BUSTRA

• Contract of sale


  An agreement whereby one of the parties (seller or vendor) obligates himself to deliver something to the other (buyer, purchaser, or vendee), who binds himself to pay a sum of money or its equivalent (price)
• Characteristics of a contract of sale

  • Consensual - perfected by mere consent without any further act
  • Commutative - thing sold is considered equivalent of price paid and vice versa
  • Principal - does not depend for its existence and validity upon another contract
  • Bilateral - both contracting parties are bound to fulfill correlative obligations
  • Onerous - thing sold is conveyed in consideration of the price and vice versa
  • Nominate - given a special name or designation in the Civil Code (sale)
• Essential requisites of a contract of sale

  • Consent or meeting of the minds
  • Object or subject matter
  • Cause or consideration
• Consent or meeting of the minds

  Consent on part of seller to transfer and deliver and part of buyer to pay. Both must have legal capacity to give consent and to obligate themselves
• Object or subject matter

  Refers to the determinate thing. Must be determinate or capable of being determinate. May be personal or real property
• Cause or consideration


  Price certain in money or its equivalent. Checks, promissory notes, or assumption of buyer of mortgage debt of seller
• Natural and accidental elements of a contract of sale

  • Natural - deemed to exist in the absence of any contrary stipulations (warranty against eviction and hidden defects)
  • Accidental - present or absent depending on stipulations (conditions, interest, penalty, time, or place of payment)
• Kinds of contract of sale

  • Absolute - sale is not subject to any condition and title passes to buyer upon delivery
  • Conditional - sale contemplates a contingency and is subject to certain conditions
• Requisites concerning the object


  • Things - must be determinate, licit, or lawful
  • Rights - all rights not intransmissible or personal may be the object of sale
• Kinds of illicit things

  • Illicit per se - decayed food unfit for consumption
  • Illicit per accidens - prohibited lottery tickets and prohibited drugs; land sold to an alien
• Right of vendor to transfer ownership


  One can sell only what he owns. Sufficient if right exists at time of delivery
• Subject matter must be determinate


  Thing is determinate or specific when particularly designated or physically segregated from all others of the same class. Sufficient if subject matter is capable of being determinate
• Sale of things having potential existence


  A future thing not existing at time contract is entered into may be the object as long as it has the potential or possible existence that it is reasonably certain to come into existence
• Sale of mere hope or expectancy

  Efficacy of sale of mere hope or expectancy is deemed subject to the condition that the thing contemplated or expected will come into existence
• Goods which may be the object of sale

  • Existing goods - goods owned or possessed by seller
  • Future goods - goods to be manufactured, raised, or acquired
• Sale of future goods

  Sale of future goods even though contract is in the form of a present sale is valid only as an executory contract to be fulfilled by the acquisition and delivery of goods specified
• Sale of undivided interest in a thing

  • By sale of owner - sole owner of a thing may sell the entire thing or only a specific portion or an undivided interest therein
  • By co-owner - co-owner or co-heir can dispose of his share even without consent of the other co-owner/s
• Fungible goods


  Goods of which any unit is, from its nature or by mercantile usage, treated as the equivalent of any other unit such as grain, oil, win, gasoline
• Sale of an undivided share of a specific mass


  Owner of mass of goods may sell only an undivided share, provided that mass is specific or capable of being made determinate. Buyer becomes co-owner with seller of the whole mass in proportion in which definite share bought bears to the mass
• Sale of thing subject to resolutory condition

  Resolutory condition - uncertain event upon happening of which obligation or right subject to it is extinguished. Vendor cannot transfer ownership of what he sold as there is no object
• Differences between sale and agency to sell

  • In sale, buyer receives goods as owner and has to pay the price. In agency, agent receives goods of principal who retains ownership and has to account for proceeds of sale
  • In sale, buyer as a general rule cannot return object sold. In agency, agent can return object he is unable to sell to third person
  • In sale, seller warrants thing sold. In agency, agent makes no warranty for which he assumes personal liability as long as he acts within his authority and in the name of seller
  • In sale, buyer can deal with thing sold as he pleases. In agency, agent must act and is bound according to the instructions of his principal
• Differences between sale and contract for a piece of work

  • In sale, the thing transferred is one which would have existed and been the subject of sale to others, even if order has not been made. In piece of work, the thing transferred is one not in existence and which never would have existed but for the order of the party desiring to acquire it
  • In sale, risk of loss is borne by buyer. In piece of work, risk of loss before delivery is borne by worker, not the employer or commissioner
  • Sale is covered by the Statute of Frauds. Piece of work is not within the Statute of Frauds
• Differences between sale and barter or exchange

  • In sale, the vendor gives the thing in consideration for a price in money. In barter or exchange, one of the parties binds himself to give one thing in consideration of the other's promise to give another
• Partly in money and in another thing


  The intention of the parties is the most important factor in determining whether it is one of barter or of sale
• Not within the Statute of Frauds

  Contract for a Piece of Work
• Sale


  One of the parties binds himself to give one thing in consideration of the other's promise to give another
• Barter or Exchange


  Whereas in a contract of sale, the vendor gives the thing in consideration for a price in money
• Partly in money and in another thing


  Intention of the parties is the most important factor
• Determining whether it is barter or sale


  1. Manifest intention of the parties is paramount

  2. If intention cannot be ascertained, it shall be considered barter if value of thing as part of the consideration exceeds the amount of money or its equivalent. Otherwise, it is a sale

  3. If intention of contract shall be one of sale, intention must be followed even though value of thing given as a part of the consideration is more than the amount of money
• Price certain in money or its equivalent


  The only point different between sale and barter
• Price in contract of sale ought to be settled for there can be no sale without a price
• Price


  Must be certain or capable of being ascertained in money or its equivalent
• Equivalent


  Promissory notes, checks, and other mercantile instruments generally accepted as representing money
• Cases when price considered certain

  • Parties have fixed or agreed upon definite amount
  • Certain with reference to another thing certain
  • Determination of the price is left to the judgment of a specified person
• Last two cases are applicable only when no specific amount has been agreed upon
• Price fixed by third person specified by parties


  Binding upon them
• Exceptions when price fixed by third person is not binding

  • Third person is in bad faith or acts by mistake when fixing the price having in mind not the thing which is the object of the sale, but another analogous or similar thing
  • Third person disregarding specific instructions or procedure laid down, or the data given him, fixed an arbitrary price
• Effect when price not fixed by third person designated

  1. If third person designated by parties to fix price refuses or cannot fix it (without fault of seller and buyer), the contract shall be ineffective, as if no price had been made, unless parties agreed on the price

  2. If third person is prevented by fault of seller or buyer, party not in fault may obtain redress by either rescission or fulfillment with damages in either case. If innocent party chooses fulfillment, court shall fix price
• Gross inadequacy of price in voluntary sales

  Mere inadequacy of price or fact that the bargain was a hard one generally does not affect validity when both parties are in a position to form an independent judgment concerning the transaction
• Exceptions when gross inadequacy of price in voluntary sales affects validity

  • The inadequacy of price may indicate a defect in the consent such as fraud, mistake, or undue influence, in which contract may be annulled not because of inadequacy of price but because consent is vitiated
  • When price is so grossly inadequate or low as to be shocking to the court's conscience that no man in his right mind would accept