NATURE DEFINITION OF CONTRACT OF SALE By contract of sale of one of the contracting parties obligates himself to transfer (known as the

seller or vendor) the ownership and to deliver a determinate thing, and the other to pay therefore a price certain in money or its equivalent. A contact of sale may be absolute or conditional CHARACTERISTICS 1. Consensual it is perfected by mere consent 2. Bilateral and Reciprocal (they have mutual obligation both parties are bound by obligation dependent upon each other. 3. Cumulative the values exchanged are almost equivalent to each other. 4. Principal it does not depend upon the existence of other contracts. 5. Onerous valuable consideration is given. 6. Nominate there is a name provided for on the civil code. ELEMENTS OF CONTRACT OF SALE 1. Object 2. Price 3. Consent Licit and Determinate Object or Thing REQUISITES: 1. The thing must be within the commerce of men 2. The thing must be licit (it must not be contrary to law, morals, good customs, public order or public policy) and the vendor must have a right to transfer the ownership thereof at the time it is delivered. 3. The thing must be determinate WHEN A THING CONSIDERED DETERMINATE A thing is determinate when it is particularly designated or physically segregated from all other of the same class. The requisite that a thing be determinate is satisfied if at the time the contract is entered into, the thing is capable of being made determinate without the necessity of a new or further agreement between the parties. RIGHT TO TRANSFER OWNERSHIP The vendor must have the right to transfer the ownership of the thing at the time that it is delivered. Thus, it is not necessary that the vendor must be the owner at the time of sale. POTENTIAL EXISTENCE AS OBJECT OF SALE Things having a potential existence may be the object of the contract of sale. The efficacy of the sale of mere hope or expectancy is deemed subject to the condition that the thing will come into existence. The sale of vain hope or expectancy is void. Thus, one can sell the young of animals that thereafter will be born or the future harvest from a farm. However, the thing must come into existence; otherwise, the sale will not be effective for not having a subject matter. EMPTIO REI SPERATI Sale of future thing EMPTIO SPEI Present thing - the hope for expectancy

The thing sold must come into existence

The sale produces effects even if the thing hoped for does not come into existence. However, the sale of vain hope or expectancy is void, such as the sale of a loosing sweepstake ticket already drawn

GOODS WHICH FORM THE OBJECT OF SALE 1. Existing goods 2. Future goods (goods to be manufactures, raised, or acquired) THINGS SUBJECT TO A RESOLUTORY CONDITION MAY BE THE OBJET OF THE CONTRACT OF SALE A resolutory condition is an uncertain event upon the happening of which the obligation (or right) subject to is extinguished. Hence, the right acquired in virtue of the obligation is also extinguished (ex. Sale subject to condition that the seller can repurchase the property). WHEN CO-OWNERSHIP EXISTS The sole owner of a thing may sell an undivided interest therein. Such sale shall produce the effect of making the seller and the buyer co-owners of the thing sold. If the buyer becomes a co-owner, with the seller, or other owners of the remainder of the mass, it follows that the whole mass is at the risk of all the period interested in it, in proportion to their various holdings. The sale of the undivided share, either of a share of a thing or that of goods, the subject matter is an incorporeal or intangible right; here, ownership passes to the buyer by the intention of the parties. SALE OF SHARE IN SPECIFIC MASS (FUNGIBLE GOODS) 1. When the quantity of the mass is more than the quantity sold, the parties shall become co-owners. 2. When quantity of the mass is less than the quantity sold, the buyer becomes the owner of the whole mass, and if there is a deficiency of the goods sold the seller is bound to make good the deficiency of the same kind and quality, unless of course the contrary was stipulated. Effect if Lost/Deteriorated (Generic Goods) If at the time the contract of sale is perfected, the thing which is the object of the contract has been entirely lost, the contract shall be without any effect. But if the thing should have been lost in part only, the vendee may choose between withdrawing from the contract and demanding the remaining part, paying its price in proportion to the total goods agreed upon. 1. If the thing was lost due to the fault of the seller as he knew already of the lost before the contract was perfected, he must pay dames to the buyer. 2. A thing is lost when it perishes or goes out of the commerce or disappears in such a way that it its existence is unknown or it cannot be recovered. Effect if Lost/Deteriorated (Specific Goods) REQUISITES 1. The goods that have perished in part or wholly or have deteriorated in quality without the knowledge of the seller. 2. Specific goods THE BUYER MAY AT HIS OPTION TREAT THE SALE 1. As avoided 2. As valid in all of the existing goods or in so much thereof as have not deteriorated, and as binding the buyer to pay the agreed price for the goods in which the ownership will pass, if the sale was divisible.

