POINTERS: Conditional sale Dacion en pago (dation in payment) Statute of fraud

Absolute sale Extinguishment of sale

Sales Sale must be in writing
contract of sale Barter vs sale Redhibitory defect
stages of contract of sale Contract for a piece of work Determinate and indeterminate objects Sale of property at price not less
essential elements of contract of sale Price, certainty Price and certainty of the price than 500 pesos
characteristics of a contract of sale Rules when price is not determined by the parties Inadequacy of the price Sale not to be performed within
option money Stages of sale contract life General rule: price; agreement; does not affect the one year
contract for a piece of work vs. contract of sale
Negotiation validity of the sale Sale of real property
dacion en pago vs. contract of sale
Perfection Exception: vice of consent; shocking to conscience;
emptio rei speratae vs. emptio rei
Consummation “simulated sale” ; simulated price Effect if not in writing > unenforceable
barter
contract to sell Indications of perfection of contract of sale Involuntary sale; Sale by auction
Simulation of price; relative simulation; absolute Rights of an unpaid seller
capacity of parties to a sale Emptio rei speratae simulation
capacity to buy Emptio spei Offer and acceptance Right of lien of goods until paid
capacity to sell
Future goods Option contract – accepted unilateral promise to buy Rights to retain them until paid
minors in relation to contract to sell; necessaries
Loss of goods or sell supported by a consideration (option money) Right of stoppage in transit
perfection of the contract of sale
Res perit domino (rule) that does not become part of the price Right of resale
obligations of vendor Consent Perfection of the contract of sale (see the intention of
obligations of vendee Object and price Right to rescind the sale
the parties) (offeror and offeree; obligations)
extinguishment of contract of sale Obligations of seller Warranties
Obligations of buyer Face to face; acceptance without condition Breach of contract of sale
Rights of seller When the thru correspondence – when the Rights of vendees in double sale
Sale, definition
Rights of buyer offeror has knowledge of the acceptance Extinguishment of Sale
Requisites of sale (elements)
Delivery When subject to a suspensive condition –
Essential requisites of sale as contract
Actual delivery upon the happening of the condition
Consent
Constructive delivery Sale by auction – upon the fall of the
Object of sale
Symbolic delivery hammer
Rules on Licit and illicit objects
Traditio brevi manu
Price (consideration; price certain in money) Effect of perfection > compliance to the obligations
Traditio longa manu
Determinate things of parties
Constitutum possessorium
Contract to sell vs contract of sale Sale of goods by description – relies on the
Traditio simbolica
Capacity to buy and sell description by the seller; obligation of seller;
Delivery to a co-owner
Absolute incapacity warranty
Equitable mortgage
Relative incapacity Sale of goods by sample – relies on sample;
Warranties
Characteristics of sale obligation of seller; warranty; similar to sample
Express warranties
Reciprocal obligations
Implied warranties Failure on warranty> rescission
Kinds and nature of sales
In relation to easement
Sale of real properties Sale on approval or trial
Caveat emptor
Sale future goods Sale or return
Caveat venditor
Sale or return
Sale of real property
“as is where is” rule
Sale on trial
Sale second hand articles

BARTER OR EXCHANGE
Article 1638. By the contract of barter or exchange
one of the parties binds himself to give one thing in
consideration of the other's promise to give another
thing. (1538a)
Article 1639. If one of the contracting parties,
having received the thing promised him in barter,
should prove that it did not belong to the person
who gave it, he cannot be compelled to deliver that
which he offered in exchange, but he shall be
entitled to damages. (1539a)
Article 1640. One who loses by eviction the thing
received in barter may recover that which he gave
in exchange with a right to damages, or he may
only demand an indemnity for damages. However,
he can only make use of the right to recover the
thing which he has delivered while the same
remains in the possession of the other party, and
without prejudice to the rights acquired in good
faith in the meantime by a third person. (1540a)
Article 1641. As to all matters not specifically
provided for in this Title, barter shall be governed
by the provisions of the preceding Title relating to
sales. (1541a)
SALE OF HOPE AND FUTURE GOODS
Article 1462. The goods which form the subject of
a contract of sale may be either existing goods,
owned or possessed by the seller, or goods to be
manufactured, raised, or acquired by the seller after
the perfection of the contract of sale, in this Title
called "future goods." There may be a contract of
sale of goods, whose acquisition by the seller
depends upon a contingency which may or may not
happen. (n)
EMPTIO REI SPERATAE
Future goods; goods to be manufactured, raised, or
acquired by the seller after the perfection of the
contract of sale
EMPTIO SPEI
Sale of hope itself - The efficacy of the sale of a
mere hope or expectancy is deemed subject to the
condition that the thing will come into existence.
