Law on sales Distinguishing contract of sale and barter

- Characteristics of a contract of sale Sale – a thing given in exchange of a price certain in

- Sale distinguished from other contracts
- Essential elements of a contract of sale
- Object of a contract of sale
- Price in a contract of sale
- Consent in a contract of sale
- Formalities in a contract of sale
- Recto law
- Capacity to contract
- Effects of the contract when the thing sold has
been lost
money or its equivalent
Barter – a thing given in exchange of another thing
How do you enter a contract of sale?
- Through three stages of sale
Negotiation – once they both agree
Perfection –
Consummation – the party will now fulfill the
obligation; the seller will transfer the ownership
to the buyer

Perfection and consummation – anything happen

Contract of sale – is a meeting of minds of the parties
with these two, it will not affect the validity of the
between the buyer and the seller, for the purpose of
sale
ownership

- Perfected by the mere consent

Stages of a contract of sale
- Negotiation – it covers the period from the time
the prospective contracting parties indicate
interest
- Perfection – it takes place upon the concurrence
of the essential elements of the sale
- Consummation – where the parties perform their
respective undertakings
Essential requisite elements of a contract of sale
- Consent - meeting of the minds, to transfer
ownership
- Object – must own the sale
- Price – money / equivalent in exchange of the
same value
What can be sold
Statue of fraud
- Required that the contract should be in writing
What will happen if the subject of thing is lost
Recto law – personal property on installment, the seller
will share because he is offended, cancel the sale
Kinds of incapacity
Absolute capacity – persons who cannot enter into a
contract, the contract of sale is defective, either voidable
or unenforceable. Exp. Minors, insane, demented and
deaf-mute’s person who do not know how to write
Relative incapacity – certain persons cannot buy certain
property. Exp. Husband and wife, the guardian, agents,
executors and administrators, public officer and
employees

- Determinate, specific object – you don’t have a

valid sale because the thing is not determinate.

In the absence of the essential it is void, if there is defect

– there is a defective contract or no contact.

Contract of donation

- If there is no price or amount

The vendor is bound to transfer the ownership of and Where should delivery be made?
deliver as well as warrant the thing which is the object of
Place of delivery
the sale.
- The place of delivery agreed upon
Obligations of the vendor
- If there is no agreement, it is determined by usage
- To transfer ownership of the thing sold of trade
- To deliver the thing - If there is no agreement and usage of trade, it is
- To warrant the object sold against eviction and the seller’s place of business if he has one, and if
hidden defects not his residence.
- To take care of the object sold pending delivery
Time of delivery
- To pay for the expenses for the execution and
registration of the contract of sale - Stipulated time
- In the absence of agreement, within a reasonable
The significance of delivery of sale is transferring
time
ownership
If the quantity of goods delivered is LESS
If the thing is lost, the owner will bear the loss if ever
happened. - The buyer may reject the goods
- Buyer may accept:
How do you make delivery? Through kinds of delivery
1. If the acceptance is with knowledge that the
- Real or actual delivery – the thing sold is placed in seller is not going to perform the contract, the
the control and possession of the vendee buyer shall pay at contract rate
- Legal or constructive – a delivery by operation of
If the quantity of goods is MORE
the law
- Quasi-tradition – delivery of rights, credits, - Buyer may accept the goods included in the
incorporeal property contract and reject the rest
- Buyer may accept the whole of the goods and pay
Kinds of legal or constructive delivery
for them at the contract rate
- Legal formalities – when the sale is made through - If indivisible, the buyer may reject the whole of
a public instrument the goods.
- Symbolical tradition – the parties use a symbol to
Mixed with goods of different description
represent the thing delivered
- Buyer may accept the goods which are in
If immovable, you make actual delivery
accordance with the contract and reject the rest
If movable, you make constructive delivery - If indivisible, the buyer may reject the whole of
the goods.
Negotiable document of title:
Who is an unpaid seller?
A document of title that actually stands for the goods it
covers, so that any transfer of the goods requires a - When the whole of the price has not been paid or
surrender of the document. tendered
- When a bill exchange or other negotiable
A document of title in which it is stated that the goods
instrument has been received as conditional
referred to therein will be delivered to the bearer. The
payment.
document is negotiable if:

