The Law on Sales

Art. 1458
• 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 therefor a price certain
in money.
 Stages of a Contract of Sale
• Preparation
-also known as conception or generation
-the period of negotiation and bargaining,
ending at the moment of agreement of the
parties
 Stages of a Contract of Sale
• Perfection
-also known as the birth of the contract

• Consummation
- otherwise called the death of the contract
- the fulfilment or performance of the terms
agreed upon in the contract
 Characteristics
• Bilateral
• Consensual
• Commutative – the thing sold is equivalent to
the price paid and vice versa
• Onerous – the thing sold is conveyed in
consideration of the purchase price
• Principal
• Nominate
 Absolute Sale

- No condition is imposed and

ownership passes to the vendee
upon delivery of the thing subject
of the sale
 Absolute Sale
- Neither a stipulation in the deed
that title to the property sold is
reserved in the seller until full
payment of the price, nor one giving
the vendor the right to unilaterally
resolve the contract the moment the
buyer fails to pay within a fixed
period
 Conditional Sale
- Subject to a certain contingency or
condition
- Ownership is not to vest in the buyer
until the happening of the condition
Contract of Sale Contract to Sell
Title over the Ownership is
property passes to retained by the seller
the buyer upon whether or not there
delivery unless there is delivery.
is a contrary Ownership passes to
agreement buyer only upon full
payment of price.
Contract of Sale Contract to Sell
Non-payment of the The payment in full
purchase price is a is a positive
negative resolutory suspensive
condition, meaning, condition, meaning,
the sale becomes if the price is not
ineffective upon the paid, the obligation
happening of such to deliver and to
condition (non- transfer ownership
payment) does not become
effective
Contract of Sale Contract to Sell
After delivery of the Whether there is
object, the seller delivery or not, the
loses ownership over seller retains the
it ownership of the
object
 Art. 1479
• A promise to buy and sell a
determinate thing for a price certain
is reciprocally demandable (bilateral
reciprocal contract)
 Art. 1479
• An accepted unilateral promise to
buy or to sell a determinate thing for
a price certain is binding upon the
promissor if the promise is
supported by a consideration distinct
from the price.
 Option Contract
- a privilege existing in one person, for
which he had paid a consideration, which
gives him the right to buy a certain
merchandise or property from another
person at any time within the agreed
period at a fixed rate
 Option Contract

- separate and distinct contract

from the contract where the
parties may enter into upon the
consummation of the option
 Art. 1482
• Whenever earnest money is given in
a contract of sale, it shall be
considered as part of the price and
as proof of he perfection of the
contract.
Earnest Money Option Money
Part of the purchase A distinct
price consideration for an
option contract
which fives the
buyer a specific
period within which
to purchase the
thing
Earnest Money Option Money
When it is given, the Even if option money
buyer is bound to is paid by the would-
pay the balance of be-buyer, he is not
the agreed purchase bound to buy the
price thing
Earnest Money Option Money
If the sale does not If the buyer decides
materialize, the not to buy the thing
earnest money paid he cannot recover
must be returned, the option money he
unless a contrary paid as
agreement had been consideration for the
stipulated option contract