1. What is a Contract of Sale?

By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing and the other to pay therefore a price certain in money or its equivalent. 2. ow is Contract of Sale distinguished from Contract to Sell? Contract of Sale Contract to Sell

!itle over the property passes to the buyer "wnership is retained by the seller whether upon delivery unless there is a contrary or not there is delivery. "wnership passes agreement to the buyer only upon full payment of the price #on$payment of the purchase price is a negative resolutory condition% meaning the sale becomes ineffective upon the happening of such condition &fter delivery of the ob'ective% the seller loses ownership over it. (nless% the contract is set aside% he cannot recover the ob'ect !he payment in full is a positive suspensive condition% meaning% if the purchase price is not paid% the obligation to deliver and to transfer ownership on the part of the seller does not become effective Whether there is delivery or not% the seller retains the ownership of the ob'ect. )f the seller% due to non$payment of the price is ousting the buyer from the property% he *seller+ is not rescinding the contract of sale but is precisely enforcing it.

,. What are the Stages of a Contract of Sale? The Phases or Stages of A contract of Sale are the following: 1. Preparation, conception or generation-the period of negotiation and bargaining% ending at the moment of agreement of the parties 2. Perfection or Birth of the Contract ,. Consummation or death-which is the fulfilment or performance of the terms agreed upon .. What are the /ssential /lements of a Contract of Sale?

The Elements of Contract of Sale are: 1. Essential Elements - necessary for the validity of the sale.

a. 0eeting of the minds of the seller and the buyer b. "b'ect which is certain and determinate Object ust be !icit or !awful. !here are two 1inds of illicit things2 a. )llicit per se-when by its nature it is heinous% immoral or wrongful b. )llicit per accidens-when it is prohibited by law c. 3rice certain 4. What may be ob'ects of sale? 1. /5isting 6oods 7 owned8 possessed by seller at the time of perfection 2. 9uture 6oods 7 goods to be manufactured% raised% acquired by seller after perfection of the contract or whose acquisition by seller depends upon a contingency *&rt. 1.:2+ #ote2 Sale of future goods is valid only as an e5ecutory contract to be fulfilled by the acquisition ; delivery of goods specified. ,. Sale of (ndivided )nterest or Share a. Sole owner may sell an undivided interest. *&rt. 1.:,+ /5. & fraction or percentage of such property< b. Sale of an undivided share in a specific mass of fungible goods ma1es the buyer a co$owner of the entire mass in proportion to the amount he bought. *&rt. 1.:.+ c. & co$owner cannot sell more than his share *=turralde v. C&+ .. Sale of !hings in >itigation a. Sale of things under litigation is rescissible if entered into by the defendant% without the approval of the litigants or the court *&rt. 1,?1+ b. #o rescission is allowed where the thing is legally in the possession of a ,rd person who did not acted in bad faith. 4. !hings sub'ect to @esolutory Condition. /5. !hings acquired under legal or conventional right of redemption% or sub'ect to reserva troncal. *&rt. 1.:4+ :. )ndeterminate Auantity of Sub'ect 0atter !he fact that the quantity is not determinate shall not be an obstacle to the e5istence of the contract provided it is possible to determine the same% without need of a new contract. *&rt. 1,.B+

:. What is the status of the following contracts of sale? 1. !hat entered into by minors2