Sale of a hope in vain - The efficacy of the sale of
a mere hope or expectancy is deemed subject to the
condition that the thing will come into existence.
The sale of a vain hope or expectancy is void.
DELIVERY: KINDS OF DELIVERY
1. Actual or real - placing the thing under the
control and possession of the buyer
2. Legal or constructive - delivery is represented by
other signs or acts indicative thereof
3. Quasi-tradition - delivery of rights, credits or
incorporeal property, made by (i) placing titles of
ownership in the hands of the buyer or (ii) allowing
the buyer to make use of rights
4. Tradition by operations of law
PLACE OF DELIVERY
a. If there is an agreement: PLACE
SPECIFIED
b. If there is no agreement: PLACE
DELIVERY DETERMINED BY USAGE
OF TRADE
c. If there is no agreement and no prevalent
usage: SELLER’S PLACE OF BUSINESS
d. In any other case: SELLERS PLACE OF
RESIDENCE
REQUISITES OF DELIVERY
A. Identity
B. Integrity
C. Intentional
KINDS OF CONSTRUCTIVE OR LEGAL
DELIVERY
By Legal Formalities - sale is made through public
instrument; gives rise only to a prima facie
presumption of delivery.
Symbolic Delivery (tradition simbolica) - delivery
of keys or depository where the movable is kept or
stored.
Traditio Longa Manu - delivery of a movable by
mere consent or agreement. (Pointing at the thing)
(example: X buys an umbrella from Y. Y is yet to
deliver the umbrella to X. )
Traditio Brevi Manu - buyer simply continues in
possession of the thing but under ownership.
Applies to movables only. Happens when buyer
already has possession of the thing sold before the
sale. (example: A car is currently on loan to X. X
has possession of the car before the sale. X buys the
car from owner Y. In effect, the physical possession
of the car need not be transferred to X because X
already has possession of it.)
Traditio Constitutum Posessorium - seller continues
to be in possession of the property sold but not as
an owner but in some other capacity (example: X is
the owner of a property. X sells the property to W.
W leases the property to X. X becomes a lessee of
the property he previously owned.)
DETERMINATE OR DETERMINABLE
Determinate is specific.
Article 1460. A thing is determinate when it is
particularly designated or physically segregated
from all others of the same class.
Determinable is one that is capable of being
determined, either at present time or in the future.
A thing is determinable when it is capable of being
made determinate at the time the contract was
entered without the necessity of a new or further
agreement between the parties.
Under contract law in some legal systems, a
redhibitory defect is a hidden defect that prevents
a product from performing the task for which it was
purchased. A buyer of a product with a redhibitory
defect can be entitled to redhibition (also called
redhibitiory action). The redhibitory action requires
proving fraud, that the seller acted in bad faith. This
means that the seller knew the defects of the thing
and that he decided not to manifest them before the
sale took place
WHAT MAY BE SOLD?
1. Existing
2. goods to be manufactured, raised or acquired by
the seller
3. things having potential existence
4. sale of specific things
5. fungible goods (those which are usually dealt
with by number, weight, or measure;
interchangeable )
6. undivided interest
ESSENTIAL ELEMENTS OF SALE
1. General Rule: If any of the essential elements is
missing, there is NO contract of sale.
2. Essential elements are: Consent Determinate
Object Price Certain in Money
3. Who may be PARTIES to a contract of sale? All
persons who have the CAPACITY TO BUY AND
SELL can be parties to a contract of sale.
4. What are the kinds of incapacity?
Absolute Incapacity – persons who cannot bind
themselves at all
Relative Incapacity – only with regard to certain
persons and certain class of property
5. ABSOLUTE INCAPACITY: Who are not allowed
to buy and sell properties, or bind themselves?
Minors Insane or Demented Deaf-mutes WHO DO
NOT KNOW how to write. Those who are under
CIVIL INTERDICTION. These persons have
absolute incapacity, meaning, they cannot bind
themselves in a contract of sale. They cannot buy
or sell. However, they may buy necessaries (basic
needs, like food etc. )
6. Who are considered to have RELATIVE
INCAPACITY?
