Lesson 1 – Sales Contract Barter – is an exchange(swap) of goods between the

parties, wherein they exchange their determinate

Contract of Sale – is a bilateral contract made between
object to the determinate object of the other.
the vendor and the vendee, where the vendor agrees to
Additional money may be included as long as it is not
sell a determinate thing in exchange for a price certain
over the amount of the object subject to barter.
from the vendee. Its validity is determined by the three:
 1 Book in exchange with 6 notebooks
1. Consent – The vendor has presented the object
 1 gold bar in exchange with a motorcycle
and the price, and the vendee has accepted the
o Gold bar is not legal tender but a
price in exchange for the object
commodity, therefore it cannot be
2. Object – There is a valid object, that is a
called sale
determinate thing, distinguishable from any
other of the same kind. It could be: Agency to Sell – is a contract that permits or gives
a. Fungible goods(Measured) authorization to an agent to perform the sale for the
b. Future goods(Manufactured or original owner. This gives no right to the agent to add
Harvested) more to the agreement as well as to except the buyer
c. Existing Goods from any stipulation between the original parties.
d. Intangible or Incorporeal
Goods(Goodwill, Digital Arts, Patents)  It is required by Law to be in writing(Art. 1874).
3. Price Certain – There is a price that is certain,  The inadequacy of sale does not constitute to
meaning it is defined well. It could be based on breach of contract. There is only a breach when
a certain price of an existing market, or to be a there is simulation or vitiation of contract.
specific price.  Simulation of contract is when the parties do
not wish to be bound to the contract, hence the
Contract of Sale vs Contract to Sell contract is primarily for deception
 Vitiation of contract is when one of the parties
Contract Of Sale Contract To Sell
have performed acts of that impair the other or
Ownership is given Ownership is not yet
avoid the contract itself.
after full payment transferred after full
payment Constitutum Possessorium – is an agreement between
No need to file for After full payment, the parties that the new owner is the legal owner, but
Contract of Absolute Contract of Absolute the actual holder of the property is the old owner. This
Sale sale need to be filed
is valid as long as permitted by the new owner.
Already the sale Mere reservation
contract contract Employer-Employee relationship vs Special Job
Single Contract Only Two contracts to
complete EE relationship Piece of Work(Specific)
Regular task of the Special tasks for the
Absolute Sale vs Conditional Sale Employee Employee
Usually permanent Usually, contractual paid
Absolute Conditional employee, paid a specific per job
The condition is the The condition is the full salary
full payment payment, and other Taxi driver: drive Taxi driver: Deliver a
conditions agreed by passengers to their passenger, outside
the parties designated places, within registered area. It should
Single Contract Only Single Contract Only a specific area be valid
Teacher: teach subject Teacher: teach any
Sale of Piece of Work – is a sale of goods that are only registered to him/her, on subject to students, such
available for specific costumers, or that is not available the time specifically as tutor that is beyond
to the general market. provided. the job of a teacher.

 Shoe size 13-15 since it is not available on

market
Contract of Sale
Seller Buyer
Contract of Agency to Sell
Seller Agent
Obligations of the Vendor Buyer
1. Transfer ownership – this usually happen
through delivery. Delivery causes the obligation
to be perfected since sale is a real contract.
There may be an actual or constructive delivery.
Constructive Delivery or Quasi Traditio:
 Execution of public instrument
 Through creation of Certificate
 Delivery of access to the property
 Virtual delivery
 Delivery of the object itself
 Negotiable Instrument(such as check)
Real(Actual) or Traditio:
 Traditio Longa mano – The seller points
or defines the location of where the
object is found, which symbolize the
transfer of ownership to the buyer. It
means that the delivery is when the two
have agreed on where the location is.
 Traditio Brevi manu – The seller has not
yet transferred legal ownership, but the
buyer has already the physical
possession
 Traditio Constitutum Possessorium –
The seller did not transfer the physical
possession, but only the legal
possession is given to the buyer.
 All of which must be agreed upon by the
parties
2. Take care of the object – the seller is obliged to
take care of the object, with the proper
diligence of a father, or any other form of
diligence as mentioned in the agreement.
3. Receive the price – accept the payment of the
buyer as long as it is valid and in right amount/s,
that is in legal tender and used in the place of
the parties.
4. Give proper authorization to the agent – if
there is an agent, the seller must give proper
authority to the seller by giving SPA(Special
Power of Attorney)
5. Warrant the sale – the seller should assure the
buyer that the product is what the agreement
stipulates, and that it does not have
imperfection that affects the use and quality of
the object. It also includes warranty against
eviction.
Breach of Contract
What to do first
1. Check whether there is an actual sale between
you and the seller.
2. Check whether the seller has the capacity to
transfer ownership
3. Check if the agent was duly authorized by the
seller
Remedy:
 Specific Performance damages
 Adequate Compensation with damages
 Recission
Earnest Money – it symbolizes a perfected contract
since it is part of the purchase price. It can be referred
to as Down payment
 The Ana intends to buy an iPhone worth
P10,000 but only had P1,500 in his wallet. She
told the seller Jack that she would like to by the
iPhone but only had P1,500. The parties then
agreed to have P1,000 as earnest money and
that the P9,000
 When the buyer is at fault, the seller may not return
the earnest fund, unless stipulated that it can be
refunded.
 When the seller is at fault, the earnest money is
automatically refundable.
Option Money – it symbolizes that the buyer intends to
buy the object, and for the seller to keep his promise to
sell it only to that buyer. It can also be forfeited when
any of the parties like to withdraw.
 The Ana intends to buy an iPhone worth
P10,000 but only had P1,500 in his wallet. She
told the seller Jack that she would like to by the
iPhone but only had P1,500. Jack had many
 customers wanting the same and so Ana gave
an option money to Jack with an amount of
P1,000. The parties then agreed that the
purchase price amounting to P10,000 shall be
paid on or before July 30.

It can be agreed upon by the seller and buyer that the

option money becomes part of the purchase price. It
does not mean that it becomes an earnest money, but
instead it is simply like one in nature.

Additional Information:

There are some persons not allowed to become a party

in a contract of sale. These persons are considered to
be:

Absolute Incapacity – persons who are physically

disabled, deaf mute, insane, minor or