a. 0erely voidable% sub'ect to annulment or ratification b. &ction for annulment cannot be instituted by the person who is capacitated since he is disqualified from alleging the incapacity of the person with whom he contracts *with partial restitution in so far as the minor is benefited+ where necessaries are sold and delivered to a minor or other person without capacity to act% he must pay a reasonable price *&rt. 1.?B+ 2. Sale by ; between spouses *&rt. 1.BC+2 a. Status of prohibited sales between spouses2 6eneral @ule2 #ull and void /5ception2 )n case of sale between spouses2 i. When a separation of property was agreed upon in the marriage settlements< or ii. When there has been a 'udicial separation of property agreed upon between them @easons2 &. 3revent defrauding creditors B. &void situation where dominant spouse ta1es advantage over the wea1er spouse C. &void circumvention on prohibition of donation between spouses b. Contract of sale with ,rd parties2 6eneral @ule2 (nder the law on sales% it would seem that a spouse may% without the consent of the other spouse% enter into sales transactions in the regular or normal pursuit of their profession% vocation or trade. *in relation with &rt. D,% 9amily Code+ /5ception2 /ven when the property regime prevailing was the con'ugal partnership of gains% the Supreme Court held the sale by the husband of a con'ugal property without the consent of the wife is void% not merely voidable under &rt. 12. of the 9amily Code since the resulting contract lac1 one of the essential elements of full consent. *6uiang v. C&% 6.@. #o. 1241D2% Eune 2:% 1BB?+ ,. Between Common >aw Spouses $ also null and void. )n Calimlim$Canullas v. 9ortun% the Court decided that sale between common law spouses is null and void because &rt. 1.BC prohibits sales between spouses to prevent the e5ercise of undue influence by one spouse over the other% as well as to protect the institution of marriage. !he prohibition applies to a couple living as husband and wife without the benefit of marriage% otherwise% the condition of those incurred guilt would turn out to be better than those in legal union. *Calimlim$Canullas v. 9ortun% et. al.% 6.@. #o. >$ 4D.BB% Eune 22% 1B?.+ But when the registered property has been conveyed subsequently to a third$party buyer in good faith and for value% then reconveyance is no longer available to common$law spouse$ seller% since under the !orrens system every buyer has a right to rely upon the title of his immediate seller. *CruF v. C&% 6.@. #o. 12C122% #ov. :% 1BBD+ D. What is the effect of failure to determine the price? Where contract is e5ecutory 7 ineffective

Where the thing has been delivered to and appropriated by the buyer 7 the buyer must pay a reasonable price therefore #ote2 !he fi5ing of the price cannot be left to the discretion of one of the parties. owever% if the price fi5ed by one of the parties is accepted by the other% the sale is perfected.

?. What is an option money? !he distinct consideration in case of an option contract. )t does not form part of the purchase price hence% it cannot be recovered if the buyer did not continue with the sale. B. When is payment considered option money? 3ayment is considered option money when it is given as a separate and distinct consideration from the purchase price. Consideration in an option contract may be anything or underta1ing of value. 1C. What is an earnest money or GarrasH? !his is the money given to the seller by the prospective buyer to show that the latter is truly interested in buying the property% and its aim is to bind the bargain. *3ineda% p. D4+ 11. What is the effect of giving an earnest money? )t forms part of the purchase price which may be deducted from the total price. )t also serves as a proof of the perfection of the contract of sale. !he rule is no more than a disputable presumption and prevails only in the absence of contrary or rebuttable evidence. *3#B v C&% 2:2 SC@& .:.% 1BB:+ #ote2 "ption money may become earnest money if the parties so agree. 12. When is payment considered an earnest money? When the payment constitutes as part of the purchase price. ence% in case when the sale did not happen% it must be returned to the prospective buyer. 1,. What are the effects of >"SS% I/!/@)"@&!)"# "9 ! )#6 to a Contract of Sale? a. B/9"@/ 3/@9/C!)"# of Sale 7 there shall be no contract to tal1 about. Would$be$seller bears the loss. b. &! ! / !)0/ "9 3/@9/C!)"# "9 C"#!@&C! "9 S&>/-1.B, Jcontract without any effect2 it never came to e5istence. !here could be no contract of sale without a thing to be sold. Would$be$seller bears the loss. c. &9!/@ 3/@9/C!)"# B/9"@/ I/>)K/@=. ). 1.?C &pplicability% correlate to2 *9ungibles sold independently and for a single price covered by the law+