- The goods are delivered to bearer

- The goods are delivered to the order of a certain
persons
Remedies of an unpaid seller Rules of preference in case of double sale

1. Possessory lien – the seller has the right to 1. Movable property

possess the object - First possessor in good faith
2. Right of stopping the goods in transit 2. Immovable property
3. Right of resale – unpaid seller having a right of - First registrant in good faith
lien or having stopped the goods in transit may - First possessor in good faith
resell the goods, if goods are of perishable nature - Person with the oldest title in good faith
4. Right to rescind – unpaid seller having the right of
lien may rescind the transfer of title and resume
the ownership of the goods, the seller expressly
reserved the right to do so.

The vendor is bound to deliver the thing sold and its

accessions and accessories.

Accessions – it signifies all of those things which are

produced by the thing which is the object of the
obligation, which are naturally or artificially attached
thereto.

Accessories – in which they are not incorporated or

attached, in other words, it includes all of those things
which are necessary for the perfection of another thing
such as equipment of a factor.

In sales involving real state, the parties may choose

between two types of pricing agreement:

a unit price contract wherein the purchase price is

determined by way of reference to a stated rate per unit
area (1,000 per square meter)

Lump sum contract which states a full purchase price for

an immovable the area of which may be declared based
on an estimated (1 million for 1,000 square meters.

Requisites of double sale

- Two or more valid contract of sale

- Two or more buyers who are at odd over the
rightful ownership of the object
- They must pertain exactly to the same object
- They must be bought from the same seller.

Principle of double sale not applicable

- Some or all of the elements as mentioned are not

present.
- The two different contracts of sale are made by
two different persons, one of them not being
owner of the property sold
- Where one of the contracts of sale is a forgery
- Where one of the contracts of sale is simulated
and the other is genuine.
 CONDITIONS AND WARRANTIES
A contract of sale may be subject to a condition, it could
be subject to an uncertain event, the happening of which
could rise to the obligation or the happening which good
make the obligation as non-existence
A tradition may be absolute or conditional
If the obligation of any party subject to any conditions and
such conditions is not fulfilled you will now again have
offended party who has the right to either refuse to
proceed with the contract or proceed with the contract
waiving the performance of the obligation
For example:
B a buyer entered into a contract with S for the purchase
of certain machinery, the arrival of the goods to be
shipped from japan is made a condition there be a no
promise by S that the goods will arrive, so if the machine
does not arrive S will not be guilty of breaching any
contract, but if S promises that the machinery will be
shipped and is already on its way, the non-arrival
constitute a breach of contract
Warranties is part in a contact of sale.
There is no need that are indicated in the contract.
However, there are warranties that could be made
express.
Requisites:
- There must be final judgement
- The purchaser or vendee has been deprived of the
whole or part of the thing sold
- By virtue of a right prior to the sale made by the
vendor
- Vendor has been summoned and made co-
defendant in the suit for eviction at the instance
of the vendee
When we say final judgement – this means the judgement
in the lower court, the parties did not wait for any
decisions
If the vendee has purchased the property and the persons
who claim to be the owner thereof, if it is before the sale,
the vendor is liable for warranty against eviction
Warrant against hidden defects
Requisites:
- The defects must be hidden
- The defects must exist at the time of the
perfection of the contract of sale
The vendee can waive warranty

Express warranty – it is any affirmation of fact or any

promises by the seller relating to the thing.

Implied warranty – an obligation imposed by the law

when there has been no representation or promise.

