Conditions, Representations, and Warranties Flashcards
May a party refuse to proceed with the contract if a condition upon which the contract is dependent upon is not performed?
Yes. Art. 1545. par. 1. Where the obligation of either party to a contract of sale is subject to any condition which is not performed, such party may refuse to proceed with the contract or he may waiver performance of the condition. If the other party has promised that the condition should happen or be performed, such first mentioned party may also treat the nonperformance of the condition as a breach of warranty.
When may the buyer treat the seller’s obligation to deliver as a condition to fulfill his (buyer) obligation?
Art. 1545. par. 2. Where the ownership in the thing has not passed, the buyer may treat the fulfillment by the seller of his obligation to deliver the same as described and as warranted expressly or by implication in the contract of sale as a condition of the obligation of the buyer to perform his promise to accept and pay for the thing.
What is an express warranty?
Art. 1546. Any affirmation of fact or any promise by the seller relating to the thing is an express warranty if the natural tendency of such affirmation of promise is to induce the buyer to purchase the same, and if the buyer purchases the thing relying thereon. No affirmation of the value of the thing, nor any statement purporting to be a statement of the seller’s opinion only, shall be construed as a warranty, unless the seller made such affirmation or statement as an expert and it was relied upon by the buyer.
What are the implied warranties provided under Art. 1547?
Art. 1547. In a contract of sale, unless a contrary intention appears, there is:
(1) An implied warranty on the part of the seller that he has a right to sell the thing at the time when the ownership is to pass, and that the buyer shall from that time have and enjoy the legal and peaceful possession of the thing;
(2) An implied warranty that the thing shall be free from any hidden faults or defects, or any charge or encumbrance not declared or known to the buyer.
This article shall not, however, be held to render liable a sheriff, auctioneer, mortgagee, pledgee, or other person professing to sell by virtue of authority in fact or law, for the sale of a thing in which a third person has a legal or equitable interest.
When does eviction take place?
Art. 1548. Eviction shall take place whenever by a final judgment based on a right prior to the sale or an act imputable to the vendor, the vendee is deprived of the whole or of a part of the thing purchased.
The vendor shall answer for the eviction even though nothing has been said in the contract on the subject.
The contracting parties, however, may increase, diminish, or suppress this legal obligation of the vendor.
Does the vendee need to appeal from the decision in order to make the vendor liable for eviction?
No. Art. 1549. The vendee need not appeal from the decision in order that the vendor may become liable for eviction.
Is the vendor still liable for eviction is the adverse possession has commenced before the sale and the prescriptive period is completed after the transfer?
No. Art. 1550. When adverse possession had been commenced before the sale but the prescriptive period is completed after the transfer, the vendor shall not be liable for eviction.
Is the vendor liable for eviction if the property is sold for nonpayment of taxes due and it was not made known to the vendee before the sale?
Art. 1551. If the property is sold for nonpayment of taxes due and not made known to the vendee before the sale, the vendor is liable for eviction.
Will the judgment debtor be free of responsibility for eviction in cases of judicial sales?
No. Art. 1552. The judgment debtor is also responsible for eviction in judicial sales, unless it is otherwise decreed in the judgment.
Can the parties stipulate in the contract that the vendor will be exempted from the obligation to answer for eviction?
Yes but only if he acted in good faith. Art. 1553. Any stipulation exempting the vendor from the obligation to answer for eviction shall be void if he acted in bad faith.
What is the legal effect if the vendor waives the warranty against eviction yet eviction takes place?
Art. 1554. If the vendee has renounced the right to warranty in case of eviction, and eviction should take place, the vendor shall only pay the value which the thing sold had at the time of the eviction. Should the vendee have made the waiver with knowledge of the risks of eviction and assumed its consequences, the vendor shall not be liable.
Art. 1555. When the warranty has been agreed upon or nothing has been stipulated on this point, in case eviction occurs, the vendee shall have the right to demand of the vendor:
(1) The […] which the thing sold […], be it […];
(2) The […], if he has been […];
(3) The […], and, in a proper case, those of […];
(4) The […], if the vendee has paid them;
(5) The […], and […], if the sale was made in bad faith.
Art. 1555. When the warranty has been agreed upon or nothing has been stipulated on this point, in case eviction occurs, the vendee shall have the right to demand of the vendor:
(1) The return of the value which the thing sold had at the time of the eviction, be it greater or less than the price of the sale;
(2) The income of fruits, if he has been ordered to deliver them to the party who won the suit against him;
(3) The costs of the suit which caused the eviction, and, in a proper case, those of the suit brought against the vendor for the warranty;
(4) The expenses of the contract, if the vendee has paid them;
(5) The damages and interests, and ornamental expenses, if the sale was made in bad faith.
