LAW OF SALES

ARTICLE 1458

By the contract of sale one of the contracting parties

obligates himself to transfer the ownership and to
deliver a determinate thing, and the other to pay
therefor a price certain in money or its equivalent.

A contract of sale may be absolute or conditional.

PARTIES

• Vendor or seller
• Vendee or buyer
STAGES OF A CONTRACT OF SALE

• Negotiation
• Perfection
• Consummation
ESSENTIAL ELEMENTS

Those without which a contract of sale would not exist.

1. Consent or meeting of the minds

2. Determinate subject matter or Object
3. Price certain in money or its equivalents
NATURAL ELEMENTS

Inherent in a contract of sale, which in the absence of stipulation

excluding them, are deemed to exist.

• Warranty against eviction

• Warranty against hidden defects and encumbrance
ACCIDENTAL ELEMENTS

• They refer to particular stipulations of the parties such as terms, place and time of
payment, and other conditions agreed upon.
CHARACTERISTICS OF A CONTRACT OF SALE

• Consensual
• Principal
• Bilateral
• Onerous
• Commutative
• Nominate
SALE VS DACION EN PAGO (DATION IN PAYMENT)

• No pre-existing credit • Pre-existing credit

• Create obligations • Extinguish obligation
• Cause or consideration • Cause or consideration
• Price – seller • Extinguishment – debtor
• Delivery – buyer • Delivery of the object given in place of
credit – creditor
SALE VS BARTER

• Money • Another thing

SALE VS CONTRACT TO SELL

• Title of the property passes to the • Title is reserved to the vendor and is
vendee upon the delivery of the thing not to pass to the vendee until full
sold. payment of the purchase price
• Risk transfers to the buyer upon • Risk remains with the seller until the
perfection (or delivery). suspensive condition is fulfilled.
• Specific performance or rescission under • No rescission; mere non-fulfillment of
Article 1191. the condition prevents the transfer of
ownership
OBJECT OF THE CONTRACT OF SALE

• The thing must be licit

• The thing must be determinate
• Vendor must have the right to transfer the ownership of the
thing at the time that it is delivered.
• Things have a potential existence may be the object of a
contract of sale.
RULES ON THE OBJECT OF THE CONTRACT OF
SALE
• The thing may be either existing goods owned or possessed by the
vendor (existing goods) or goods to be manufactured, raised, or acquired
by the seller after the perfection of the contract of sale (future goods).
• Sole owner may sell an undivided interest of the things (co-owner)
• Fungible goods (Article 1464)
• Things subject to resolutory condition may be the object of a contract of
sale
FUNGIBLE GOOD

• Article 1464. In the case of fungible goods, there may be a sale of an undivided
share of a specific mass, though the seller purports to sell and the buyer to buy a
definite number, weight or measure of the goods in the mass, and though the number,
weight or measure of the goods in the mass, and though the number, weight or
measure of the goods in the mass is undetermined. By such a sale the buyer
becomes owner in common of such a share of the mass as the number, weight or
measure bought bears to the number, weight or measure of the mass. If the mass
contains less than the number, weight or measure bought, the buyer becomes the
owner of the whole mass and the seller is bound to make good the deficiency from
goods of the same kind and quality, unless a contrary intent appears.
• A sold to B 300 sacks of rice from a mass stored in the warehouse of A.
The mass actually consist of 500 sacks of rice.

• A sold to B 500 sacks of rice from a mass stored in the warehouse of A.

The mass actually consist of 300 sacks of rice.
PRICE

• is the sum stipulated as the equivalent of the thing sold,

and also every incident taken into consideration for the
fixing of the same, put to the debit of the vendee, and
agreed to by him.
CERTAINTY OF PRICE

• Agreed upon a definite amount

• Reference to another thing certain
• Determination of the price is left to the judgment of a specified person or
person.
EARNEST MONEY VS OPTION MONEY

• Part of the purchase price • Separate and distinct from the purchase
• Paid upon the perfection of a contract of price - Option contract
sale • Paid for a sale that is yet to be perfected
GROSS INADEQUACY OF PRICE

• Does not affect a contract of sale except as it may indicate a defect in the
consent or that the parties really intended a donation or some other act
or contract.
SIMULATED PRICE

• If the price is simulated, the sale is void, but the act may be shown
to have been in reality a donation, or some other act or contract.
FORM

• In writing
• Statute of Frauds
• Sales of piece of land through an agent
• Verbal
• Partly in writing and partly verbal
• May be inferred from the conduct of the parties.
WHEN OWNERSHIP OF THE THING IS
TRANSFERRED
• Actual delivery
• Constructive delivery
SALE BY SAMPLE

• Sample is a small representative portion or quantity of a whole mass of

goods or products.
• The seller warrants that the bulk of the goods delivered correspond with
the sample shown to the buyer.
SALES BY DESCRIPTION

• The parties contract solely with reference to the description.

• The seller warrants that the bulk of the goods delivered correspond with
the description of the goods presented to the buyer
SALE BY SAMPLE AND DESCRIPTION

• The seller warrants that the bulk of the goods delivered correspond with
both the description and sample.
• The buyer shall have reasonable opportunity of comparing the bluk with
the description or the sample.
REMEDIES OF VENDOR IN INSTALLMENT SALE OF
PERSONAL PROPERTY
• Exact fulfillment of the obligation, should the vendee fail to pay
• If the vendee’s failure to pay covers two or more installments, he may, at his option vail
himself of the first remedy or either of the following:
• Cancel the sale
• Foreclose the chattel mortgage on the thing sold, if one has been constituted. In this case, he
shall have no further action against the purchaser to recover any unpaid balance of the price.
• J sold his car to K for Php1,200,000.00 payable in 12 equal monthly installment. As
security, K executed a chattel mortgage on the car.
CAPACITY TO BUY OR SELL

• All those who may oblige themselves may enter into a contract of sale
HUSBAND AND WIFE

• The husband and the wife cannot sell property to each other,
except:
• When a separation of property was agreed upon in the marriage
settlements; or
• When there has been a judicial separation of property under article
191
PROHIBITIONS

1. The guardian, the property of the person or persons who may be under his
guardianship;

2. Agents, the property whose administration or sale may have been intrusted to them,
unless the consent of the principal has been given;

3. Executors and administrators, the property of the estate under administration;

PROHIBITIONS

• Public officers and employees, the property of the State or of any subdivision thereof, or of
any government-owned or controlled corporation, or institution, the administration of which
has been intrusted to them; this provision shall apply to judges and government experts who,
in any manner whatsoever, take part in the sale;
• Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other
officers and employees connected with the administration of justice, the property and rights
in litigation or levied upon an execution before the court within whose jurisdiction or
territory they exercise their respective functions; this prohibition includes the act of acquiring
by assignment and shall apply to lawyers, with respect to the property and rights which may
be the object of any litigation in which they may take part by virtue of their profession;
• Any others specially disqualified by law.
EFFECTS OF THE CONTRACT WHEN THE THING
SOLD HAS BEEN LOST

• At the time of perfection of the contract

• COMPLETELY LOST
• Contract of sale is without effect.
• PARTIALLY LSOT
• Vendee may choose:
• Withdrawing the contract; or
• Demand the remaining part and pay the proportionate price
NEXT TOPICS:

• CHAPTER 4-9 SALES. CIVIL CODE