Law on Sales Chapter 1-3 Reviewer
Essay by MaureenEpoh • March 10, 2019 • Study Guide • 1,972 Words (8 Pages) • 981 Views
CHAPTER 1 – Nature and Form of the Contract
Contract of sale
Characteristics:
- Consensual – by mere consent
- Bilateral – both are bound
- Onerous – there is price
- Commutative - equivalent
- Nominate – “sale”
- Principal – independent contract
Essential requisites:
- Consent/meeting of minds
- Object
- Cause/consideration
Kinds of contract of sale:
- Absolute – no condition
- Condition – contingent
Requisites concerning Object:
- Things – licit and not impossible; illicit = null & void
- Rights
Kinds of illicit things:
- Per se (of its nature)
- Per accidens (provisions of law)
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
Not determinate = null & void
Sale of things having potential existence
May be an object of sale
Sale of a mere hope or expectancy
Valid; Void if vain
Goods which may be the object of sale:
- Existing goods
- Future goods
Sale of future goods
Valid as executory contract
Sale of undivided interest in a thing:
- By sale owner
- By co-owner
Sale of an undivided share of a specific mass:
Fungible goods – any unit is equivalent of any other unit
Sale of thing subject to a res. condition may be an object of sale
Happening extinguishes obligation
Sale vs. Agency to sell:
- Sale – buyer receives goods as owner
Agency – receives goods of principal
- Sale – buyer pay price
Agency – agent accounts for proceeds
- Sale – buyer cannot return object sold
Agency – can return if unable to sell
- Sale – seller warrants thing sold
Agency – agent makes no warranty
- Sale – buyer can deal with thing sold as owner
Agency – bound to principal’s instructions
Sale vs. Contract of Piece of Work
CPW – never would have existed but for the order of buyer;
-risk of loss to contractor; not with Statute of Frauds
CS – thing exists even without order; risk of loss to buyer
Sale vs. Barter
Barter – both give things
Sale – give a thing and receive price in money
When price considered certain:
No sale if price not certain or ascertainable
If price not fixed by 3rd person – contract is ineffective
If 3rd person is prevented, IP may resist or ask for fulfillment
Gross inadequacy in price:
Defect – may be annulled because consent is vitiated
Effect where price is simulated:
- Void; valid as donation (intended)
- Ownership not transferred (not intended)
Price on a given day at particular market:
Must be certain
Fixing of price by one of contracting parties not allowed
To be just
If price cannot be fixed,
Contract is inefficacious
Effect of failure to determine price:
Executory – no effect; no obligation
Delivered – pay reasonable price
Stages of Contract of Sale:
- Negotiation
- Perfection
- Consummation
Perfection
If one does not comply, injured party may sue for fulfillment or
rescission with payment of damages.
Right of Owner to Fix his Own Price
Reasonable or unreasonable
Effect of failure to pay price/absence of price:
- Price Stipulated
- demand performance, rescission, cancellation
- No price
- sale is void/non-existent; no contract of sale
Rules Governing Auction Sales:
- Sale of separate lots by auction are separate sales
- Sale perfected by the fall of the hammer
- Right of seller to bid in the auction
- No notice given – unlawful; to avoid puffing
- Notice given – expressly reserved
Ownership of things transferred by delivery
Actual or constructive
Note: nonpayment prevents transfer of ownership
Kinds of promise treated in Article 1479:
- Accepted unilateral promise to sell (promisee elects to buy)
- Accepted unilateral promise to sell (promisee elects to sell)
- Bilateral promise to buy & sell reciprocally accepted
Effect of Unaccepted Unilateral Promise
No juridical effect or legal bond; policitation
Option
privilege existing in one person for which he has paid a consideration which gives him the right to buy/sell from/to another person, if he chooses, at any time within the agreed period at a fixed price, or under, or in compliance with certain terms and conditions; exercised when sale may be perfected
Effect of Accepted Unilateral Promise
May be withdrawn;
It is only if the promise is supported by a consideration
distinct and separate from the price that its acceptance will
give rise to a perfected contract.
Effect of Bilateral Promise to Buy and Sell
Perfected sale
Risk of Loss or Deterioration
- Lost before perfection – seller bears loss (res perit domino)
- Lost at time of perfection – contract void/inexistent
- Lost after perfection but before delivery – buyer bears loss
- Lost after delivery – buyer bears loss
Article 1480
Non-fungible goods:
If the risk ought to belong to the buyer before delivery, the
benefit ought to belong to him who has the risk.
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