Article 1466.

In construing a contract containing provisions characteristic of both the contract of

sale and of the contract of agency to sell, the essential clauses of the whole instrument shall be
considered.
Sale vs. Agency
SALE
The buyer pays for the price of the goods/property
purchased
The buyer becomes the owner of the goods/property
purchased
Buyer cannot return the goods/property when the sale is
defective
The seller warrants the goods/property sold
The seller has full freedom to enter into any terms or
conditions on the contract of sale

AGENCY
The agent does not pay for the price. He merely accounts for
the proceeds of the sale.
The agent does not become the owner of the goods/property
delivered to him for sale.
The agent returns the goods/property if he was not able to sell
the same
The agent does not make any warranty as long as he acts
within his authority and in the name of the principal
The agent must follow the instructions of the principal

Article 1467. A contract for the delivery at a certain price of an article which the vendor in the
ordinary course of his business manufactures or procures for the general market, whether the
same is on hand at the time or not, is a contract of sale, but if the goods are to be manufactured
specially for the customer and upon his special order, and not for the general market, it is a
contract for a piece of work.
Contract for a Piece of WorkThe article sold is specially manufactured and upon the special order of the
customer. Article is not sold in the ordinary course of business.
Contract for a piece of work
Contract of Sale
The thing transferred is one not in existence and w/c never
The thing transferred is one which would have existed and
would have existed but for the order of the party desiring
would have been the subject of sale to some other person,
to acquire it
even if the order had not been given
The services dominate the contract eventhough there is a
The primary objective of the contract is a sale of the
sale of goods involved
manufactured item; it is a sale of goods eventhough the item
is manufactured by labor furnished by the seller and upon
previous order of the customer
Not w/in the Statute of Frauds
Governable by the Statute of Frauds
Article 1468. If the consideration of the contract consists partly in money, and partly in another
thing, the transaction shall be characterized by the manifest intention of the parties. If such
intention does not clearly appear, it shall be considered a barter if the value of the thing given
as a part of the consideration exceeds the amount of the money or its equivalent; otherwise, it
is a sale.
Sale
Barter
Consideration: giving ofmoney as payment
Consideration: giving of athing
Governed by law on sales: species of the genussales
If consideration consists party in moneyand partly by thing look at manifest intention;
If intention is not clear:value of thing is equal
If intention is not clear:value of thing is more
or less than amount ofmoney sale
than amount of money barter
Rules if Consideration is partly Money and Partly Goods
1. Determine the intention of the parties.
2. If intention could not be determined, consider the value of the thing given:
a. If value of the thing more than value of the money, it is BARTER
b. If value of the thing less than value of the money, it is SALE
c. If both values are the same, SALE

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 1471. If the price is simulated, the sale is void, but the act may be shown to have been
in reality a donation, or some other act or contract.

EFFECT OF GROSS INADEQUACY OF PRICE

NOTE: Mere inadequacy of the price does not affectthe validity of the sale, except
(1) When there isfraud, mistake, or undue influence indicative of adefect in consent is present,
(2)When it shows thatthe parties really intended a donation or some otheract or contract.
EFFECT WHERE PRICE IS SIMULATED
1. The act may be shown to have been in realitya donation, or some other act or contract
2. If not and neither party had any intentionwhatsoever that the amount will be paid (absolutely simulated):
the sale is void
3. If there is a real price but what is stated in thecontract is not the one intended to be paid(only relatively
simulated): the contract ofsale is valid but subject to reformation
Effect of Gross Inadequacy of Price.No effect.
Exceptions: (meaning, sale is set aside)
1. If consent is vitiated, such as VIMFU (Violence, Intimidation, Mistake, Fraud, Undue influence)
2. If the parties intended a donation or some other act or contract
3. If the price is so low as to be shocking to the conscience
Effect of Simulated Price.Sale is void, unless it could be shown that the parties intended a donation or
some other act of liberality.
o
Price Simulated- No price to support a contract of sale, such that neither party had any intention that
the amount will be paidvoid
o
Price is False- there is a real price not declaredcontract is valid, but the underlying deed is subject to
reformation to indicate the real price upon which the minds of the parties have met.

Article 1475. The contract of sale is perfected at the moment there is a meeting of minds upon
the thing which is the object of the contract and upon the price.
From that moment, the parties may reciprocally demand performance, subject to the
provisions of the law governing the form of contracts.

PERFECTION OF CONTRACT OF SALE.Meeting of the minds upon the thing and price.
Effect: Parties may reciprocally demand performance
GENERAL RULE: A contract of sale is perfected atthe moment there is a meeting of the minds upon
thething which is the object of the contract and upon theprice; consensual contract
Exception: When the sale is subject to a suspensivecondition
REQUIREMENTS:
1. When parties are face to face when thereis absolute acceptance of an offer that iscertain
2. When thru correspondence or telegram when the offeror receives or had knowledgeof the
acceptance
3. When the sale is subject to a suspensivecondition from the moment the condition isfulfilled
NOTES: Qualified acceptance: mere counter-offerwhich needs to be absolutely accepted to give rise
toperfected contract of sale. Business ads are mere invitations to make an offerexcept when it appears to be
otherwise.