5. The Contract of Sale

Question 1

What is a sale/contract of sale?

Answer 1

Sale is a contract by which a person, the seller, transfers ownership of property to another person, the buyer, for a price in money which the latter obligates himself to pay. (art. 1708)

Question 2

What are the seller’s obligations?

Answer 2

1. Delivery
2. Ownership
3. Quality

Question 3

Discuss delivery (seller’s obligation)

Answer 3

• Give property to the buyer or allow the buyer access
• Property form (ex. color, model, and size) and quantity must be as agreed upon

Question 4

Guaranteeing ownership (seller’s obligation) means that the seller must guarantee full ownership to the buyer.

However, what if the property belongs to another? What rights do they have?

Answer 4

Sale of property of another:
- Owner may revendicate property (art. 1714)
- Exceptions:
(1) Seller becomes owner
(2) Judicial sale
(3) Prescription

Question 5

What does guaranteeing quality (seller’s obligation) mean?

Answer 5

A legal guarantee against latent defects and if item perishes due to latent defects

Question 6

What are the latent defect conditions?

Answer 6

(1) The defect exists at the time of the sale
(2) The defect was not apparent, or obvious to a regular buyer
(3) Makes the item unfit for the intended use, OR
(4) Reduces the usefulness of the item and if the buyer was aware:
(4.1) would not have bought it, OR
(4.2) would not have paid so high a price

Question 7

What are the latent defect exceptions?

Answer 7

1. No legal warranty if product is sold as is: selling this as is, not aware of any latent defects and wouldn’t be expected to know about any defects. Or they can explain the defects and are selling it as is [If a professional seller is aware of a defect and don’t disclose, they can’t exclude their liability, however a non-professional can exclude the liability]
2. If the product was sold by the court via judicial sale

Question 8

Discuss the implications of an item perishing due to latent defects

Answer 8

(A) If the seller: was aware of the defect (whether new goods or used goods) or is a merchant, professional seller or anyone selling new goods, who is presumed to have known of the defect // Then the seller has: to restore the price and pay all damage

(B) If the seller: was not aware of the defect (someone selling-hand or used goods, e.g.: a garage sale) // Then the seller has: to restore the price

Question 9

What are the buyers obligations?

Answer 9

1. Pay price
2. Take delivery

Question 10

What are the types of sales contracts?

Answer 10

1. Outright sale
2. Trial sale
3. Instalment sale
4. Sale with a right of redemption
5. Auction sale
6. Sale of residential immovable

Question 11

What is an outright sale?

Answer 11

Contract of instantaneous performance

Question 12

Describe a trial sale.

Answer 12

The buyer can try out the product before deciding to buy or return the item, if no period is specified, and the buyer has not informed about the refusal within 30 days, the seller assumes they bought the product.

Question 13

What is an instalment sale?

Answer 13

Ownership is deferred until payment in full
- The buyer has the responsibility to ensure they keep the product in good condition
- The buyer pays little by little (think of financing a car)

Question 14

What is a sale with a right of redemption?

Answer 14

Sold property can be bought back by original owner within deadline

Question 15

What is an auction sale?

Answer 15

Seller can set reserve price or other conditions

Seller can withhold identity until sale

Question 16

Describe the sale of a residential immovable.

Answer 16

By builder or developer of new or existing home

Need preliminary contract with Promise to Purchase (buyer has 10 days to cancel promise)