Observe the diligence of a good father of a family
Pay for the expenses
Elements of a Contract
Essential
Accidental
Natural
The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price
Sale is a contract; there must be consent on part of the parties
Obligations of the Buyer
Accept the delivery
Pay for the price
Price is the cause
Instances when he can refuse to accept: Justified
Unjustified – buyer will be liable to pay for damages & he will automatically be the owner of the thing
Characteristics of Sale
Consensual
Real
Bilateral
Unilateral
Reciprocal
Non-reciprocal
Onerous
Gratuitous
Commutative
Aleatory
Nominate
Innominate
Principal
Accessory
No form is required in general; exception if covered by Statute of Frauds
Statute of Frauds applies only on executory
Contract is valid if common consent is present but they cannot demand because it is unenforceable. It must be in writing, unless there is ratification or it has already been executed
Stages of Sale
Preparation/Bargaining/Negotiation
Perfection/Creation/Birth
Termination/Consummation
Determinate Thing
Object of the contract of sale, not generic thing
Ownership
Basic requirement/purpose
Price must be certain, void if not & it could be a thing other than the money itself
Contract must be in writing to be enforceable; otherwise it is unenforceable
Law on Sales, Article 1458
Ownership is required at the time of delivery
Three Basic Natural Elements of Sale
Warrant against eviction
Warrant against hidden defects
Warrant of fitness or merchantability
The court has the power to make an interim injunction if it is just and convenient to do so.
An interim injunction can be granted without notice, but the defendant must still have a reasonable opportunity to respond.
An auctioneer can withdraw before the fall of the hammer unless it is announced without reserve
Auction sale is perfected upon the fall of the hammer or in any other customary manner
Requirements for the validity of a donation
Personal property exceeding 5,000 – In writing, otherwise, void
Real property, regardless of value – Public instrument, otherwise, void
Electronic contracts under the E-Commerce Act of 2000 / RA 8792 (ECA) allow for offers, acceptance, and other elements required for contract formation to be expressed in electronic documents
Possible objects of sale
Potential existence (emptio res speratae) 1461
Hope or expectancy (emptio spei) 1461
Existing (OP) or Future Goods (MRA)
When is the contract perfected?
From the time it came to his knowledge / knowledge of acceptance
Consent
1320 – Form of acceptance: express or implied
1321 – Matters that may be fixed by the offeror: place, time, or manner of delivery – Accidental elements
1324 – Option money v. Earnest money: no contract of sale in option money, there is a contract of sale in earnest money
1330 – Vices of consent (MIVUF): Voidable if one is present
1340 – Usual exaggerations in trade: Valid
1341 – Expression of opinion: GR – Valid, Voidable if opinion is made by an expert
1345/1346 – Simulation of contract: Absolute/Fictitious – no intention to be bound / Void, Relative – parties conceal their true agreement / Valid, Void if contrary to 1306 or if it prejudices the right of a TP
A seller cannot employ by-bidders or puffers
Perfection of the contract if sent by letter
1. 4 Theories in the perfection of contract: Manifestation Theory (Code of commerce) – declaration
2. Expedition Theory (American Courts) - sent the letter
3. Reception Theory (German Civil Code) - receive the letter
4. Cognition Theory (Spanish Civil Code) - knowledge
A seller cannot bid, exception if it is announced with reserve
Essential requisites of sale
Consent
Object
Price
Not covered by Statute of Frauds: If already paid/performed – Executed
Requisites for the object of the contract of sale: Determinate (1460) / Determinable (2nd par.), Licit / Lawful, Not impossible, Right to transfer ownership at the time the object is delivered (1459), Transmissible
Acceptance made by letter or telegram does not bind the offeror except from the time it came to his knowledge. The contract, in such a case, is presumed to have been entered into in the place where the offer was made
Sale of separate lots by auction are separate sales
A bidder can withdraw before the fall of the hammer
Points of distinction between Emptio Res Speratae and Emptio Spei
As to the object of the sale
As to what is uncertain
As to the subject thereof
As to requisite of the existence of the thing
Points of distinction between Option Money and Earnest Money