Sales 1458-1478 Annotations

Question 1

What are the 6 Characteristics of a contract of sale?

Answer 1

(1) Consensual, because it is perfected by mere consent without
any further act;

(2) Bilateral, because both the contracting parties are bound to
fulfill correlative obligations towards each other — the seller, to deliver and transfer ownership of the thing sold and the buyer, to pay the price;

(3) Onerous, because the thing sold is conveyed in consideration
of the price and vice versa (Onerous means heavy obligation)

(4) Commutative, because the thing sold is considered the equivalent of the price paid and vice versa. However, the contract may be aleatory as in the case of the sale of a hope (e.g.,
sweepstakes ticket); (Aleatory means something is dependent on an uncertain event, a chance occurrence)

(5) Nominate, because it is given a special name or designation in
the Civil Code, namely, “sale”; and

(6) Principal, because it does not depend for its existence and
validity upon another contract.

Question 2

What are the 3 essential requisites of sale?

Answer 2

1. Consent or meeting of the minds
   (There may, however, be a sale against the will of the owner in case of expropriation)
2. Object or subject matter
3. Cause or consideration
   (This refers to the “price certain in
   money or its equivalent”)

Question 3

What are the 2 elements of a contract of sale?

Answer 3

(1) Natural elements or those which are deemed to exist in certain
contracts, in the absence of any contrary stipulations, like warranty
against eviction (Art. 1548.) or hidden defects (Art. 1561.); and

(2) Accidental elements or those which may be present or absent
depending on the stipulations of the parties, like conditions, interest, penalty, time or place of payment, etc.

Question 4

What are the kinds of contracts of sale as to presence or absence of conditions?

Answer 4

1. Absolute: Where the sale is not subject to any condition whatsoever and where title passes to the buyer upon delivery of the thing sold.
2. Conditional: Where the sale contemplates a contingency, and in general, where the contract is subject to certain conditions usually, in the case of the vendee, the full payment of the agreed purchase price and in the case of the vendor, the fulfillment of certain warranties, e.g., the timely eviction of squatters on the property sold

Question 5

When is a price considered certain?

Answer 5

Capable of being ascertained in money or its equivalent.
1. The parties have fixed a definite amount
2. It be certain with reference to another thing certain
3. The determination of the price is left to the judgement of a specified person/s

Question 6

This is a privilege existing in one person for which he has paid
a consideration which gives him the right to buy/sell, for example,
certain merchandise or certain specified property, from/to another person, if he chooses, at any time within the agreed period at a fixed price, or under, or in compliance with certain terms and conditions

Answer 6

An option

Question 6

What is the nature of an option contract

Answer 6

1 It is a preparatory contract, separate and distinct from the main contract itself (subject matter of the option) which the parties may enter into upon the consummation of the option
2. It gives the party granted the option the right to decide, whether
or not to enter into a principal contract, while it binds the party who has given the option, not to enter into the principal contract with any other person during the agreed time and within that period, to enter into such contract with the one to whom the option was granted if the latter should decide to use the option.
3. An option must be supported by a consideration distinct from the price.

Question 7

What is option money

Answer 7

A payment given to the seller to keep an offer open for a specific period to compensate the seller for holding the property off the market.
Generally non-refundable unless the parties agree otherwise.
Does not bind the parties to a sale; it merely creates an option contract.

Question 8

What is earnest money

Answer 8

A partial payment or deposit to show the buyer’s good faith and intent to purchase to bind the parties to the sale and signify the buyer’s commitment.
It is considered part of the total purchase price, and is refundable if the sale does not proceed for valid reasons not attributable to the buyer.

Question 9

What is the right of first refusal

Answer 9

It is a contractual right that gives one party (the “holder”) the priority to purchase or lease a property or asset before the owner offers it to third parties. It is a safeguard for the holder, ensuring they are given the opportunity to match or exceed the terms of a potential third-party offer before the asset is sold or leased.