Sales

Question 1

Sale

Answer 1

Sale = contract where a person transfers ownership of a thing to another for a price in money.

Sale of immovable must be in writing and must be recorded to affect third person.

Sale of movable can be oral, but delivery is required to affect third persons.

Question 2

Elements of a Valid Sale

Answer 2

Price

Object

Agreement

Question 3

Object of Sale

Answer 3

Items Capable of Sale = all things, corporeal or incorporeal, susceptible to ownership

1. Succession rights may not be sold before death of decedent.
2. Sale of thing of another is null. Buyer entitled to damages if he did not know thing belonged to another.

Litigious Redemption – if litigious right (lawsuit filed at time of transfer) sold, party against whom right has been transferred can get released by paying transferee the price transferee has paid.

Sale of Future Things – can sell future things and can sell “hopes”.

1. Sale of hope is aleatory, and buyer assumes risk thing will not materialize.
2. Sale of future thing creates a suspensive condition and buyer does not assume the risk.

Question 4

Price

Answer 4

For a contract to count as a sale, “price” must be (1) in money, and (2) certain or determinable through method parties have agreed on.

Price can be determined by a third party on parties’ agreement.

Reasonable Price = thing is movable of kind that seller habitually sells, and parties fail to agree on price after either (1) initially said nothing about price or (2) left price to be agreed on later

Seriousness of Price

1. Can’t be out of proportion to value of thing, and parties must intend that a price be paid. (If no intent, sale is a simulation.)

Question 5

Perfection of the Sale

Answer 5

Ownership is perfected once three elements of sale are satisfied. Payment of price and/or delivery are not required.

i. Goods Sold by Weight/Measure – once counting or weighing happens, sale is perfected.
ii. Goods Sold by Lump – sale perfected even if not counted or weighed.

Risk of Loss – if due to a fortuitous event (not reasonably foreseeable), risk transferred to buyer when thing is delivered

Individualization – seller sets aside goods for fulfillment of the sale contract where seller cannot change mind easily

Question 6

Sale Involving Transit Through Common Carrier

Answer 6

Look to bill of lading

Buyer owns things in transit that are deliverable to buyer.

Seller owns things in transit that are deliverable to seller or agent.

Risk of loss transferred to buyer on delivery to carrier if contract doesn’t require seller to deliver things to a particular destination. Risk on seller until things are duly tendered to buyer at place of particular destination.

Question 7

Agreements and Non-Perfected Sales

Answer 7

i. Sale on a suspensive condition doesn’t transfer title until condition met.
ii. Sale on view or trial = buyer retains right to test goods, sale not perfected until the goods have been checked.
iii. Sale of Future Thing – the coming into being of the thing is a suspensive condition, and title doesn’t pass until it happens
iv. Parties can agree that title doesn’t transfer until later.

Question 8

Option

Answer 8

Unilateral contract to buy or sell where grantor of option is bound to buy/sell if grantee accepts in time. Option must specify price and thing, have a term, and be in writing if applied to an immovable.

Question 9

Right of First Refusal

Answer 9

Unilateral contract where one party agrees that she will not sell a thing without first offering it to a certain person. Can be enforced by specific performance.

Question 10

Contract to Sell

Answer 10

Bilateral agreement where parties promise to enter into sale at a later date. Must meet 3 requirements of a sale.

Earnest Money = amount given to seller that negates availability of specific performance. If promise of sale made with earnest money, both parties have right to recede by:

1. If prospective buyer recedes, he forfeits earnest money.
2. If prospective seller recedes, he must return double the earnest money.
3. Earnest money must be expressly stipulated. Deposits don’t count.

If contract to sell is for immovable, action prescribes in 5 years.

Question 11

Time limits for agreements preparatory to sale

Answer 11

Right of First Refusal – holder has 10 days to exercise if movable, 30 days if immovable. If not exercised, remains in holder for 6 months unless seller concludes a sale with a third party.

Time Limit for Options and First Refusal on Immovable – cannot be longer than 10 years, and will be reduced to 10 years if longer. But if contract gives rise to continuous or periodic performance, this limit doesn’t apply.

Options, right of first refusal, and contract to sell must be recorded to affect third parties for immovable. If movable, affects third parties with actual knowledge.