*applies to goods identified and agreed upon at the time a contract of sale is made. Certain Price or Consideration REQUISITES 1. Must be certain 2. Must be real, not fictitious 3. As a rule, not inferior to the value of the thing Price is the sum stipulated as the equivalent of the thing sold and also every incident taken into consideration for the fixing of the price of the sale. *There is a valid sale though the purchase price is not paid in full. The unpaid seller s remedy is an action to collect the balance or rescind the contract, within the time allowed by law. INSTANCES WHEN THE PRICE IS CERTAIN 1. When it is stipulated 2. When it is with reference to another thing which is certain 3. When it is fixed by a third person 4. When it is fixed by the court (if the person acted in bad faith/mistake) 5. In case of grains, liquids, securities, the price is certain when the price fixed is that which the thing sold would have on a definite day, or in a particular exchange or market, or when an amount is fixed above or below the price on such day, or in such exchange or market, provided said amount is also certain. If the third person or persons are unable or refuses to fix price, the sale shall be inefficacious, unless the parties subsequently agree upon the price; however, where the third persons are prevented from fixing price by fault of the seller or buyer, the aggrieved party at fault as are allowed by the law. GROSS INADEQUACY OF THE PRICE Gross inadequacy of the 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. It will not invalidate a contract of sale. However, if the inadequacy of the price is coupled with vitiated consent, the contract can be set aside due to defect in the consent. Likewise when it appears that aside from the manifest inadequacy of the price, there is the added circumstance that the vendor was in abnormal state of mind, the courts should step in to protect the seller from the transaction. A judicial sale of real property will be set aside when the price is so inadequate as to shock the conscience of the court, and when there be additional circumstances against its fairness. SIMULATED PRICE/SALE 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. If the price in a contract of sale is simulated, the contract is valid as a donation or some other agreement, provided the requirements of donations or other agreements are complied with. Hence, if these requirements do not exist, the contract is absolutely void, not merely voidable. A simulated deed of sale Distinguish Option Money from Earnest Money Consent WHEN PERFECTED/WHEN CONSUMMATED

DISTINGUISH FROM Contract of agency to sell Contract to sell Contract for a piece of work Contract of barter DISTINGUISH ABSOLUTE SALE FROM CONDITIONAL SALE CAPACITY TO BUY OR SELL SELLER S RIGHT TO TRANSFER WHEN OWNERSHIP TRANSFERRED FORM OF SALE OBLIGATIONS OF THE SELLER/VENDOR WHETHER SELLER DELIVERS OR BUYER TAKES POSSESSION IF SELLER DELIVERS How to deliver By Negotiable Document of Title What to deliver WHEN SELLER NOT BOUND TO DELIVER TO WHOM OWNERSHIP TRANSFERRED When delivery to carrier, delivery to buyer In double sale DUTY TO GIVE BUYER OPPORTUNITY TO EXAMINE GOODS RISK FOR GOODS SHIPPED SELLER S WARRANTIES Express Implied Warranty against eviction Warranty against hidden faults/defects or encumbrance

Additional warranties under Consumer Act of the Philippines EXPENSES SHOULDERED BY SELLER