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SALE vs. BARTER

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Sale vs. Barter:

BARTER is the contract created if the object is paid with another object. This is not sale
within the contemplation of law. SALE denotes payment of price certain in money or its
equivalent.

In instances whereby the object is paid partly in cash and partly in property, the contract is
deemed sale if the amount of cash is greater than the value of property. However, the
contract is deemed barter if value of property used for payment is greater than the amount
of cash.

Example: To pay a house and lot worth P1 million, Jake tendered cash in the amount of P700
thousand and his sedan car worth P300 thousand. The contract formed is Sale because the
amount of cash is greater than the value of property.

To pay a house and lot worth P1 million, Jake tendered cash in the amount of P300 thousand
and his Pajero worth P700 thousand. The contract formed is Barter because the value of
property is greater than the amount of cash.

SOMETHING TO PONDER ON: What if the value of the object and the amount of cash are
equal, what would it be? Sale or barter?

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