Code III - Sales Flashcards
Sale
contract whereby a person transfers OWNERSHIP of a thing to another for a PRICE IN MONEY
Formal Sales Requirements
Immovable = in writing
movable = can be sold orally
Elements of a Valid Sale
- Consent
- The Object
- The Price
Consent
established through offer and acceptance
Acceptance Varying from Offer
Immovables = Counter offer
Movables = if agreement on thing and price, additional terms are regarded as PROPOSALS FOR MODIFICATION must be accepted by offeror to become part of the contract
Special Rules Regarding Merchants (Acceptance Varying from Offer)
Additional terms become a part of the contract unless:
- terms materially alter the offer
- offer expressly limits acceptance to the terms of the offer
- offeror objects within reasonable time
The Object
all things corporeal or incorporeal susceptible of ownership may be sold unless prohibited by law
Litigious Redemption
litigious rights may be sold
party against whom the right has been transferred may get himself released by paying to the transferee the price he paid
Sale of Future things
the coming into existence of the thing acts as a suspensive condition and the buyer does not assume the risk
Sale of a Hope
assume the risk that the thing will not materialize
The Price
must be in MONEY, if it is not then it is not a sale but an exchange
Must be certain or determinable through a method agreed upon
IF sale is a movable of kind the seller habitually sells, and no price agreed, price term will be implied - a reasonable price
Perfection of the Sale
The thing, the price, and the consent of the parties are required
NEITHER payment nor delivery is essential
Ownership
Passes to the buyer upon perfection of the sale
Risk of loss
due to fortuitous (could not have been reasonably foreseen) events transferred to the buyer when DELIVERED
Agreements with Perfection Delayed
- Suspensive Condition
- Sale of Future Thing
- Promis to contract to Sell
Options
Grantor of the option is bound to buy or sell if the grantee of the option accepted within stipulated time
MUST specify thing and the price, have a term, and be in writing for IMMOVABLES
Term Requirement (Option)
an option contract MUST have a term
if Option is part of another contract (lease) option’s term is coextensive with the term of that contract
If indefinite duration option coextensive with contract is INVALID FOR LACK OF A DEFINITE TERM
Right of First Refusal
grantor MAY not sell 3p without first offering to sell to holder of the right
May be enforced by specific performance
Need NOT contain term
Affecting Immovable property MUST be in writing
Contract to Sell
parties promise to enter into a sale at a later date
Earnest Money in Contract to Sell
Amount given to the seller by the buyer to secure the parties interests in case of breach
parties must EXPRESSLY STIPULATE the sum is earnest money
Negates availability of specific performance and recovery of actual damages
both parties have the right to recede
Receding in Contract with Earnest Money
- if buyer recedes, he forfeits earnest money given previously
- If Seller recedes, he returns double the amount of earnest money to buyer
- If failure to perform is excused, earnest money is not owed
Contract to Sell Prescription
if an immovable action for breach or other failure is 5 years
Time Limits for Exercise of Right of First Refusal
holder of right has 10 days if movable, 30 if immovable (CAN BE CONTRACTED AROUND)
If decides not to buy, right remains unless grantor concludes a final sale to 3p within 6 months
Time Limits for Options and Right First Refusal on Immovables
cannot be granted for a term longer than 10 years if it is its reduced to 10 (unless connected to k with continuous or periodic performance ie rent)
Effect against third parties (options, rights of first refusal, and contracts to sell)
immovables = subject to public record doctrine
movables = binding with actual knowledge
Doctrine of Implied Warranty of Merchantability
protects buyer from being compelled to accept a flawed title
buyer may refuse to enter into the sale if the title is suggestive of serious litigation
Construction of Contracts (Seller)
Must explain themselves clearly in a contract
ambiguity will be construed against her
Seller’s Obligations
- Deliver the thing; AND
- Warranting the thing:
- Against evicition
- Against Redhibitory defects; AND
- is reasonably fit for its ordinary or intended use
Delivery
If seller remains in possession = presumption the sale is a simulation
Untimely Delivery by Seller
buyer demand DISSOLUTION of the sale or SPECIFIC PERFORMANCE
either case seller is liable for damages
Buyer fails to pay price
seller is not bound to deliver
Delivery of Immovables
seller is to deliver the FULL EXTENT of the premises
Liberative Prescription is 1 year from date of sale
Conforming Goods
seller must deliver conforming goods (agreed kind, quality, and quantity
buyer has right to inspect, must reject nonconforming goods within a REASONABLE time
Buyer Accepts Nonconforming Goods
may not later reject them, UNLESS accepted them in reasonable belief that the nonconformity would be cured
Sellers Right to Cure Nonconformity
may cure if time for performance has not expired OR the seller reasonably believed the goods would be acceptable to the buyer
Warranty against Eviction
loss or danger of losing the whole or part of the thing sold because of third persons right that existed at time of sale
Scope of Warranty against eviction
loss of possession by virtue of judgment favoring 3p w/superior rights
has not lost possession if can prove 3p has perfect title
nonapparent conventional servitudes that have not been declared (not natural or legal nonapparent servitudes)
Implied in every sale (can be modified)
Covers rights existing at time of sale
Liability for Breach of Warranty Against Eviction
Warranty Sale
- restitution of the price
- restitution of fruits and revenues if buyer bound to return them to 3p
- All costs by suits for warranty and/or eviction
- Damages (excluding increase in value) IF buyer did NOT know danger of the eviction
Sale w/o Warranty
- restitution of price ONLY if buyer did not know the danger
Sale at Buyer’s Peril and Risk
- NOTHING BACK
Warranty Sale
parties either do not address the matter of warranty or recite sale is a warranty sale