Art. 1163. Every person obliged to give something is also obliged to take care of it with the proper diligence of a good father of a family, unless the law or the stipulation of the parties requires another standard of care Art. 1164. The creditor has a right to the fruits of the thing from the time the obligation to deliver it arises. However, he shall acquire no real right over it until the same has been delivered to him. Art. 1165. When what is to be delivered is a determinate thing, the creditor, in addition to the right granted him by Article !", may compel the debtor to make the delivery. #f the thing is indeterminate or generic, he may ask that the obligation be complied with at the e$pense of the debtor. #f the obligor delays, or has promised to deliver the same thing to two or more persons who do not have the same interest, he shall be responsible for any fortuitous event until he has effected the delivery Art. 1262. An obligation which consists in the delivery of a determinate thing shall be e$tinguished if it should be lost or destroyed without the fault of the &pplicability. 3rinciple ofhas @es 3erit Iomino. debtor, and before he incurred in delay. Kendor bears ris1 of loss until

)). 14C. transferred by delivery.

ownership is

secure performance of buyerLs obligation b+ Where actual delivery is delayed through fault of the buyer. 1.. What are the remedies of an (npaid Seller? ). "rdinary

When by law or stipulation, the obligor is liable even for fortuitous events, the loss of the thing does not e$tinguish the obligation, and he shall be responsible /5ceptions2 for damages. The same rule applies when the nature of the obligation requires a+ Where delivery of goods has been made but ownership is retained by the the assumption of risk.

seller merely to

1. &ction for 3rice /5ercised when2 a. ownership has passed to buyer< b. price is payable on a day certain< c. goods cannot readily be resold for reasonable price and &rt. 14B: is inapplicable 2. &ction for Iamages 7 )n case of wrongful neglect or refusal by the buyer to accept or pay for the thing sold )). Special 1. 3ossessory >ien 7 Seller not bound to deliver if buyer has not paid him the price. )t is e5ercisable only in following circumstances2 a. goods sold without stipulation as to credit< b. goods sold on credit but term of credit has e5pired c. buyer becomes insolvent #ote2 When part of goods delivered% may still e5ercise right on goods undelivered 2. Stoppage in !ransitu @equisites2 a. )nsolvent buyer< b. Seller must surrender the negotiable document of title% if any< c. Seller must bear the /5penses of delivery of the goods after the e5ercise of the right< d. Seller must either actually ta1e possession of the goods sold or give #otice of his claim to the carrier or other person in possession< e. 6oods must be in !ransit< and f. (npaid seller.

,. Special @ight to @esell the 6oods /5ercised when2 a. 6oods are perishable% b. Stipulated the right of resale in case of default% or c. Buyer in default for unreasonable time .. Special @ight to @escind< @equisites2 a. /5pressly stipulated "@ buyer is in default for unreasonable time b. #otice needed to be given by seller to buyer #ote2 "wnership of goods already with buyer but seller may still rescind< ownership is destroyed even without court intervention but in ordinary sale% need to go to court.

Auestions2 1. "hat are the responsibilities of a seller # $endor under the %ew Ci$il Code in cases of e&press warranties' (nder &rticle 14:1% a vendor or a seller has the responsibility to ensure that the item he or she sells has no hidden defects. 2. "hat (ind of defects of the item sold shall ma(e the $endor or seller liable' )f the defects should render the item sold totally unfit for the use for which it is intended% the seller or the vendor shall be liable for such defects. Second% if the defect should diminish or decrease its fitness or its use to the e5tent that if the buyer was aware of such defect he would not have bought the product or would have demanded a lower price for it. ,. "hat are the instances where a $endor or seller ma) not be held liable in case of defects' & vendor or seller may not be held liable in cases of patent defects pr those which are clearly visible upon inspection of the product bought. )n case the defects are not visible% and the buyer is an e5pert% who by reason of his trade or profession should have 1nown the defects% then the vendor or seller may not be held liable. .. "hat are the responsibilities of the seller or $endor as to the *ualit) or fitness of the product sold in case there is no e&press warrant) gi$en to him' !he seller or vendor is liable to the buyer in an implied warranty% if such buyer ma1e 1nown to the seller e5pressly or impliedly% the particular purpose for which the goods are acquired. !he vendor% by implication% warrants the general fitness or quality of the product sold to the buyer. Second% the seller or vendor is liable to the buyer if such buyer relies on the sellerLs s1ill or 'udgment.