LAW ON SALES
What are the kinds of sale?
1. As to the absence or presence of condition: ABSOLUTE or CONDITIONAL 2. As to the standing or status of the sale: VALID, RESCISSIBLE, VOIDABLE, UNENFORCEABLE, VOID 3. As to the nature of the object of sale SALE OF MOVABLE/PERSONAL PROPERTY SALE OF IMMOVABLE/REAL PROPERTY
What are the essential requisites of a contract of sale?
1. Consent 2. Object - Determinate Subject Matter 3. Cause - Price certain Absence of any will render the contract null and void.
What are the sources of the law on sales?
1. Constitution 2. Civil Code 3. other statutes 4. judicial decisions
What are natural elements?
1. Integral parts of the contract of sale unless there are provisions in the law on sales or stipulation of the parties in the contrary. 2. Built-in elements like (1) warranty against eviction and (2) warranty against hidden defects.
What are the characteristics of a contract of sale?
1. Nominate - A contract's specific name and designation. Sale has its individuality and is governed by its own set of rules. 2. Principal - can stand on its own 3. Consensual - perfected by consent. No particular form is required for its validity. 4. Bilateral - reciprocal rights and obligations 5. Onerous 6. Commutative - the value of the deteminate thing is considered or assumed to be the equivalent of the price. ---------------------------------- 7. title - Ownership of the thing sold is not transferred by mere perfection of the contract of sale, but by tradition of delivery. 8. aleatory - The fullfillment of the obligation of one of the parties in the contract of sale of hope depends on the happening of an event which is uncertain. The buyer assumes a certain risk.
What are the concepts of Sale?
1. SALE IS A TRANSACTION It is a transaction constituted by two persons who negotiate about a determinate thing. 2. SALE IS A SPECIAL CONTRACT Meeting of the minds of 2 persons (COC) 3. SALE IS A SOURCE OF OBLIGATION The existence of a valid contract of sale means that there is a source of reciprocal obligations for the seller and the buyer.
When is there a VOIDABLE SALE?
1. The sale is valid until anulled. 2. It presupposes a DEFECT IN THE CONSENT OF EITHER PARTY. 3. It is voidable even if there is no damage to the contracting parties. Example: Incapable of giving consent, or those vitiated consent by mistake, violence, intimidation, undue influence, or fraud. Example: Sale made to minors (exp: essential goods))
When is there a VOID SALE?
1. lack of any of the essential requisites. 2. or when the cause or object is contrary to law, morals, good customs, public order, public policy, or prohibited by law, or is declared by lawto be void. EXAMPLE: 1. sale of illegal drugs. 2. sale of the conjugal property without the written consent of the other spouse or the court.
When is there a UNENFORCEABLE SALE?
1. sale cannot be enforced by a proper court action unless RATIFIED. 2. Defect is either: a. entered into without or in excess of authority b. does not comply with the statute of fraud c. both of the contracting paprties do not possess the required legal capacity Example: 1. Sale of a parcel of land for the principal by one who has no authority or exceeded the scope of his authority. 2. Oral sale of the house of lot.
What is a contract to sell?
A bilateral contract whereby the propective seller, while expressly reserving the ownership of the property despite delivery thereof to the prospective buyer, bindshimself to sell the property exclusively to the propective buyer UPON FILLFILLMENT OF THE CONDITION agreed upon, that is the full payment of the purchase price. (PREPARATORY) CONTRACT TO SELL -> FULL PAYMENT -> CONTRACT OF SALE -> DELIVER
What is a contract of sale?
Article 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership and to deliver a determinate thing, and the other to pay therefore a price certain in money or its equivalent.
What are accidental elements?
Autonomy of Contracting Parties the stipulations agreed upon by the parties. Article 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. It may include the manner, time, price, place of delivery, etc.
Conditional Contract of Sale v Contract to Sell
CONDITIONAL CONTRACT OF SALE - sale is already perfected - a subsequent buyer is presumed to be a buyer in bad faith CONTRACT TO SELL - no perfected sale yet - a subsequent buyer is presumed to be a buyer in good faith
Contract of Sale v. Contract to Sell
CONTRACT OF SALE - ownership is transferred upon delivery - non-payment is a resolutory condition CONTRACT TO SELL - ownership is transferred upon full payment - full payment is a positive suspensive condition; hence, non-payment would not give rise to the obligation to transfer ownership
Does the contract of sale require a form?
GENERAL RULE: A contract of sale may be in writing, or by word of mouth, or partly of both, or may be inferred by the conduct of the parties. EXCEPTIONS: 1. Article 1357. If the law requires a document or other special form, as in the acts and contracts enumerated in the following article, the contracting parties may compel each other to observe that form, 2. Under Statute of Frauds, certain contracts must be in writing, otherwise, they shall be unenforceable. (1403(2)) 3. Sale of large cattle which requires that the same be recorded with the city/municiapal treasurer and that a certificate of transfer be issued. Otherwise, the sale is not valid. (1581)
What is the difference of an absolute and conditional contract of sal?