Doctrine of Implied Warranty of Merchantability applies, and buyer can refuse sale if title suggests serious litigation

Question 12

Obligations of the Seller

Answer 12

a. Seller must explain self clearly, and ambiguities are construed against seller.

Seller has three obligations: delivery, warranting (against eviction and against redhibitory defects), and assuring that thing sold is reasonable fit for ordinary use

Question 13

Extent of Delivery of Immovable

Answer 13

Generally supposed to deliver full extent of premises, but duty varies on type of sale:

1. Sale Per Aversionem – sale of ‘a certain and limited body or distinct object’ and sold for lump price. If this type of sale, price will not increase or decrease if quantity delivered differs from amount specified in sale
2. Sale By Measure – occurs when price is fixed at a rate of so much per measure. If discrepancy at delivery:
   a. Seller delivers amount less than promised, price reduced accordingly but no right to recede.
   b. If seller delivers up to 5% more than promised, price will be increased accordingly
   c. If seller delivers more than 5% over, buyer has right to recede or to pay the increase
3. Sale of Immovable for Lump Price
   a. If seller delivers less than promised, but difference if 5% or less, no effect on sale and buyer can’t recede.
   b. If seller delivers less than promised, and is more than 5%, price reduced but no right to recede.
   c. If seller delivers more, but not more than 5% more, no effect on sale.
   d. If seller delivers more than 5% more, buyer can recede or pay the increase in price.

Liberative prescription based on extent of delivery is 1 year from date of the sale.

Question 14

Sales of Movables

Answer 14

Acceptance forms contract for sale of movable if agreement on thing and price, even if acceptance has different terms from offer.

1. Between merchants, terms become part of contract unless materially alter offer, offer expressly limits acceptance to offer, or offeror objects in reasonable time
2. If parties are nonmerchants, different terms are proposals for modification.
3. No sale is valid if acceptance is conditional on offeror’s acceptance of additional or different terms

Seller must deliver conforming goods (agreed-on goods) – buyer has right to inspect and can reject non-confirming goods in reasonable time

1. Buyer cannot later reject nonconforming absent promise to cure
2. Seller can cure after rejection if time for performance has not expired or seller reasonably believed original goods would be acceptable to the buyer

Question 15

Obligation of the Seller –> Warranty Against Eviction

Answer 15

Eviction = buyer’s loss or danger of losing whole or part of thing sold because a third person had right that existed at time of sale

Scope of Warranty:

1. Warranty breached if third party has perfect title, vendor doesn’t.
2. Warrant covers non-apparent conventional servitudes that have not been declared.
3. Warranty is implied in every sale, but can be expressly excluded.
4. Warranty covers rights in existence at time of sale.

Partial Eviction – buyer is entitled to proportionate reduction.

Question 16

Obligation of the Seller to Deliver

Answer 16

Delivery or Tradition

i. If seller remains in possession of thing sold, presumption is that sale is a simulation.
ii. If seller does not timely deliver, buyer can demand dissolution or specific performance and seller is liable for damages
iii. If buyer has not paid price and seller has not granted buyer a term for payment, seller is not bound to deliver.
iv. Thing must be delivered in condition expected by parties.

Question 17

Different Warranty Sales and Obligations of the Seller

Answer 17

Seller’s liability depends on type of sale:

1. Warranty Sale – parties don’t address warranty or call sale a warranty sale, eviction entitles buyer to restitution of price, of fruits if buyer bound to return them to evicting owner, costs, and damages if buyer did not know of danger of eviction
2. Sale Without Warranty – sale where warranty was renounced. Eviction entitles buyer to restitution if buyer didn’t know of danger of eviction.
3. Sale at Buyer’s Peril and Risk – buyer gets nothing on eviction. It is a nonwarranty sale if buyer was aware of danger, buyer declared he was buying at risk, or seller not obligated to return price
4. Quitclaim Deed – transferor conveys to transferee whatever interest (if any) transferor might have without warranty on the existence of those rights. If evicted, transferor owes nothing.

Question 18

Additional Rights and Duties of Buyers in Warranty Against Eviction

Answer 18

1. Call in Warranty – must timely notify seller of a threatened eviction, and if no notification, buyer loses rights of warranty to extent seller could have defended action
2. Suspension of Payment of Price on Eviction or Fear of Eviction
3. Subrogation – buyer is subrogated to seller’s actions in warranty against all others, permitting buyer to sue seller’s seller, etc.
4. After-Acquired Title Doctrine – if seller later acquires title, doctrine automatically vests title in buyer to cure breach of warranty regardless of seller’s intentions. Original buyer cannot have filed suit for breach of warranty of eviction.