Sale Without Warranty
seller specifically renounces the warranty
Sale at Buyer’s Peril and Risk
non-warranty sale with one of the following:
1. buyer was aware of the danger of eviction at time of sale
2. regardless of knowledge buyer declared buying at peril and risk; OR
3. Seller’s obligation of returning the price has been EXPRESSLY excluded
Quitclaim Deed
not a sale of corporeal immovable but an assignment of right WITHOUT warranting the existence of such rights
Partial Eviction
buyer entitled to a proportionate reduction in price
IF principal cause was to get the part evicted from buyer has option to cancel sale
Call in Warranty
if threatened with eviction BUYER MUST timely notify seller to defend the suit
if buyer does not, loses rights under the warranty to extent seller could have successfully defended the action
Subrogation Rights (eviction)
buyer is subrogated to his seller’s actions in warranty against all others (even if warranty excluded)
After-Acquired Title Doctrine
seller does not have title to the property being sold at the time of the sale, but later gains title will be a cure for seller’s breach of warranty against eviction
Warranty Against Redhibition
protects buyer from redhibitory defects or vices
Elements of Redhibitory Defect
- render the thing useless or so inconvenient that buyer would not have bought the thing had they known; OR
- NOT render the thing totally useless, but diminish it usefulness or value so that buyer would have bought for a lesser price
MUST NOT be apparent or discoverable at time of sale by a reasonably prudent buyer (buyer must inspect thing sold)
MUST have existed at time of delivery (w/in 3 days presumed)
Effect of Breaching Warranty against Redhibition
if so useless or inconvenient would not have bought = rescission
If value is diminished = reduction in price (quanti minoris)
BOP Redhibitory Defect
proving the thing had defect at delivery is on buyer
NO requirement to prove cause of the defect
Not of Kind Specified or Lacking Qualities Seller Represents It Has
governed by general rules of contract
IF seller INTENTIONALLY MISREPRESENTS buyer’s rights are governed by redhibition
Liability of Seller for Redhibitory Defect (TOTALLY USELESS)
Good Faith Seller = restore purchase price and buyer’s reasonable expenses for the sale
Bad Faith Seller =
must restore purchase price and buyer’s expenses AND pay damages and attorney’s fees
Liability of Seller for Redhibitory Defect (Lesser Defect)
Good Faith = Reduction in price;
1. Seller has opportunity to Repair before dissolution
2. Liberative Prescription: shorter of 1) 2 years from date of delivery 2) 1 year from date of discovery
Bad Faith = Reduction in price;
1. NO opportunity to Repair
2. Liberation Prescription: 1 year from discovery of defect, OR 10 years from the date of perfection of the sale, whichever occurs first
Notice to Seller (redhibition)
MUST give notice
Suffers diminution of warrant to extent failure made repair impossible or more burdensome
NOT necessary when the seller has ACTUAL notice of the defect
Risk of Loss (Redhibition)
Buyer may seek rescission even after destruction IF it was due to redhibitory defect
Quanti Minoris (redhibition)
reduction of the price
Buyer who seeks dissolution may be compelled to accept reduction of the price
Subrogation (redhibition)
buyer is subrogated to the seller’s rights against ALL other’s
Waivers of Warranty (redhibition)
must be in CLEAR and UNAMBIGUOUS TERMS and MUST be brought to the buyer’s attention
Warranty of fitness for Ordinary Use
limited to the ordinary use of such things UNLESS:
1. Buyer has a particular use in mind
2. seller knows or should know the buyer’s particular use
3. seller knows or should know buyer is RELYING on the seller’s SKILL and JUDGMENT in selecting the thing
Liberative Prescription (Warranty for ordinary use)
shorter of:
1. 2 years from delivery
2. one year from daye buyer discovered the unfitness
Buyers Obligation
- Take Delivery
- Pay Price
Buyer’s Breach of Duty to take delivery
liable to seller for damages and expenses incurred for preservation of the thing
Seller is entitled to damages in amount of difference between contract price and market price on date of breach
Buyer’s Breach of Duty to Pay Price
seller can choose between:
1. dissolving the sale
2. seeking enforcement of the sale (specific performance)
Seller’s right of Resale (buyer breached sale)
seller has right to sell to 3p
buyer responsible for any loss realized in the resale
Lesion Beyond Moiety
- must be for a sale of a corporeal immovable
- brought by vendor
- lesion must be > 1/2 (price is less than one-half the value of the thing as of the time of the sale)
Effects of Lesion Beyond Moiety
Buyer given choice:
1. return the thing (get money back)
2. keep the thing and give seller money equal to FMV
IF THING IS SOLD: Pay seller profit made on resale
Lesion Beyond Moiety Peremption
one year from date of sale
Sale with Right of Redemption
right to take thing back from the buyer
CANNOT be reserved for more than 10 years if immovable and 5 years if movable
Immovable = effective when the sale is recorded
movable = effective against third persons with actual knowledge
Exchange
each party transfer ownership of a thing OTHER than money
Effect of an Exchange Contract
agreement transfers ownership NOT delievery
Eviction on Exchange
may demand value of the thing OR return the thing he gave
May also seek damages
Lesion in Exchange
party giving a corporeal immovable in exchange for property worth less than 1/2 of FMV may claim rescission
Giving In Payment (Dation En Paiement)
debtor gives a thing to creditor as payment of a sum that is due
perfected by DELIVERY
Contract to Build
Builder MUST build in a good and workmanlike manner
Distinguishing Contract to Build from a Sale
- Buyer has SOME control over the specifications of the object
- negotiations take place before the object is constructed
- contract contemplates one party will supply the materials and also will furnish skill and labor to build the desired project
Rescission of Contract to Build
based on breach of warranty of workmanlike performance NOT redhibition
Contracts to “furnish and install”
similar to contracts to build
sale subject to suspensive condition
ownership and risk remain with seller if condition not fulfilled