Examples of implied warranties

- Warranty that the seller has a right to sell

- Warranty against eviction
- Warranty against non-apparent burden

Eviction – act or process of legally dispossessing a person

of land or rental property

- Judicial process whereby the vendee is deprived in

whole or part of the thing sold
 OBLIGATIONS OF THE VENDEE
The principal obligations of the vendee
- Bound to accept delivery
- Bound to pay the price of the thing sold
In connection with this, the vendor is not required to
deliver the thing sold until the price is paid.
The vendee is required to pay the order before the thing is
delivered
In the absence of the agreement in the contrary, the
vendee is bound accept the delivery and pay the price in
the time and place designated
If there is no stipulation in the time and place of delivery,
the vendee is bound to pay at the time and place of
delivery.
In the absence of stipulation, only the time of delivery has
been agreed upon the delivery, the vendee is required to
pay when it is delivered.
The buyer has a reasonable opportunity to examine the
goods upon delivery
Types of acceptance
1. Express acceptance
- When the buyer intimates to the seller that he has
accepted the goods
- Physically or verbally accepted
2. Implied acceptance
- When something is delivered and the buyer does
not do anything which is inconsistent with the
seller’s ownership
- When, after the lapse of a reasonable time he
retains the goods without intimating to the seller
that he has rejected them
It has two acts there,
Delivery – one of the obligations of the vendee to deliver
the thing sold
Acceptance – is an obligation on part of the vendee
Effects of buyer’s justifiable refusal to accept delivery
- The buyer has no obligation to return the goods to
the seller
- It is sufficient that the buyer notifies the seller
that h refuses to accept the goods
Vendee owes interest between the delivery and
payment
- Should it have been so stipulated
- Should the thing sold delivered produce fruits or
income
- Should the buyer be in default from the time of
judicial or extrajudicial demand for the payment
Suspension of payment by the vendee
- The vendee be disturbed in the possession or
ownership of the thing acquired
- Have reasonable grounds for fear such
disturbance
Exceptions to suspension of payment
- The vendor gives security for the return of the
price in a proper case
- It has been stipulated that, notwithstanding any
such contingency, the vendee shall be bound to
make the payment
- The vendor has caused the disturbance or danger
to cease
Seller may immediately sue for the rescission of the sale
- The vendor has reasonable grounds to fear the
loss of immovable property sold and its price
The demand is not for the payment of the price but
for the rescission of the contract of sale
Rescission of the sale of movable property shall of right
take place
- If the vendee, upon the expiration of the period
fixed for the delivery of the thing, should not have
appeared to receive it
- Having appeared, he should not have tendered
the price at the same time, unless a longer period
has been stipulated for its payment.
 Extinguishment of sale Legal redemption – it is the right to be subrogated, upon
the same terms and conditions stipulated in the contract,
in the place of one who acquires a thing by:

Sale extinguishment – sales are extinguished by the same - purchase

causes as all over obligations, by those stated in the - dation in payment
preceding articles of this title and by conventional or legal - by any other transaction whereby ownership is
redemption transmitted by onerous title.

Causes of extinguishment of sale Conventional redemption is created by agreement

- Same causes as all other obligations Legal redemption is created by law

(payment of obligation, loss of the thing,
Redemption – the act of reclaiming or regaining
compensation
possession by paying specific price
- Conventional redemption
- Legal redemption Right of redemption – if the resale has been perfected, the
owner of adjoining land has right of redemption
Extra special which will apply to sale, these are:

- Conventional redemption – subject to the

agreement of the party this is when the vendor
reserves the right to repurchase the thing sold,
- with the obligation to comply with the
requirements of the law – the right to repurchase
which have been agreed upon the parties

A sale is considered as Equitable mortgage if it is lacks of

formalities of the law on sales

Mortgage – you use the property as collateral usually for a

loan, does not transfer ownership, but sale does

The contract of sale shall be presumed to be an equitable

mortgage, in the following instances:

- when the price of a sale with right to repurchase

is unusually inadequate
- when the vendor remains in possession as lessee
- when the purchaser retains for himself a price of
the purchase price

period of redemption

1. if there is no period of redemption agreed upon

- it shall last 4 years from the date of the contract
2. if there is an agreement as to period of
redemption
- the period agreed upon cannot exceed ten years

legal redemption – means it is not by agreement of the

party rather by law.