Law on Sales Flashcards
(15 cards)
What is a contract of sale?
By the contract of sale, one of the contracting parties obligates himself to transafer the ownership and to deliver a determinate things, and the other to pay therefer a price certain in money or its equivalent.
What are the kinds of sale as to transfer of ownership upon deliver?
- Absolute sale - ownership transfers upon delivery, actual or constructive, even if no total payment of the price has been made yet.
- Conditional sale - Ownership automatically transfers to the buyer upon fulfillment of the condition, which is usually the full payment of the price, without the need of a new agreement or to execute a new contract.
Contract to Sell - a special kind of conditional sale where ownership does not automatically pass upon fulfillment of the condition. It will only give the buyer the right to demand the execution of a deed of sale or to compel the seller to sell. Ownership transfers only upon execution of the deed of sale or some other mode of deliver.
What are the essential elements of a contract of sale?
- Consent
- Cause
- Object
Kinds of Incapacity
(2)
a. Absolute incapacity - the party cannot give consent to any and all contract, which may result in the contract being voidable or void.
b. Relative Incapacity - the party is prohibited from entering some specific transactions with some persons and sometimes over specific things.
Minors and those without capacity to act: may enter into a valid contract of sale of “necessaries” as provided under Art. 1489. Necessaries are those which are indispensable for sustenance, dwelling, clothing and medical attendance.
What are the Rules as to PRICE?
a. It must be certain.
i. With reference to another thing certain, or
ii. The determination thereof be left to the judgment of a special person or persons.
1) Should such person or persons be unable or unwilling to fix it, the contract shall be inefficacious, unless the parties subsequently agree upon the price.
2) If the third person or persons acted in bad faith or by mistake, the courts may fix the price.
3) Where such third person or persons are prevented from fixing the price or terms by fault of the seller or the buyer, the party not in fault may have such remedies against the party in fault as are allowed the seller or the buyer, as the case may be
b. 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.
c. The price of securities, grain, liquids, and other things shall also be considered certain, when the price fixed is that which the thing sold would have:
i. On a definite day, or
ii. In a particular exchange or market, or
iii. When an amount is fixed above or below the price on such day, or in such exchange or market, provided said amount be certain.
d. The fixing of the price can never be left to the discretion of one of the contracting parties. However, if the price fixed by one of the parties is accepted by the other, the sale is perfected.
What happens when the price cannot be determined?
The contract is inefficacious.
However, if the thing or any part thereof has been delivered to and appropriated by the buyer he must pay a reasonable price therefor. What is a reasonable price is a question of fact dependent on the circumstances of each particular case
What are the rules of to Objects of Contracts of Sale?
a. Must be licit
b. vendor must have the right to transfer ownership thereof at the time it is delivered
c. must be determinate
d. In the case of fungible goods, there may be a sale of an undivided share of a specific mass, even though
i. The seller purports to sell and the buyer to buy a definite number, weight or measure of the goods in the mass, and
ii. The number, weight or measure of the goods in the mass is undetermined.
e. It 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, called “future goods.”
f. The sole owner of a thing may sell an undivided interest therein.
g. Things subject to a resolutory condition may be the object of the contract of sale, such as one that is the subject to a right of repurchase
sale of vain hope is void.
How is a contract of sale perfected?
Sale, being a consensual contract, is perfected by mere consent as to the object of the contract and upon the price.
When is ownership transferred?
Happens after delivery, either actual or constructive, as a general rule. Except if the parties agreed that ownership will not pass until full payment of the price.
When is sale by auction perfected?
It is perfected when the auctioneer announces its perfection by the fall of the hammer, or in other customary manner.
Before perfection:
1. Any bidder may retract his bid; and
2. the auctioneer may withdraw the goods from the sale unless the auction has been announced to be without reserve.
What is Earnest Money?
It forms part of the purhcase price and is proof of perfection of a contract of sale.
What is Option Money?
It is a separate consideration to give the offeree a definite period within which to decide whether or not to accept an offer, there is no perfected contract of sale yet and does not form part of the purchase price.
Recto Law
It applies to a contract of sale of personal property the price of which is payable in installments.
It does not apply to sales “on credit”, only sales in installement
It likewise applies to contracts purporting to be leases of personal property with option to buy, when the lessor has deprived the lessee of the possession or enjoyment of the thing.
Models of delivery: things
a. Actual delivery
b. Constructive delivery
C. Delivery to a common carrier
Constructive Delivery
i. Traditio Longa Manu: literally, long-hand delivery, or by pointing to the thing sold accomplished by mere consent of the seller, ownership transfers to the buyer, because at the time of sale, the seller cannot transfer possession to the buyer, e.g., the thing is leased by another.
ii. Consitutum Posessorium: at the time of sale, the seller is in possession and remains in possession in another concept other than an owner, like that of a lessee, depositary or borrower. E.g., sale lease-back.
iii. Brevi Manu: or short hand delivery. When the buyer is in possession of the thing, in a concept other than that of an owner, at the time of sale, and remains in possession after sale, now as owner. E.g., a lessee who buys the thing leased.
iv. Symbolic Delivery: where the seller merely gives the key to a warehouse where the goods are located or in a sale of car, the delivery of the keys is symbolic delivery.
v. Execution of the Required Formality: by execution of a public instrument. This mode of delivery is available to both sale of rights and sale of things;
