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Regulatory Framework for Business Transactions > Law on Sales > Flashcards

Law on Sales Flashcards

1
Q

Sales Definition

A

One of the contracting parties obligates himself to transfer ownership and to deliver a determinate thing and the other to pay a certain price in money or its equivalent.

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2
Q

Characteristics of Sales

A
  1. Purpose- Transfer Ownership
  2. Perfection- Mere Consent
  3. Subject Matter- determinate thing
  4. Cause- Onerous
  5. Bilateral- Both Parties have their respective obligations
  6. Nominate- specific designation in the law and have specific rules
  7. Commutative- equivalence in prestation, although can be aleatory in sale of hope
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3
Q

Contract for Piece of Work

A

Good that are to be manufactured specially for the customer upon his special order, and not for general market.
Subject is service

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4
Q

Dacio en Pago

A

Cause for the debtor is the extinguishment of the obligation and delivery of the thing and transfer of ownership to the creditor

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5
Q

Payment by Cession

A

Creditors do not become owners of the property assigned but are merely given the right to sell such property and apply the proceeds to their claims

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6
Q

Barter

A

The cause of barter is a non-cash asset. Is not covered by the statute of frauds regardless of price

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7
Q

Determination whether barter or sale when it comes to partly noncash and cash

A
  1. Check the intention of the parties
  2. If intention is not clear, check the monetary value of noncash:
    Barter if noncash is greater than the amount of money
    Sale if noncash is less than or equal to the amount of money
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8
Q

Contract of Agency to Sell

A

There is no transfer of ownership upon delivery. Risk of loss remains with the principal owner and not the agent

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9
Q

Kinds of Sale

A
  1. Absolute Sale- ownership transfers upon delivery even if no total payment has been made
  2. Conditional Sale- ownership automatically transfers upon fulfillment of the condition
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10
Q

Contract to sell

A

Special type of conditional sale wherein fulfillment of the condition gives right to the buyer to demand execution of a deed of sale or compel seller to sell.

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11
Q

Essential elements of a contract of sale

A
  1. Consent
  2. Object
  3. Cause
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12
Q

Absolute vs Relative Incapacity

A

Absolute Incapacity- party cannot give consent to any and all contracts which can result to the contract being void or voidable
Relative Incapacity- party is prohibited from entering specific transactions with some person or sometimes things

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13
Q

Rules on minors in contract of sale

A

They are allowed to enter a valid contract when it comes to the sale of necessities as provided under Art. 1489

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14
Q

Examples of Relative Incapacity

A
  1. Husband and Wife cannot sell property to each other
    2.Following persons cannot purchase even at auction the following properties:
    - Guardians: The property of the ward
    - Agents: The property of the principal entrusted to them
    - Executors: Property of the estate under administration
    - Public Officers and Employees: The property of the state or of any subdivision which has been entrusted to them
    - Judges: The property and rights in litigation or levied upon an execution
    - Aliens: Land located in the Philippines except by succession or Filipino who lost citizenship
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15
Q

Does gross inadequacy of price affect sale?

A

Generally it doesnt unless it indicates a defect in consent or parties intended a donation or some other contract

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16
Q

Remedy if the special person acted in bad faith in determining the price

A

Courts will fix the price

17
Q

Rules on Object of Sale

A
  1. Licit or within the commerce of men
  2. Have right to transfer at the time of delivery
  3. Determinate (particularly designated)
18
Q

Emptio rei Speratae

A

Sale of a future thing: must come into existence otherwise sale will be ineffective
Sale of future inheritance is cannot be the object of sale

19
Q

Emptio Spei

A

Sale of hope: produces effect even if the thing hoped does not come into existence

20
Q

Sale of Vain Hope

A

VOID

21
Q

When is a sale by auction perfected

A

perfected by the fall of the hammer or in other customary manner

22
Q

Seller’s right to bid

A

Seller has no right to bid unless:
1. expressly reserved
2. notice was given to the bidder; and
3. not prohibited by law or stipulation

23
Q

Option Agreement and Contract

A

A promise to buy and sell a terminate thing for a price certain is reciprocally demandable

24
Q

Rules Applicable in Option Contract

A
  1. Not binding unless there is a price given called option money.
  2. Offeror can withdraw at any time without being liable for damages.
  3. If there is option money, he can still withdraw but is liable for damages.
  4. If acceptance is communicated, withdrawal cannot be validly made since there is a perfected sale.
25
Q

Earnest Money

A

Money which forms part of the payment and is proof of perfection of contract of sale

26
Q

Sale of Goods by Description or Sample

A

Contract may be rescinded if the bulk of the goods do not correspond with the description or sample

27
Q

Sale of Good by Description and Sample

A

Contract may be rescinded if the bulk of the goods do not correspond with the description and the sample

28
Q

Application of Recto Law

A

Applies to sale of personal property in installment and leases of personal property with option to buy. Does not apply to sales on credit

29
Q

Alternative Remedies of Seller under Recto Law

A
  1. Exact Fulfillment of the obligation
  2. Cancel the sale
  3. Foreclose the Chattel Mortgage on the property itself
30
Q

Remedy 1: Exact fulfillment of obligation

A

Can only be availed if unpaid amount covers only one installment

31
Q

Remedy 2: Cancel the sale

A

Can be availed upon vendee’s failure to cover two or more installments.
General Rule: Seller is allowed to retain a reasonable amount of price already paid as compensation for the use of the thing OR all of the price paid if there is a forfeiture clause.

Retention of ALL the PURCHASE PRICE is UNCONSCIONABLE

32
Q

Remedy 3: Foreclosure of the Chattel Mortgage on the Property Itself

A

Must be on the property itself not other property mortgaged. Cannot recover deficiency because it would entitle remedy 1

33
Q

Application of Maceda Law

A

Applies on sale of immovable property on installment where the buyer is given protection in case of failure to pay installments

34
Q

Rights of the buyer if installments paid are less than 2 years equivalent under Maceda Law

A
  1. 60 day grace period- wherein buyer can pay without interest; applicable only once every 5 years.
  2. Buyer may sell or assign his interest
  3. Pay the entire balance
35
Q

Rights of the buyer if more than 2 years worth of installments under the Maceda Law

A
  1. In addition to the 60 day grace period, additional 30 days or 1 month for every year of installment
  2. If seller exercise right to rescind contract, seller must give Cash Surrender Value
36
Q

Computation of Cash Surrender Value

A
  1. Minimum of 50% of all payments including downpayment; plus
  2. Additional 5% for every year after 5 years installment (55% on the 6th year, 60% on the 7th year)
37
Q

Void Stipulation in Maceda Law

A
  1. Stipulation as to interest, damages, or penalty during the grace period
  2. Forfeiture Clause due to the payment of CSV
  3. Automatic cancellation upon default of the buyer

Regulatory Framework for Business Transactions (22 decks)

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