Husband and wife Agents in relation to the
property entrusted to them. Executors and
administrators in relation to the property of estate
under his/her administration. Public officers with
respect to the properties of the government,
political subdivisions, or GOCCs, entrusted to
them. Judges, justice, prosecuting attorney, clerks
of court, etc. with respect to the property in
custodia legis. Other persons disqualified by law
7. How do we treat Husband and Wife in relation to
transfer of property through sale to each other?
General Rule: Husband and wife cannot sell to each
other. Exception: When separation of property was
agreed. There was a judicial separation of property.
8. When does consent in sale happen?
Upon meeting of the minds of the parties as to the
object to be sold and the price, there is consent. To
elaborate, we need to look at OFFER and
ACCEPTANCE. The buyer may offer to buy or the
seller my offer to sell. The buyer may accept the
offer of the buyer, or the seller may accept the offer
of the buyer.
9. What are the rules on OFFER?
GENERAL RULE: Offer may be withdrawn at any
time without even communicating such withdrawal
to the interested buyer.
EXCEPTION: When the offeror has allowed the
offeree a certain period to accept, OFFER may be
withdrawn at any time before acceptance by
communicating such withdrawal. EXCEPTION
TO THE EXCEPTION: Offer cannot be withdrawn
within a certain period if found under
consideration. (see OPTION CONTRACT)
10. What is an OPTION CONTRACT?
An option contract is an accepted unilateral
promise to buy or sell supported by a consideration
distinct from the price. It secures the privilege to
buy. TAKE NOTE of the consideration. This means
that the opportunity to sell to other buyers is
forgone during the period given to the person who
promises to buy. Only after the period when the
prospect buyer has not bought the object of sale can
the seller sell to another. An option WITHOUT
CONSIDERATION is VOID.
ACCEPTANCE.
Acceptance refers to that which determines
consent. It is the acceptance of the offer, and not
the acceptance of the good delivered. However, the
goods to be delivered is also part of the offer. What
are the requisites of acceptance? It must be
absolute. It must be plain and unconditional. To
bind the offeror, the offeree must comply with the
conditions of the offer.
e) Obligation to notify the seller of such
refusal(Art. 1587)
2. Buyer unjustifiably refuses
a) Title passes to the buyer, unless there is
stipulation and seller reserved the ownership
b) Obliged to pay the price (art. 1588)
When Vendee is liable for interest
Buyer shall pay interest for the period between
delivery and payment of price in the following
cases:
1. If there is stipulation
2. Thing sold produces fruits or income
3. If he is in default, from the time judicicial
demand for payment of price. (art. 1589)
RES PERIT DOMINO
The thing is lost to the owner. This phrase is used
to express that when a thing is lost or destroyed, it
is lost to the person who was the owner of it at the
time.
CIF vs. FOB
Cost, insurance, and freight (CFI) and free on
board (FOB) are international shipping agreements
used in the transportation of goods between buyers
and sellers.
12. What are the rules on PRICE?
It is the sum stipulated as equivalent of the thing
sold and also every incident taken into
consideration for the fixing of the price put to the
debit of the buyer and agreed to by him (kabayaran,
bayad, presyo; ang halaga ng bagay na ipinagbibili
na pinagkasunduan ng bumibili at nagbibili. Hindi
mahalaga kung magkano, ang kailangan lamang ay
napagkasunduan ng dalawa.)
REQUISITES: Certain or ascertained at the time
of perfection In money or its equivalent Real, not
fictitious Why is it important that the price must be
certain? Aside from the fact that it is part of the
offer to be accepted, the certainty of the price
makes the contract and the obligations enforceable
as there is a reference as to how much must be
paid. Hence, when the buyer pays less, the seller
can demand for the balance. The seller cannot
demand payment more than the agreed price. Why
must it be in money or its equivalent? The price
must have a UNIT of measure. It determines the
value. Example: “babayaran ko ng SAMPU.” Sa
ganitong pagkakataon hindi malalaman kung
“sampu” ng anong bagay. Ngunit kung “sampung
piso” ang ibinigay o sinabi, malalaman na ang
value. Generally, the measure of price or unit in
money is in legal tender (Peso, for the Philippines).