In the case of Ramos v. Heruela: ABSOLUTE: - when title to the property passes to the vendee upon delivery - when there is no stipulation in the contract that the title to the property remains with the seller until full payment. - no stipulation/condition giving the vendor the right to cancel. CONDITIONAL: - ownership remains with the vendor - full payment of the price is the suspensive condition, non-fullfilment of this condition prevents the obligation to sell from arising.
Does the inadequacy of the price affect the validity of the contract of sale?
NO. Article 1470. Gross inadequacy of price does not affect 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. Article 1355. Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a contract, unless there has been fraud, mistake or undue influence.
What is a reciprocal obligation?
Obligations to be performed simultaneously such that the performance of one is conditioned upon the simultaneous fullfillment of the other.
Sale v Agency to Sell
SALE: Buyer receives the goods as owner AGENCY: Agent receives good as goods of the principal SALE: Buyer pays the price AGENCY: Agent delivers the price which he got from his principal SALE: Buyer cannot return the object sold as a general rule AGENCY: Agent can't return the goods SALE: Seller warrants the thing sold AGENCY: Agent makes no warranty SALE: Not unilaterally revocable AGENCY: Essentially revocable
Sale v. Barter
SALE: Consideration is a price in money or its equivalent. SALE = where the value of the thing given as part of the consideration equals or is less than the amount of money given BARTER: Consideration is another thing. BARTER = where the value of the thing given as part of the consideration exceeds the amount of money given or its equivalent
Sale v. Contract for a piece of work
SALE: Goods are manufactured or procured in the ordinary course of business CPW: Goods are manufactured for customer upon his special order SALE: For the general market, whether on hand or not CPW: For a specific customer SALE: Governed by Statute of Frauds CPW: Not within Statute of Frauds Contract for a Piece of Work - When each product or system executed is always UNIQUE and could not mass-produce the product because of its very nature, such is a contract for a piece of work. [Commissioner v. Engineering Equipment and Supply Co., G.R. No. L-27044 (1975)]
Sale v Dacion en Pago
SALE: No pre-existing debt DACION: Pre-existing debt SALE: Creates an obligation DACION: Extinguishes the obligation (mode of payment) SALE: Price is more freely agreed upon, fixed by the parties DACION: Price is the value of the thing given SALE: Buyer has to pay the price DACION: Payment is received by the debtor before contract is perfected.
Sale v. Donation
SALE: Onerous DONATION: Gratuitous SALE: Perfected by mere consent DONATION: Requires consent and must comply with the formalities required by law for its validity. [Art. 745, CC] SALE: The property sold is replaced by the equivalent monetary consideration; there is no diminution of the seller's estate DONATION: Requires that there be a diminution of the estate of one party (donor) and the enrichment of the other party's estate (donee) NOTE: When the price of the contract of sale is simulated, the sale may be void but the act may be shown to have been in reality a donation or some other contract. [Art. 1471, CC] NOTE: The donee must accept the donation personally, or through an authorized person with a special power for the purpose, or with a general and sufficient power; otherwise, the donation shall be void. [Art. 745, CC]
Sale v Lease
SALE: Ownership transferred by delivery LEASE: No transfer of ownership SALE: Permanent LEASE: Temporary SALE: Seller must be owner at time of delivery LEASE: Lessor need not be owner
What happends if one party cannot comply with his obligation?
The injured party may choose between the fullfillment and the rescission of the obligation, with the payment of damages in either case.
When is there a VALID SALE?
The sale has all the essential elements of its validity and produces the desired legal effect,
When is there a RESCISSIBLE SALE?
The sale is valid because all the essential elements of a valid contract are present. However, the sale has an EXTRINSIC DEFECT because of the economic and the financial injury or PREJUDICE TO EITHER OF THE SELLER OR BUYER, or to a THIRD PERSON. As a consequence of which, the sale MAY BE RESCINDED. Example: 1. Sale of things under litigation by the defendant without the knowledge and approval of the litigants or of the court. 2. Sale that is entered into by a guardian on behald of his ward who suffers lesion by more than 1/4 of the value of the determinate thing which is the object of the contract of sale.
What is the essence of a contract of sale?
The transfer of ownership in exchange for a price paid oro promised.
Who are the parties to a Contract of Sale?
VENDOR - or the seller who binds himself to transfer ownership of and deliver a determinate thing NOTE: has the right to transfer ownership AT THE TIME THE THING TO BE DELIVERED VENDEE - or the buyer/purchaser who pays fo the full price
How to determine whether contract is sale or barter?
a. Manifest intention of the parties: Even if the acquisition of a thing is paid for by another object of greater value than the money component, it may still be a sale and not a barter, when such was the intention of the parties b. When intention does not appear and consideration consists partly in money and partly in another thing