What is the effect if the vendee partially loses the thing by reason of eviction?
Art. 1556. Should the vendee lose, by reason of the eviction, a part of the thing sold of such importance, in relation to the whole, that he would not have bought it without said part, he may demand the rescission of the contract; but with the obligation to return the thing without other encumbrances than those which it had when he acquired it.
He may exercise this right of action, instead of enforcing the vendor’s liability for eviction.
The same rule shall be observed when two or more things have been jointly sold for a lump sum, or for a separate price for each of them, if it should clearly appear that the vendee would not have purchased one without the other.
Art. 1558. The vendor shall […], unless he is […] at the instance of the vendee.
Art. 1558. The vendor shall not be obliged to make good the proper warranty, unless he is summoned in the suit for eviction at the instance of the vendee.
Art. 1559. The defendant vendee shall ask, within the time fixed in the Rules of Court for answering the complaint, that […].
Art. 1559. The defendant vendee shall ask, within the time fixed in the Rules of Court for answering the complaint, that the vendor be made a co-defendant.
What can the vendee do should the immovable thing sold be encumbered with any non-apparent burden or servitude, not mentioned in the agreement?
Art. 1560. If the immovable sold should be encumbered with any non-apparent burden or servitude, not mentioned in the agreement, of such a nature that it must be presumed that the vendee would not have acquired it had he been aware thereof, he may ask for rescission of the contract, unless he should prefer the appropriate indemnity. Neither right can be exercised if the non-apparent burden or servitude is recorded in the Registry of Property, unless there is an express warranty that the thing is free from all burdens and encumbrances.
Within one year, to be computed from the execution of the deed, the vendee may bring the action for rescission, or sue for damages.
One year having elapsed, he may only bring an action for damages within an equal period, to be counted from the date on which he discovered the burden of servitude.
Is the vendor responsible for hidden defects? What are hidden defects?
Art. 1561. The vendor shall be responsible for warranty against the hidden defects which the thing sold may have, should they render it unfit for the use for which it is intended, or should they diminish its fitness for such use to such an extent that, had the vendee been aware thereof, he would not have acquired it or would have given a lower price for it; but said vendor shall not be answerable for patent defects or those which may be visible, or for those which are not visible if the vendee is an expert who, by reason of his trade or profession, should have known them.
Art. 1562. In a sale of goods, there is an implied warranty or condition as to the quality or fitness of the goods, as follows:
(1) Where the buyer, expressly or by implication, […], and it appears that the […] (whether he be the grower or manufacturer or not), there is an implied warranty that the goods shall be […];
(2) Where the goods are […] (whether he be the grower or manufacturer or not), there is an implied warranty that the goods shall be of […].
Art. 1562. In a sale of goods, there is an implied warranty or condition as to the quality or fitness of the goods, as follows:
(1) Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are acquired, and it appears that the buyer relies on the seller’s skill or judgment (whether he be the grower or manufacturer or not), there is an implied warranty that the goods shall be reasonably fit for such purpose;
(2) Where the goods are bought by description from a seller who deals in goods of that description (whether he be the grower or manufacturer or not), there is an implied warranty that the goods shall be of merchantable quality.
Art. 1563. In the case of contract of sale of a specified article under its patent or […], there is […], unless there is a stipulation to the contrary.
Art. 1563. In the case of contract of sale of a specified article under its patent or other trade name, there is no warranty as to its fitness for any particular purpose, unless there is a stipulation to the contrary.
Art. 1564. An implied warranty or condition as to the quality or fitness for a particular purpose may be annexed by the […].
Art. 1564. An implied warranty or condition as to the quality or fitness for a particular purpose may be annexed by the usage of trade.
Art. 1565. In case of a contract of sale by sample, if the seller is a dealer in goods of that kind, there is an implied warranty that the goods shall be […] which would not be apparent on reasonable examination of the sample.
Art. 1565. In case of a contract of sale by sample, if the seller is a dealer in goods of that kind, there is an implied warranty that the goods shall be free from any defect rendering them unmerchantable which would not be apparent on reasonable examination of the sample.
Is the vendor still responsible to the vendee for any hidden faults or defects even if he was not aware of them?
Yes unless there is a contrary stipulation. Art. 1566. The vendor is responsible to the vendee for any hidden faults or defects in the thing sold, even though he was not aware thereof.
