LAW-ON-SALES-as-of-MAY-13 2

LAW ON SALES

NATURE AND FORM OF THE CONTRACT

Contract of Sale

  • Article 1458:

    • One party transfers ownership and delivers a determinate thing.

    • The other party must pay a certain price in money or its equivalent.

    • It can be absolute or conditional.

Contract to Sell

  • Article 1478:

    • Agreement that ownership does not pass to the purchaser until full payment is made.

Conditional Contract of Sale

  • Article 1461:

    • Potentially existing things can be sold.

    • The sale of mere hope or expectancy is subject to conditions about future existence; vain hopes are void.

TYPES OF CONTRACTS

Contract of Sale vs. Contract to Sell

  • Ownership Transfer:

    • Sale: Upon delivery.

    • Contract to Sell: Upon full payment.

  • Conditions:

    • Sale: Perfected.

    • Contract to Sell: Not perfected until conditions met.

ESSENTIAL REQUISITES OF A CONTRACT OF SALE

1. Consent of Contracting Parties

  • Perfected at the moment of “meeting of the minds” regarding the object and price as per Article 1475.

2. Object Certain

  • Must be licit, within commerce, and vendor must have the right to transfer ownership.

    • Illicit Things:

      • Examples:

        • Sale of unfit animals.

        • Sale of future inheritance is void.

        • Sale of land to aliens violates Constitutional prohibitions.

Types of Objects

  • Existing: Physically present.

  • Future: May exist in the future and has reasonable certainty.

  • Contingent: Subject to conditions of existence.

3. Cause of Obligation

  • Refers to “price certain in money or its equivalent” as per Article 1458.

    • Not simply goods or merchandise.

Price

  • Requisites for Valid Price:

    1. Certain or ascertainable at the time of perfection.

    2. In money or its equivalent.

    3. Real: Buyer intends to pay; seller expects to receive.

Inadequacy of Price

  • General Rule: Does not affect validity of contract except in cases where:

    • Indications of vitiated consent (fraud, mistake).

    • Judicial/Execution Sales.

No Price Agreed Upon

  • Result: Inefficacious contract per Article 1474.

    • Buyer must pay a reasonable price for delivered goods.

FALSE AND SIMULATED PRICE

  • False Price: Not the true price, yet parties are bound.

  • Simulated Price: Not intended to be paid; declared void.

Earnest Money vs. Option Money

  • Earnest Money: Part of purchase price, binds the sale.

  • Option Money: Consideration for the right to choose to purchase or sell.

BARTER

  • Definition: Value exchanged in goods equal or less than money given.

REMEDIES OF VENDOR IN SALE

  • Options include: fulfilling obligations or cancelling sale for non-payment of installments.

DOUBLE SALES

  • Rule: Ownership transfers to the first possessor in good faith.

  • Requirements:

    • Multiple valid sales.

    • Same object sold.

Caveat Emptor

  • Buyer should inquire about rights of others in possession before purchasing.

MISCELLANEOUS PROVISIONS

Ownership Transfer

  • Transfers upon actual or constructive delivery unless otherwise stated.

Kinds of Delivery

  • Actual: Ownership given to the vendee.

  • Constructive: Under specific conditions may carry equal effects to actual delivery.

  • Symbolic: Transfer of possession without actual physical transfer.

Warranties in Sale

Implied Warranties

  • Seller's warranty against eviction, encumbrances, and defects.

Buyer’s Rights

  • In case of breach of warranty, options include accepting goods and claiming damages, or rejecting goods.

RESCISSION OF CONTRACT

  • Remedies arising from breach include damages, specific performance, or rescission.

CREDIT TRANSACTIONS

  • Includes purchases or loans with a promise of future payment.

Security and Bailment

  • Security guarantees obligation fulfillment; bailment involves property delivery for safekeeping.

LOAN TYPES

Commodatum vs. Mutuum

  • Commodatum: Not consumable, rented for specific use.

  • Mutuum: Consumable goods, ownership transferred to borrower upon loan agreement.

DEPOSIT

Types of Deposit

  • Voluntary: By agreement; Judicial: As per court order.

Obligations of Depositor and Depositary

  • Periodic review of obligations regarding safekeeping and return of the deposited goods.

HIGHLIGHTS

  • Emphasize the distinction between types of contracts (sale, loans, deposit).

  • Consider the implications of ownership transfer and remedies in various scenarios.

CONCLUSION

  • Understanding contracts in terms of terms, requirements, rights, and obligations is crucial for successful transactions and legal protection.