RFBT2

• Contract of Sale


  One of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain or its equivalent
• Characteristics of a Contract of Sale

  • Consensual
  • Bilateral
  • Onerous
  • Nominate
  • Principal
• Requisites of a Contract of Sale

  • Consent
  • Object
  • Cause
• Contract of Sale

  Title passes to the buyer upon delivery of the thing sold
• Contract to Sell

  Ownership is reserved in the seller and is not to pass until the full payment of the purchase price
• Requisites for a thing to be the object of sale

  • The thing must be existing or at least have a future contingent existence
  • It must be licit or legal
  • It must be determinate or determinable by description or segregation
  • The vendor must have a right to transfer ownership of the thing at the time it is delivered
• Price in Contract of Sale

  Must be in money or its equivalent, must be certain or at least ascertainable, must be real not simulated
• Simulated Price

  The contract of sale was executed by the parties who do not intend to be bound. The sale is void, but the act may be shown to have been in reality a donation or some other contract
• Perfection of Contract of Sale

  The contract is perfected at the moment there is meeting of the minds upon the thing which is the object of the contract and upon the price which is the cause
• Earnest Money


  Given by the buyer to the seller to bind the bargain, is a partial payment of the purchase price and is considered as proof of the perfection of the contract
• Option Money


  Money given by the 'would be' buyer to the 'would be' seller for a separate agreement, which is called the option contract. It is not part of purchase price
• Forms of Contract of Sale

  • For Validity
  • For Enforceability
  • For the convenience of the parties
• Recto Law


  Provides for alternative remedies of the vendor in sale of personal property payable in installments
• Maceda Law


  Provides for protection to buyers of real estate on installment payments against onerous and oppressive conditions
• The expenses for the execution and registration of the sale and of putting the goods in a deliverable state are borne by the vendor, unless there is a stipulation to the contrary
• Capacity to Buy and Sell

  Any person, natural or juridical, may enter into contract of sale, except those incapable of giving consent under the law on contracts
• Persons disqualified to buy

  • Husband and wife (except when separation of property or judicial separation)
  • Persons prohibited from acquiring property due to their position and relation (guardians, agents, executors, public officers, judicial officers, lawyers)
  • Seller in an auction sale (unless notice is given reserving such right)
  • Unpaid seller in case of resale
• Absolute Incapacity


  Persons who cannot bind themselves, like minors, insane persons, and deaf mutes who do not know how to write
• Relative Incapacity


  Incapacity exists only with reference to certain persons or a certain class of persons
• Res Perit Domino


  The owner of a thing bears the risk of loss
• If the thing is lost before perfection

  The seller bears the loss
• If the thing is lost at the time of perfection

  The contract is void or inexistent
• If the thing is lost after perfection but before delivery

  The risk of loss is shifted to the buyer as an exception to the res perit domino rule
• If the seller reserves ownership to secure the buyer's performance

  The goods are at the buyer's risk from the time of delivery
• Where actual delivery has been delayed through the fault of either the buyer or the seller


  The goods are at risk of the party at fault
• Res perit domino rule


  The risk of loss is shifted to the buyer as an exception if the thing is lost after perfection but before its delivery
• Delay on delivery is caused by the buyer


  The goods are at risk of the buyer
• Delay on delivery is caused by the seller

  The goods are at risk of the seller
• The thing in the contract is lost


  The risk of loss is shifted to the buyer as an exception if the loss occurs after perfection but before delivery
• Actual delivery


  Physically transferring the possession of the object to the transferee
• Constructive delivery


  No actual transfer of the possession of the object to the transferee, but the law considers that delivery took place
• Different kinds of constructive delivery

  • Execution of public instrument
  • Symbolic delivery or tradition symbolica
  • Traditio longa manu
  • Traditio brevi manu
  • Traditio constitutum possessorium
  • Quasi-delivery or quasi-traditio
• Contract of sale or return

  Ownership over the thing sold is transferred to the buyer upon delivery, but the buyer has the option to return the same to the seller instead of paying the price
• Contract of sale on trial or approval

  Ownership is retained by the seller, even after delivery, until the sale has become absolute
• Document of title to goods

  Any document used in the ordinary course of business in the sale or transfer of goods, as proof of the possession or control of the goods, or authorizing or purporting to authorize the possessor of the document to transfer or receive, either by indorsement or by delivery, goods represented by such document
• Rights of an unpaid seller

  • Lien on the goods or right to retain them for the price while in his possession
  • Right of stopping the goods in transit in case of insolvency of the buyer
  • Right of resale
  • Right to rescind the sale
• In case of double sale of movable property

  Ownership shall pass to the buyer who first took possession in good faith
• In case of double sale of immovable property

  Ownership shall belong to the buyer who first registered the sale in good faith in the Registry of property, or in the absence of registration, the buyer who first took possession in good faith, or in the absence of both, the buyer who presents the oldest title in good faith
• Implied warranties of a seller

  • Warranty against eviction
  • Warranty against hidden defects or unknown encumbrances
  • Warranty as to fitness or merchantability
• There is breach of warranty against eviction

  When the buyer is deprived in whole or in part of the thing purchased by virtue of final judgment by a court based on the right of a third party prior to the sale