Sales Flashcards by Paul Robert CPA

Sale
- 2 parties : Seller (Vendor) and Buyer (Vendee)
- what is the obligation of seller? of buyer?

Seller - to transfer ownership + to deliver determinate thing
Buyer - to pay a price certain in money

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Characteristics of Contract (BCCNOP)

Bilateral
Consensual
Commutative
Nominate
Onerous
Principal

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Essential Requisites (COC)

Consent
Object
Cause

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Consent
- meeting of minds
(1) upon the thing
(2) upon the price

Yes

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Service can be an object in a contract of sale. True or False?

False (only thing or right)
- since purpose is to transfer ownership

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Indeterminate thing may be an object in a contract of sale. True or False?

True (Generally : Determinate Thing)
- However, indeterminate thing who are physically segregated → determinate na → can be an object in a contract of sale

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Another Requisites of Object
- must be within commerce of men (licit)
- seller must have a right to transfer ownership at time it is delivered

at time it is delivered (not perfection)

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From the flashcard above, it stated “at time it is delivered”. Thus, future goods can be an object in a contract of sale.

Other term for “sale of future things”

Emptio Rei Speratae - valid

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Other term for “sale of hope or expectancy”

Emptio Spei - valid
- example → lotto ticket

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Can future inheritance, being a future thing, be an object in a contract of sale?

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Sale of vain hope is valid. True or False?

False (void)

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In a contract of sale, the cause we are talking about is “price”.

YES

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Price must be certain
- fixed by the parties
- with reference to another thing certain
- determination of price is left to will of a 3rd person

What will happen if the 3rd party is in bad faith or mistake?

What will happen if the 3rd party is prevented by the seller/buyer?

What will happen if the 3rd party is unwilling or unable to determine a price?

court may fix the price

Fulfillment + Damage
Rescission + Damage

contract is not effective

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Gross inadequacy of price does not affect a contract of sale. True or False?

False (Generally : True)
- However, if there’s a defect in consent or the parties really intended it to be a donation → it affects the contract of sale

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A contract of sale may be oral or written (subject to Statute of Frauds). True or False?

True
- Personal Property → at least 500
- Real Property → any amount

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In a sale of piece of land made through an agent, the authority of A is oral. What wil be the status of the contract of sale?

VOID (not unenforceable)

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In a sale of piece of land made through an agent, the authority of A is written. From Agent (A) to Buyer (B), it is oral. What wil be the status of the contract of sale?

Unenforceable (statute of frauds)

In a sale of piece of land made through an agent, the authority of A is written. From Agent (A) to Buyer (B), it is also written. What wil be the status of the contract of sale?

Valid

Kinds as to Transfer of Ownership
- Absolute
- Conditional

What about contract to sell?

Absolute
- there is already a transfer of ownership if delivered (whether actual or constructive), even if payment is not yet complete

Conditional
- transfer of ownership will happen upon fulfillment of condition

Contract to Sell → is a conditional sale. However, transfer of ownership happens only upon execution of a deed of sale

Contract of Sale or Agency to Sell
- there is transfer of onwership

Contract of Sale
- Agency to Sell → no transfer (only right to sell property)

Contract of Sale or Agency to Sell
- after delivery, buyer bears the risk of loss

Contract of Sale
- Agency to Sell → risk of loss remains to the principal (not transferred to the agent)

Contract of Sale or Contract for Piece of Work
- special order

Contract for Piece of Work
- Contract of Sale → in the ordinary course of business (whether on hand or not - kahit di pa napproduce)

In a sense, parang same lang yung contract of sale at yung contract for piece of work. Bakit need pa sila idistinguish sa isa’t-isa?

Contract of Sale = covered by Statute of Frauds
Contract for Piece of Work = X

Kaya if ever may sale of real property na P300 lang at contract for piece of work yon, valid pa rin siya (hindi unenforceable)

If consideration is partly in money, partly in kind. Is it a contract of sale or barter?