This provision shall not apply if the contrary has been stipulated, and the vendor was not aware of the hidden faults or defects in the thing sold.
Art. 1567. In the cases of Articles 1561, 1562, 1564, 1565 and 1566, the vendee may elect […], with damages in either case.
Art. 1567. In the cases of Articles 1561, 1562, 1564, 1565 and 1566, the vendee may elect between withdrawing from the contract and demanding a proportionate reduction of the price, with damages in either case.
What is the burden upon the vendor should the thing sold be lost as a result of a hidden defect?
Art. 1568. If the thing sold should be lost in consequence of the hidden faults, the vendor was aware of them, he shall bear the loss, and shall be obliged to return the price and refund the expenses of the contract, with damages. If he was not aware of them, he shall only return the price and interest thereon, and reimburse the expenses of the contract which the vendee might have paid.
Shall the vendor still be liable for a hidden fault even if the thing was lost due to a fortuitous event?
Yes. Art. 1569. If the thing sold had any hidden fault at the time of the sale, and should thereafter be lost by a fortuitous event or through the fault of the vendee, the latter may demand of the vendor the price which he paid, less the value which the thing had when it was lost.
If the vendor acted in bad faith, he shall pay damages to the vendee.
Art. 1570. The preceding articles of this Subsection shall be applicable to […], except that […].
Art. 1570. The preceding articles of this Subsection shall be applicable to judicial sales, except that the judgment debtor shall not be liable for damages.
Art. 1571. Actions arising from the provisions of the preceding ten articles shall be barred […].
Art. 1571. Actions arising from the provisions of the preceding ten articles shall be barred after six months, from the delivery of the thing sold.
Art. 1572. If two or more animals are sold together, whether for a lump sum or for a separate price for each of them, the redhibitory defect of one shall […], and not that of the others; unless […].
The latter case shall be presumed when a […] is bought, even if a […] has been fixed for each one of the animals composing the same.
Art. 1572. If two or more animals are sold together, whether for a lump sum or for a separate price for each of them, the redhibitory defect of one shall only give rise to its redhibition, and not that of the others; unless it should appear that the vendee would not have purchased the sound animal or animals without the defective one.
The latter case shall be presumed when a team, yoke, pair, or set is bought, even if a separate price has been fixed for each one of the animals composing the same.
Art. 1573. The provisions of the preceding article with respect to the sale of animals shall in like manner be […].
Art. 1573. The provisions of the preceding article with respect to the sale of animals shall in like manner be applicable to the sale of other things.
Art. 1574. There is no warranty against hidden defects of […].
Art. 1574. There is no warranty against hidden defects of animals sold at fairs or at public auctions, or of livestock sold as condemned.
When will the sale of animals be void?
Art. 1575. The sale of animals suffering from contagious diseases shall be void.
A contract of sale of animals shall also be void if the use or service for which they are acquired has been stated in the contract, and they are found to be unfit therefor.
Art. 1576. If the hidden defect of animals, even in case a professional inspection has been made, should be of such a nature that expert knowledge is not sufficient to discover it, the defect shall […].
But if the veterinarian, through ignorance or bad faith, should fail to discover or disclose it, he shall […].
Art. 1576. If the hidden defect of animals, even in case a professional inspection has been made, should be of such a nature that expert knowledge is not sufficient to discover it, the defect shall be considered as redhibitory.
But if the veterinarian, through ignorance or bad faith, should fail to discover or disclose it, he shall be liable for damages.
Art. 1577. The redhibitory action, based on […], must be brought within […].
This action can only be exercised with respect to […].
Art. 1577. The redhibitory action, based on the faults or defects of animals, must be brought within forty days from the date of their delivery to the vendee.
This action can only be exercised with respect to faults and defects which are determined by law or by local customs.
When will the vendor be liable for the death of the animal sold?
Art. 1578. If the animal should die within three days after its purchase, the vendor shall be liable if the disease which cause the death existed at the time of the contract.
What is the effect of rescission of a sale of an animal?
Art. 1579. If the sale be rescinded, the animal shall be returned in the condition in which it was sold and delivered, the vendee being answerable for any injury due to his negligence, and not arising from the redhibitory fault or defect.
Art. 1580. In the sale of animals with redhibitory defects, the vendee shall also enjoy […]; but he must […] which has been fixed for the exercise of the redhibitory action.
Art. 1580. In the sale of animals with redhibitory defects, the vendee shall also enjoy the right mentioned in Article 1567; but he must make use thereof within the same period which has been fixed for the exercise of the redhibitory action.
