes:
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a. Husband and wife except;
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(1) when a separation of
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property was agreed upon in
rs e the marriage settlements. (2)

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when there has been a
judicial separation of property.
b. Persons prohibited from
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acquiring by purchase.
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This applies to 1) The guardian

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persons who cannot 2) Agents

bind themselves and 3) Executors and
Definition
includes minors, Administrators
insane or demented 4) Public Officers and
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persons, and deaf- Employees

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mutes who do not 5) Justices, judges,

know how to write. prosecuting attorneys,
clerks court, and other
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officers connected
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with the administration

of justice, the property
and rights in litigation
or levied upon an
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execution before the

court whose
jurisdiction or territory
they exercise their
respective functions;
A contract of sale For items (1) to (3), the contract is
entered into by a voidable since only private interests
person suffering from are involved.
absolute incapacity is
Status of the voidable. However, For items (4) and (5), the contract is
Contract when necessaries void since they are imbued with
are sold to a minor or public interest.
other incapacitated
person, he must pay a
reasonable price.
i. Existing Goods vs. Future Goods;
Existing Goods Future Goods
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er as
Goods owned or possessed by the Goods to be manufactured, raised, or
seller. acquired by the seller after the
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perfection of the contract of sale or
goods whose acquisition by the seller
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rs e depends upon a contingency which may
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or may not happen.
j. Commutative vs. Aleatory

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Commutative Aleatory
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Where the parties give equivalent An agreement whereby the parties

values; hence, there is a real involved do not have to perform a
fulfillment. particular action until a specific,
triggering event occurs.
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The seller gives the thing sold, and

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receives the price, which is the For example, gambling, wagering, or

equivalent. The buyer gives the price betting typically use aleatory contracts.
and receives the thing sold, which is Additionally, another very common type
is
the equivalent. of aleatory contract is an insurance

policy.
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3. Is there a formal requirement for the validity of a Contract of Sale? Explain.

There is no formal requirement for the validity of a Contract of Sale. It can be
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oral or written if it has the three requisites of a contract which is Consent, Object
or and Cause or Consideration then It is valid.
4. What is the effect of the Gross Inadequacy of the Price?

Gross Inadequacy of Price does not effect 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. There is a gross inadequacy of price if a reasonable
man will not agree to dispose of his property.
5. What may be the objects of Sale?
Requsites of object of a contract of sale

•Within the commerce of men
•Must be licit (not contrary to law, morals, good customes, public order or public
policy)
•Must be determinate
The vendor must have the right to transfer the ownership at

the time that it is delivered.
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•It is not necessary that the vendor must be the owner at the time of sale.
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o.
Things having a potential existence may be the object of a
contract of sale. rs e
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•However, the thing must come into existence; otherwise, the sale will not be
effective for not having a substance matter.
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The goods which form the subject of a contract of sale may

either :
•Existing Goods
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•Future Goods
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The sole owner of a thing may sell an undivided interest

is
therein.
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•Such sale shall produce the effect of making the seller and the buyer co-ownersof
the thing sold.
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Fungible Goods
•Refers to interchangable goods such as grain etc., that allow one to be replaced by
another without loss of value.
•Things subject to a resolutory condition may be the object of a contract of sale.
6. When is price certain?
Certainty of Price
If the If the price fixed is
determination of that which the
the price is left to thing sold would
the judgement of a have a definite day,
If the parties specified person or or in a particular
have agreed If it be certain persons. exchange or
market, or when an
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upon a with reference
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If such person or amount is fixed
definite to another persons unable or
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abover or below
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amount for thing certain. unwilling, acted in the price on such
bad faith, or day, or in such
the sale.
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prevented by the exchange or
rs e fault of the seller market, provided
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or buyer, the courts said amount is
may fix the price. certain.
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7. A granted B the exclusive right to sell his brand of Maong pants in Isabela, the price for
his merchandise payable within 60 days from delivery, and promising B a commission of
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20% on all sales. After the delivery of the merchandise to B but before he could sell any
of them, B’s store in Isabela was completely burned without his fault, together with all of
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A's pants. Must B pay A for his lost pants? Why?
No, B is not in fault because it is a Extra-ordinary fortuitous events which are

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uncommon and which B could not have reasonably foreseen.

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Name: Ericka V.

1. The essential requisites of the Contract of Sale.

The cause or consideration is in The cause or consideration is another

However, where the consideration is partly in money and partly in another

of the consideration exceeds the monetary consideration.

consideration is more than or equal to the value of the thing given

Key Point Sale Agency to Sell

c. Sale vs. Dacion en Pago;

of the object given in place of

Price pre-existing credit which the

parties seek to extinguish.

d. Contract of Sale vs. Contract to Sell;

Key Point Contract of Sale Contract to Sell

sold. (buyer) until full payment of

something of value to show purchase price.

that the buyer was really in

earnest and given to the seller

contract of sale. perfected.

f. Emptio Rei Speratae vs. Emptio Spei;

Key Points Emptio Rei Speratae Emptio Spei

Other term Sale of an expected thing Sale of the hope itself

The thing sold must come The sale produces effects

Key Point Absolute Sale Conditional Sale

h. Absolute Capacity vs. Relative Capacity;

Key Point Absolute Capacity Relative Capacity

rs e the marriage settlements. (2)

This applies to 1) The guardian

persons who cannot 2) Agents

persons, and deaf- Employees

mutes who do not 5) Justices, judges,

with the administration

execution before the

i. Existing Goods vs. Future Goods;

Existing Goods Future Goods

j. Commutative vs. Aleatory

Where the parties give equivalent An agreement whereby the parties

The seller gives the thing sold, and

receives the price, which is the For example, gambling, wagering, or

the equivalent. of aleatory contract is an insurance

3. Is there a formal requirement for the validity of a Contract of Sale? Explain.

4. What is the effect of the Gross Inadequacy of the Price?

5. What may be the objects of Sale?

Requsites of object of a contract of sale

The vendor must have the right to transfer the ownership at

The goods which form the subject of a contract of sale may

The sole owner of a thing may sell an undivided interest

A's pants. Must B pay A for his lost pants? Why?

No, B is not in fault because it is a Extra-ordinary fortuitous events which are

uncommon and which B could not have reasonably foreseen.

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