Depends
1. Intention of Parties
2. If intention is not clear
a. Thing > (it is a barter)
b. Thing ≤ (it is a sale)

Example
- money = 5,000
- in kind = 5,000

This is a “sale” since less than or equal to. If the value of in kind is 5,001, it is a “barter”

If the promise to buy and/or sell is bilateral (mutual promise), it is reciprocally demandable. True or False?

True

If the promise to buy and/or sell is unilateral, and it is not accepted by the offeree, there is a contract. True or False?

False (there is no contract)

If the promise to buy and/or sell is unilateral, and it is accepted by the offeree, it is already binding to the offeror. True or False?

Depends - If no consideration (option money) → not binding to Seller. Seller **can** withdraw. - If with consideration (option money) → perfected option contract. Seller **cannot** withdraw.

Always remember to look out for this. Sale - period to pay Option - period to decide

YES

If you pay earnest money, it is a proof of a perfected contract of sale. True or False?

True "earnest" kaya magiging part siya ng purchase price - Option → no perfected sale yet (not part of purchase price unless agreed)

Obligations of the Vendor - to take care of the thing - to transfer ownership

- to take care of the thing = after perfection, before delivery - to transfer ownership = upon delivery (however, parties may agree)

Who Bears Risk of Loss - Before Perfection - At Perfection - Perfected, Before Delivery - Perfected, After Delivery ## Footnote Res Perit Domino - who owns suffer the loss

Seller - Before Perfection - At Perfection Buyer - Perfected, Before Delivery - Perfected, After Delivery

Kinds of Delivery - Actual Delivery - Constructive Delivery

YES

Constructive Delivery - Execution of Public Instrument - Symbolic Delivery - Traditio Longa Manu - Traditio Brevi Manu - Constitutum Possessorium

- Execution of Public Instrument - Symbolic Delivery → e.g. keys - Traditio Longa Manu → by pointing, must be agreed - Traditio **B**revi Manu → **B**uyer is in possession - Constitutum Po**ss**e**ss**orium → **s**eller is in possession

What law applies to installment, personal property? ## Footnote REPER

Recto Law

What law applies to installment, real property? ## Footnote MARE What RA number?

Maceda Law (RA 6552)

Recto law is for the benefit of buyer. True or False?

True - since ang remedies of seller is alternative (can only choose 1), parang pinoprotect yung buyer

Maceda law is for the benefit of buyer. True or False?

True - since rights of buyer

In Recto Law, what is the remedy of the seller - in case 1 or more installments is unpaid - in case 2 or more installments are unpaid ## Footnote 3 remedies

**1 or more installment** 1.exact fulfillment **2 or more installment** 2.cancel the sale 3.foreclose chattel mortgage

What to remember in "foreclose chattel mortgage"?

- Seller cannot recover deficiency - It is an absolute rule

In Maceda Law, what is the rights of the buyer - if paid **less than** 2 years of installment ## Footnote Grace Period - how many days? What if buyer still did not pay within the grace period? Unlimited ba yung pag avail sa grace period?

- Grace Period = 60 days If still fail to pay, seller may cancel / rescind contract - after 30 days from notice to rescind ## Footnote Grace Period = can only be applied once every 5 years

In Maceda Law, what is the rights of the buyer - if paid **at least** 2 years of installment ## Footnote Grace Period - how many days? What if buyer still did not pay within the grace period? Unlimited ba yung pag avail sa grace period?

- Grace Period = 60 days **(+ 1 month for every 1 year after the 2-year requirement)** If still fail to pay, seller may cancel / rescind contract - after 30 days from notice to rescind - + payment of CSV ## Footnote Grace Period = can only be applied once every 5 years

How to compute Cash Surrender Value? ## Footnote What is the maximum?

= 50% of total payments made '+ 5% per year (after 5 years) Maximum → 90% For example, if 7th year 50% + 10% 10% = 5% x 2 years (7-5)