3 - SALES Flashcards
What are the main parties involved in a contract of sale?
The parties are the Seller and the Buyer.
What obligations does the seller have in a contract of sale?
The seller must:
1. Transfer ownership.
2. Deliver the thing.
3. Warrant the thing.
4. Preserve the thing.
What obligations does the buyer have in a contract of sale?
The buyer must pay the price.
What are the characteristics of a contract of sale?
The characteristics are:
1. Bilateral: Obligations are on both parties.
2. Consensual: Perfected by mere consent.
3. Commutative: Exchange of equivalents.
4. Nominate: Has a specific name.
5. Onerous: It involves an exchange that is not gratuitous.
6. Principal: It can stand alone.
What is the first essential requisite of a contract of sale?
Consent or Meeting of the Minds (Article 1475).
Who cannot give valid consent in a contract of sale?
Persons who cannot give valid consent include:
1. Minor
2. Insane
3. Deaf-mute who cannot write
4. Demented persons
What vices can vitiate consent?
Vices of consent include:
- Mistake: a false belief about something essential to the contract, such as the identity of one of the parties, or the nature or object of the contract.
- Violence: the use of physical force to compel someone to enter into a contract.
- Intimidation: the use of threats to create fear in someone’s mind, causing them to enter into a contract.
- Undue Influence: taking advantage of a position of power or trust to unfairly persuade someone to enter into a contract.
- Fraud: the use of deceit or trickery to induce someone to enter into a contract.
What is prohibited among spouses regarding contracts of sale?
Husbands and wives cannot sell property to each other (Article 1490), with exceptions such as separation of property agreements and judicially approved separations.
Who cannot acquire property by purchase, according to Article 1491?
The following persons cannot acquire by purchase:
1. Guardian/Ward (Voidable if the guardian purchases the ward’s property)
2. Agent/Principal (Voidable unless the principal consents)
3. Executor or Administrator/Estate (Voidable until annulled)
4. Public officers or employees (Void)
5. Justices, judges, or court employees concerning property under litigation (Void)
What constitutes the object or subject matter of a sale?
The object can be a thing or a right; however, service cannot be a valid object.
What qualifies as a determinate thing in a contract of sale?
A determinate thing is particularly designated and separated from others of the same class. If the thing sold is indeterminate, it must be capable of being made determinate.
What exceptions exist regarding the object of the sale?
- The object must be licit or within the commerce of men.
- The seller must have the right to transfer ownership at the time of delivery (Article 1459).
- Sales involving things that may come into existence (Emptio rei speratae, Article 1461) are valid.
- Sales of hope or expectancy (Emptio spei, Article 1461) may be void if they involve vain hopes.
What is required regarding the cause or price in the contract of sale?
The price must be certain:
1. Fixed by the parties.
2. Referenced to another certain thing.
3. Determined by a third person, but if they are unable or unwilling, the court may fix the price.
What rules apply regarding the form of contracts of sale?
Subject to the Statute of Frauds:
- Personal property (₱500 or more) must be in writing.
- Real property must be in writing regardless of price.
- For sale of land through an agent, authority must be in writing.
What distinguishes an absolute contract of sale from a conditional one?
- Absolute: Ownership transfers upon delivery.
- Conditional: Ownership transfers upon the fulfillment of conditions, usually full payment of the purchase price.
How does a contract of sale differ from an agency to sell?
The key differences lie in the ownership transfer and obligations regarding the price, where a sale transfers ownership, while an agency does not.
How can you determine if a contract is a sale or barter when part of the consideration is money?
- Manifest intention of the parties.
- If the value of the non-monetary consideration exceeds the money, it’s a barter.
- If the monetary value exceeds the non-monetary, it’s a sale.
What is the difference between earnest money and option money?
- Earnest Money: Part of the purchase price.
- Option Money: A reservation fee that is non-deductible unless agreed upon to be part of the purchase price.
Who bears the risk of loss of the object in a sale?
- Before perfection, the seller bears the loss.
- At the time of perfection, the seller still bears the loss.
- After perfection but before delivery, the buyer bears the loss (Supreme Court ruling).
- After perfection and delivery, the buyer bears the loss.
What is the Recto Law, and who benefits from it?
The Recto Law (Article 1484) applies to sales of personal property in installments and benefits the buyer.
What are the seller’s remedies under the Recto Law?
The seller can:
1. Demand exact fulfillment (for one or more failures to pay).
2. Cancel the sale (for two or more failures to pay).
3. Foreclose the chattel mortgage (for two or more failures to pay).
What does the Maceda Law cover?
The Maceda Law (R.A. No. 6552) covers sales of real property in installments, granting the buyer specific rights in case of default.
What are the principal obligations of the seller under Article 1495?
The seller must:
1. Transfer ownership (cannot be waived).
2. Deliver the thing (cannot be waived).
3. Warrant the thing (can be waived).
4. Preserve the thing.
When is ownership typically transferred in a sale?
Ownership is generally transferred upon delivery, unless the parties agree otherwise.
What are the different kinds of delivery?
- Actual Delivery (Article 1497): Placed in control and possession.
- Legal or Constructive Delivery: Various methods including symbolic delivery and by legal documents.
What constitutes the delivery of incorporeal property?
It involves the execution of a public instrument or quasi-traditio, where ownership titles are transferred to the buyer.
What is the difference between “sale or return” and “sale on approval”?
- Sale or Return: Transfer of ownership occurs, and the buyer bears the loss.
- Sale on Approval: Ownership is not yet transferred; the seller bears the loss unless the sale is approved.
What happens if the seller of goods is not the owner (Article 1505)?
The buyer acquires no better title than the seller had.
What exceptions allow a buyer to acquire title over the thing despite the seller not being the owner?
Exceptions include:
1. Estoppel by the owner.
2. Sale by an apparent owner.
3. Sale under statutory power or court order.
4. Purchases from merchants at stores or markets.
When is a seller considered unpaid, and what are their rights under Article 1525?
A seller is unpaid when the buyer has not paid the price. Rights include:
1. Possessory lien.
2. Right of stoppage in transit.
3. Right of resale.
4. Right to rescind.
What is a possessory lien, and when can an unpaid seller exercise it?
A possessory lien allows a seller to retain possession of goods until payment is made. It can be exercised when:
1. Goods are sold without credit terms.
2. Credit terms have expired.
3. The buyer becomes insolvent.
Under what conditions can the unpaid seller exercise the right of stoppage in transit?
The seller can exercise this right if the goods are in transit, and the buyer is insolvent.
When can a seller exercise the right of resale?
The right of resale may be exercised if:
1. Goods are perishable.
2. There is an express reservation.
3. The buyer is delayed in payment for an unreasonable time.
What are the requisites for double sale?
- All sales must be valid.
- All sales must involve the same subject matter.
- Same subject matter must be bought from the same seller.
- Buyers must have conflicting interests.
How is ownership determined in a double sale of movable and immovable property?
- Movable: Ownership acquired by the first buyer who takes possession in good faith.
- Immovable: Ownership is acquired by the first buyer who registers the sale in good faith.
What are the two types of warranties in a sale?
- Express Warranties: Affirmation of fact or promise relating to the thing sold.
- Implied Warranties: Warranty against eviction and hidden defects.
What are the requisites to enforce warranty against eviction?
- Vendee must be deprived of the whole or part of the thing sold.
- Deprivation must be by final judgment
