Class 5 - Contract of Sale Flashcards
What is a contract of sale?
Contract by which the seller transfers ownership of property to another person (the buyer) for a price in money which the buyer must pay.
both parties have obligations
What is the seller’s obligation of delivery?
Give the property to the buyer or allow them access to it and give it in the right form and quantity. (e.g. 1 car in red)W
What is the seller’s obligation of ownership?
The seller must guarantee full ownership to the buyer. This is important is if you buy something you dont want someone else to have claims on it.
What happens if property belongs to someone other than the seller?
Civil code states that the owner of the property can get the item back from the buyer without paying for it. The buyer must persue the seller. exceptions:
- Seller becomes owner (seller pays back the true owner and therefore becomes the owner after having sold the item)
- Judicial sale (judge orders the sale, blocks the true owner from getting the money back)
- Prescription (period of time during which you can enforce your rights, after this you have no right to get the item back. Normally 5 years)
What is the seller’s obligation of guarantee of quality
It is a guarantee against latent defects (civil code)
Conditions: defects exist at time of sale, not apparent/obvious to regular buyer, makes the item unfit for intended use or reduces the usefullness of the item and if buyer was aware they would not have bought it or paid such a high price.
Exceptions: Sold as is (conventional warranty). Sellers can agree with buyer on terms where the seller is not responsible for latent defects that the seller is not aware of. Could also be latent defects that the seller is aware of if they disclose it.
- Professional sellers cannot exclude liability if they are aware of a defect and did not disclose it. non-professional seller may exclude their liability though
-judicial sale: no warranty as of the quality of the property
What happens if an item perishes due to latent defects and they were aware of the defects or is a professional who is presumed to have known?
They must restore the price AND pay damages
What happens if an item perishes due to latent defects and the person was not aware of the defects
They must restore the price (this situation never applies to professionals)
What is a legal warranty?
it is what the law required
1727: if seller was not aware of latent defect and the property perishes because of this defect, the loss is born by the seller who must return the price
1728: If the seller was aware or could not have been unaware, he must restore the price and pay damages
What is conventonal warranty?
What the parties agree upon. Could agree to provide buyer with new product at new cost which would go above their legal warranty.
1732: You can add/remove parts of the legal warranty however the seller cannot excepmt themselves from liability for personal acts or omissions.
1733: Seller may not exclude or limit liability unless the defects they were aware of were disclosed exception is “as is”
What is the buyers obligation?
Pay the price and take delivery (Accept possession of the item)
What is an outright sale?
Instantly giving full ownership to buyer → one and done
What is trial sale?
When the buyer gets to try out the product for a specified period of time before deciding to buy or return the item.
If not time is specified, and the buyer has not notified the seller of a return within 30 days, then the item is assumed to have been sold
What is instalement sale?
Ownership is deferred until payment in full
Buyer decides to pay for a product little by little so they only become the owner once they pay in full → buyer has responsibility to ensure they keep the item in good condition
What is sale with a right of redemption?
Sold property can be bought back by origianl owner within deadline
Civil Code says within 5 years after which the right of redemption cannot be exercised
What is auction sale?
Seller can set reserve price or other conditions
Seller can withhold identity until sale
If identity is not disclosed to the buyer, the auctioneer would take on the responsibilities of the seller