However since peso may have its equivalent in
foreign currency, it may be denominated by the
same. Why is it important that the price must be
REAL, not fictitious? A fictitious price, or
simulated (hindi makatotohan, “bala-bala”,
“kunwari”, “kunyari”) makes the sale void, or
inexistent. It is the same as an inexistent contract
where one of the essential elements is missing (lack
of consideration). Example: Ibebenta ko sa iyo ang
aking kotse. Bayaran moa ko ng ZERO pesos (Php
0.00). Pumayag ka. Hindi ba sa ganitong
situwasyon ibinigay ko na lamang ang kotse sa iyo
ng libre. At kung libre lamang ang kotse, ito ay
tinatawag sa batas na DONATION. Maaari din
namang kunwari lamang na babayaran ng Php
100,000 pero hindi naman talaga babayaran.
CIF - buyer assumes full responsibility for the
goods as soon as they reach the destination
FOB - the goods are considered into the control of
the buyer as soon as they’re loaded onto the ship.
Related principle:
CAVEAT EMPTOR (Latin phrase)
“Let the buyer beware”
- the principle that the buyer alone is
responsible for checking the quality and
suitability of goods before a purchase is
made.
● Applicable to goods “SOLD AS IS”
● Second hand things are “sold as is”
● Diligence of buyer: to inspect the goods
before purchase.
RELATIVE SIMULATION/FALSE
PRICE – this is not the true price
ABSOLUT SIMULATION – price is not intended
to be paid
13. Does inadequacy of price invalidate the sale?
Gross inadequacy of price does not affect the
contract of sale except if the inadequacy shows that
there is a defect in consent.
14. If delivery of item has been made without
determining price, what must be done? Where
delivery has been made, the buyer must pay a
reasonable price.
15. If there is no delivery yet, and the contract is
executory, what is the effect of failure to determine
price? Where the contract is executory, the contract
is without effect. There is no obligation created. An
executory contract is one which has unperformed
obligations. The performance of the obligations
remains on both sides. Hence, in this case, there is
no delivery yet, or no money has been paid yet.
Neither the buyer nor the seller can demand
performance of obligation from each other.
(Compare with a situation in which there was
already delivery. In such case, the buyer needs to
pay.) (OBJECT or SUBJECT MATTER of sale will
be discussed in another lecture)
Art. 1583. Unless otherwise agreed, the buyer of
goods is not bound to accept delivery thereof by
installments. Where there is a contract of sale of
goods to be delivered by stated installments, which
are to be separately paid for, and the seller makes
defective deliveries in respect of one or more
instalments, or the buyer neglects or refuses
without just cause to take delivery of or pay for one
more instalments, it depends in each case on the
terms of the contract and the circumstances of the
case, whether the breach of contract is so material
as to justify the injured party in refusing to proceed
further and suing for damages for breach of the
entire contract, or whether the breach is severable,
giving rise to a claim for compensation but not to a
right to treat the whole contract as broken. (n)
Art. 1584. Where goods are delivered to the buyer,
which he has not previously examined, he is not
deemed to have accepted them unless and until he
has had a reasonable opportunity of examining
them for the purpose of ascertaining whether they
are in conformity with the contract if there is no
stipulation to the contrary. Unless otherwise agreed,
when the seller tenders delivery of goods to the
buyer, he is bound, on request, to afford the buyer a
reasonable opportunity of examining the goods for
the purpose of ascertaining whether they are in
conformity with the contract. Where goods are
delivered to a carrier by the seller, in accordance
with an order from or agreement with the buyer,
upon the terms that the goods shall not be delivered
by the carrier to the buyer until he has paid the
price, whether such terms are indicated by marking
the goods with the words "collect on delivery," or
otherwise, the buyer is not entitled to examine the
goods before the payment of the price, in the
absence of agreement or usage of trade permitting
such examination. (n)
When is there acceptance of good?
1. Express acceptance
2. Buyer does an act which only an owner can do
3. Failure to return after reasonable lapse of time
Effect of acceptance on vendor’s liability for
breach of warranty
General Rule: Seller is not discharged from liability
for breach of warranty by the acceptance of the
goods Exception:
(1) If there is an agreement, express or implied;
(2) if buyer fails to give notice to seller of breach of
warranty within a reasonable time after buyer
knows of such breach. (Art. 1586)
Effects if buyer refuses to accept delivery
1. Buyer justifiably refuses to accept
a) Buyer has no duty to return the goods
b) Title does not pass
c) Not be obliged to pay the price
d) If he constitute himself as a depositary, he shall
be liable as such