Art. 1581. The form of sale of large cattle shall be governed by […].
Art. 1581. The form of sale of large cattle shall be governed by special laws.
Art. 1630. One who sells an inheritance without enumerating the things of which it is composed, shall only be answerable for his […].
Art. 1630. One who sells an inheritance without enumerating the things of which it is composed, shall only be answerable for his character as an heir.
Art. 1631. One who sells for a lump sum the whole of certain rights, rents, or products, shall comply by […]; but he shall not be obliged to […], except in the case of […] or the […].
Art. 1631. One who sells for a lump sum the whole of certain rights, rents, or products, shall comply by answering for the legitimacy of the whole in general; but he shall not be obliged to warrant each of the various parts of which it may be composed, except in the case of eviction from the whole or the part of greater value.
What is a condition?
A condition means an uncertain event or contingency on the happening of which the obligation of the contract depends. In such a case, the obligation of the contract does not attach until the condition is performed.
What is the difference between a condition precedent and a condition subsequent?
- Precedent: the contract is not perfected or cannot be performed until the occurrence of a particular external event.
- Subsequent: a condition that terminates the contract due to either the occurrence of a particular event or act of a party to the contract.
Differentiate condition for perfection vs. condition for performance
- Perfection: the compliance by one party of an undertaking, the fulfillment of which would beckon, in turn, the demandability of the reciprocal prestation of the other party.
- Performance: in the nature of a promise that it should happen, which non-performance may be treated as a breach of warranty.
What is the effect of the non-fulfillment of the condition?
- When condition is not fulfilled:
- Refuse to proceed with the contract; or
- Proceed with the contract but waive the performance of the condition
- If the condition is in the nature of a promise that it should happen, the non-performance of such condition may be treated by the other party as a breach of warranty
What is a warranty?
- A statement or representation made by the seller contemporaneously and as part of the contract of sale, having reference to the character, quality, or title of the goods , and by which he promises or undertakes to ensure that certain facts are or shall be as he then represents.
- Not every false representation voids the contract, only those matters substantially affecting the buyer’s interest , not matters of opinion, judgment, probability, or expectation. When the buyer undertakes his own investigation, and the seller does nothing to prevent it from being as full as the buyer chooses, the buyer cannot afterwards allege misrepresentations.
- In Goodyear Philippines, Inc. v. Sy , the Court held that a warranty is an affirmation of fact, or any promise made by a seller in relation to the thing sold , and that the decisive test is whether the seller assumes to assert a fact of which the buyer is ignorant of .
What are the two-types of warranties? What are their differences?
Express warranty – Nature is contractual; freely represented; stipulated by the parties, thereby binding both the seller ad buyer. An express warranty can be made by and also be binding on the seller even in the sale of a secondhand article.
Implied warranty – An implied warranty is derived by law, by implication, or inference from the nature of the transaction or relativation, or circumstances of the parties, irrespective of any intention of the seller to create it. They are constituted by law as part of every contract of sale, w/n the parties are aware of them, and w/n the parties intended them.
What are the requisites of an express warranty?
Requisites of an express warranty:
- An affirmation of fact or any promise relating to the thing sold;
- The natural tendency of such affirmation or promise is to induce the buyer to buy;
- The buyer buys the thing relying thereon (Art. 1546);
- Made before the sale, not upon delivery
What are the essential elements of a warranty against eviction?
Warranty against eviction: Seller warrants that the buyer, from the time ownership passes, shall have and enjoy legal and peaceful possession of the thing. Requisites are:
- Buyer is deprived of the whole or a part of the thing sold;
- Eviction is by final judgment;
- Final judgment based on a right prior to the sale or an act imputable to the vendor;
- Seller is summoned and made co-defendant in the suit for eviction at the instance of the buyer.
What are the remedies of the buyer in case of total eviction?
In case of total eviction, the buyer shall have the right to demand of the seller:
- Return of the value which the thing sold had at the time of the eviction, be it greater or lesser than the price of the sale;
- Income or fruits, if buyer has been ordered by the court to deliver them to the party who won the suit against him;
- Cost of the suit which caused the eviction, and, in a proper case, those of the suit brought against the seller for the warranty;
- Expenses of the contract if the buyer has paid them; and
- Damages and interests and ornamental expenses if the sale was made in bad faith.
What are the remedies of the buyer in case of partial eviction?
Partial eviction, the buyer has the option to:
- Enforce the same rights as with total eviction (Art. 1555) or
- Demand rescission of the contract with the obligation to return the thing without other encumbrances than those which it had when he acquired it.