Question 19

Warranty Against Redhibition

Answer 19

Redhibitory Defect = vice in the thing that:

1. Renders thing useless, entitling buyer to rescission, or
2. Diminishes thing’s usefulness or value such that buyer would have bought it at reduced price. Buyer entitled to reduction of price.

Defect cannot have been apparent, not known to buyer at time of sale, and must exist at time of delivery (or within 3 days of delivery)

Intentional misrepresentation of item’s qualities triggers redhibition.

Buyer must give notice of defect (and burden on buyer to prove defect), and untimely notice will reduce warranty.

Quanti Mortis – reduction of price on account of redhibitory defect.

Subrogation – buyer is subrogated to seller’s rights against others, and can bring suits all the way back to initial manufacturer. Can also bypass seller and sue just manufacturer.

Can waive redhibition, but must be clear, unambiguous, and brought to buyer’s attention

Question 20

Liability of the Seller in Warranty Against Redhibition

Answer 20

Good-Faith Seller – must restore purchase price and reasonable expenses if useless, or price reduction if lesser defect.

a. Seller has the right to repair.
b. Liberative prescription – 4 years from delivery or 1 year from discovery, but if immovable property, 1 year from delivery. Interrupts if seller accepts thing for repair.

Bad-Faith Seller – purchase price, expenses, damages, and attorneys’ fees if useless, price reduction if lesser defect.

a. Liberative prescription – 1 year from discovery of defect. Interrupts for repair, but seller has no right to repair.

Manufacturer selling a product always considered bad-faith seller

Question 21

Warranty of Fitness for Ordinary Use

Answer 21

Governed by the general law of contracts.

Limited to ordinary uses made of a thing, unless buyer has particular purpose in mind, seller knows of purpose, and seller knows that buyer is relying on seller’s skill in selecting the thing

Question 22

Obligation of the Buyer

Answer 22

Buyer obligated to pay the price and take delivery of the thing at time and place delivery is to be made.

Buyer who fails to take delivery is liable for damages plus seller’s expenses.

If buyer fails to pay the price, the seller can compel buyer by offering to deliver. If buyer doesn’t pay, seller can dissolve sale or seek enforcement by filing suit for specific performance.

If buyer breaches contract for movable, seller has right of resale to third party.

Question 23

Lesion Beyond Moiety

Answer 23

Ability of a seller of to rescind sale if the price paid for the property is far less than actual value of the property at the time of the sale

Can be brought only if contract is for sale of corporeal immovable. Only the vendor can bring the action, and only if price is less than ½ of fair market value of the thing.

If sale is lesionary, buyer can either return thing and get money back or keep thing and make up the difference.

If buyer has sold thing to third party, action is only available against initial buyer and is limited to the profit

Peremptive period of one year from the date of sale.

Question 24

Sale With Right of Redemption

Answer 24

Right of redemption= right to take back thing from the buyer

Can be reserved for up to 10 years if immovable, 5 years if movable. These are peremptive periods and run against all persons, including minors.

If an immovable, right of redemption must be recorded to be effective against third persons. If movable, effective if 3rd person has actual knowledge of right.

Question 25

Exchange

Answer 25

Contract of Exchange = each party transfers to the other the ownership of a thing other than money.

Rules of contracts apply generally, but rules of sales apply to rights and duties of buyers and sellers.

Agreement on the things transfers ownership, delivery not required.

A person evicted from a thing received in exchange can demand value of thing or return the thing, and seek damages.

Lesion available for corporeal immovable given in exchange for property worth less than ½ fair market value.

Question 26

Dation En Paiement

Answer 26

(Giving in Payment)

Dation en paiement = debtor gives a thing to a creditor as payment of a sum due.

Giving payment is perfected at delivery, and is otherwise governed by sales rules.

Question 27

Contract to Build

Answer 27

Contract to Build – builder must build in good and workmanlike manner. Builder must have control over project specifications, negotiations take place before object is constructed, and contract contemplates that one party will supply materials, skill, and labor to build desired object.

Breach is based on warranty of workmanlike performance, not redhibition.