RFBL- Sales

Sales

Sales

is a contract where one party (seller or vendor) obligates himself to transfer the ownership of and to deliver a determinate thing, while the other party (buyer or vendee) obligates himself to pay for said thing a price certain in money or its equivalent

Art. 1458

Contract of Sales

1. Consent

2. Object

3. Consideration

Essential elements of contract of sale

Stages of a contract of sale

1. NEGOTIATION OR POLICITATION STAGE

2. PERFECTION OR BIRTH

3. CONSUMMATION

Begins from he time the prospective contracting parties manifest their interest in the contract and ends at the moment of agreement of the parties. A negotiation is formally initiated by an offer, which must be certain.

NEGOTIATION OR POLICITATION STAGE

takes place when the parties agree upon the essential elements of the contract

PERFECTION OR BIRTH

occurs when the parties fulfill or perform the terms agreed upon in the contract culminating in the extinguishment thereof.

CONSUMMATION

•Those inherent in the contract and are deemed to exist in the contract in the absence of any stipulation to the contrary.

Natural elemenrs

•Dependent on the parties’ stipulations

Accidental elements

Characteristics of a contract of sale

1. Consensual

2. Bilateral

3. Principal

4. Onerous

5. Nominate

6. Title, not a mode

•Perfected by mere consent, which is manifested by the meeting of the minds as to the offer and acceptance thereof on the subject matter, price and terms of payment

Consensual

•it imposes obligations on both the seller and the buyer

Bilateral

•the thing sold is considered the equivalent of the price paid and vice versa

GR: COMMUTATIVE

the consideration is not equivalent (mere chance)

XPN: ALEATORY

its existence does not depend upon the existence and validity of another contract

Principal

•The thing sold is conveyed in consideration of the purchase price, and vice versa

Onerous

•it has a specific name given by law

Nominate

a contract of sale is not a mode, but merely a title. The sale itself does not transfer ownership.

Title, not a mode

The seller is granted the right to unilaterally rescind the contract predicated on the fulfillment or non-fulfillment, as the case may be, of the prescribed condition.

Conditional Sale

The title to the property is not reserved to the seller or if the seller is not granted the right to rescind the contract based on the fulfillment or non-fulfillment, as the case may be, of the prescribed condition.

Absolute Sale

•A bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price.

Contract to sell

–one who sells and transfers the thing and ownership to the buyer

–Must be legally capacitated to enter into contract.

–If the vendor is a corporation, the contract must be executed by the board of directors or by a corporate agent duly authorized by the board.

–Must have a right to transfer the ownership at the time it is delivered.

Seller/Vendor

–one who buys the thing upon payment of the consideration agreed upon.

–Must be legally capacitated to enter into contract.

Buyer/Vendee

Parties to a contract of sale

• Seller/Vendor

• Buyer/Vendee

Sale of Things with potential existence

• EMPTIO RE SPERATAE

• EMPTIO SPEI

If the contract of sale is made dependent upon  the existence of the things such that if it did not come into existence the contract is not effective, and the buyer will have no obligation to pay the price

EMPTIO RE SPERATAE

if the contracting parties intended the contract of sale to exist at all events

EMPTIO SPEI

•The sum stipulated as the equivalent of the thing sold and also every incident taken into consideration for the fixing of the price put to the debit of the buyer and agreed to by him.

Price

It is a continuing offer or contract by which the owner stipulates with another that the latter shall have the right to buy the property at a fixed price within a certain time, or under, or in compliance with, certain terms and conditions, or which gives to the owner of the property the right to sell or demand a sale

Option Contract

Element of a Valid Option Contract

1. Consent

2. Subject Matter

3. Prestation

an option right to an unaccepted unilateral offer to sell/accepted unilateral promise to sell or an unaccepted unilateral offer to buy/accepted unilateral promise to buy a determinate or determinable object for a price certain including the manner of payment.

Subject Matter

A consideration separate and distinct from the purchase price for the option given.

Prestation

•this 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.

•It is actually a partial payment of the purchase price and is considered as proof of the perfection of the contract

•Option money may become earnest money if the parties agree

Earnest Money

Kinds of Delivery

• Actual/ Real

• Constructive/ Legal

• Quasi-Traditio

• Tradition by operation of law

–Thing sold is placed under the control and possession of buyer/agent

•ACTUAL/ REAL

–does not confer physical possession of the thing, but by construction of law, is equivalent to acts of real delivery

•CONSTRUCTIVE/LEGAL

Kinds of Constructive Delivery

•TRADITIO SYMBOLICA

•TRADITIO INSTRUMENTAL

•TRADITIO LONGA MANU

•TRADITIO BREVI MANU

•TRADITIO CONSTITUTUM POSSESSORIUM

–delivery of certain symbols representing the thing

•TRADITIO SYMBOLICA

–delivery of the instrument of conveyance

•TRADITIO INSTRUMENTAL

–Delivery of thing by mere agreement; when seller points to the property without need of actually delivering (thing must be in sight)

•TRADITIO LONGA MANU

–the buyer, being already in possession of the thing sold due to some other cause, merely demands in possession after the sale is effected, but now in the concept of an owner (Ex: Lessee becoming the owner)

•TRADITIO BREVI MANU

–the seller remains in possession of the property in a different capacity (Ex: Owner to lessee)

•TRADITIO CONSTITUTUM POSSESSORIUM

Kinds of deliver through carrier

• Free Along Side (FAS)

• Free on Board (FOB)

• Cost, insurance, and freight (CIF)

• Collect on Delivery (COD)

•when goods are delivered alongside the ship. there is already delivery to the buyer. The seller pays all charges and is subject to risk until the goods are placed alongside the vessel

FAS (FREE ALONG SIDE)

•– when goods are delivered at the point of shipment, delivery to carrier by placing the goods on vessel is delivery to buyer. The seller shall bear all expenses until the goods are delivered, depending on whether the goods are to be delivered FOB at the point of shipment or at the point of destination.

FOB (FREE ON BOARD)

• where the buyer pays a fixed price for which the seller furnishes the goods, pays the freight and insurance to the point of delivery, and all risks while the goods are in transit are for the account of the buyer

CIF (COST, INSURANCE AND FREIGHT)

•the carrier acts for the seller in collecting the purchase price, which the buyer must pay to obtain possession of the goods

COD (COLLECT ON DELIVERY)