1458

Contract of Sale contract whereby the seller

obligates himself to deliver something to the
buyer who binds himself to pay a price

1. One can sell only what he owns

2. Sufficient if right exist at the time of
delivery
1460

Characteristics:
1. Consensual perfected by mere consent
2. Bilateral parties are bound to fulfill
obligations reciprocally
3. Onerous price is considered in the thing
sold
4. Commutative thing sold is equivalent to
the price paid
5. Nominate Sale is its special name in the
civil code
6. Principal its existence and validity upon
another contract
Requisites:

1461
Things having potential existence

Natural Elements elements deemed to exist in

absence of any contrary stipulations

1462

2 Kinds of Contract of Sale

Goods which can be the object of the sale

1. Existing goods possessed by the seller
2. Future goods to be manufactured,
raised or acquired

1459
Requisites Concerning Objects
Determinate
Licit (lawful)
Not impossible
Rights which are not intransmissible or
personal

Kinds of Illicit Things

1. Per se nature
2. Per accidens
declaring it illegal

Subject into condition that the thing

contemplated will come into existence
This is VALID even if this thing does not
come into existence unless the hope of
expectancy is VAIN.

Sale of future goods

1. Absolute no subject to any condition

2.
Conditional sale contemplates
contingency/condition

1.
2.
3.

Even a future thing not existing in the

time of contract (potential/possible
existence) may be the object of sale
i.e. the wine a vine is expected to
produce

Sale of hope or expectancy

1. Consent/Meeting of Minds
2. Object/Subject Matter (Determinate thing)
3. Cause/Consideration (Price)

Accidental Elements elements which may be

present depending on the stipulations of the
parties

Subject matter must be determinate

provisions

Right of vendor to transfer ownership

of

law

Sale of future goods cannot be the

subject of an executed sale but may be
the subject of an executory contract (that
which is yet to be fully executed or
performed; opposite of executed sale)

1463
Sale of undivided interest in a thing

Makes the buyer a co-owner in the thing

sold (i.e. land)
Once became a co-owner, the buyer can
dispose the thing (undivided portion of the
thing) even without the consent of his coowners

1464

Sale of an undivided share of a specific mass

1. Fungible goods goods of any unit is
equivalent to any other unit; a commodity
money (i.e. grain, oil, wine, gasoline)
2. Effect: may be a sale of undivided interest
if the mass is specific or capable of being
determinate
3. Risk of loss: whole mass is at risk of all
the parties interested in it, in proportion to
their various holdings
4. Subject Matter: incorporeal/intangible
right
1465

Things subject to a resolutory condition

may be the object of the contract of sale
Resolutory condition uncertain event
upon the happening of which the
obligation subject to it is extinguished

1466
Contract of agency person binds himself to
render some service or to do something in
representation of another, with the authority of
the latter
Differences between contract of sale and
agency
1. Sale, buyer receives the goods as owner
Agency, agent receives goods (but the
ownership retains to the principal)
2. Sale, buyer pays the price
Agency, only accounts for the proceeds in
the principals behalf
3. Sale, buyer cannot return the object sold
Agency, agent can return the object
4. Sale, seller warrants the thing sold
Agency, agent assumes no warranty
5. Sale, buyer can deal with the things sold
as he pleases
Agency, agent acts according to the
instructions of the principal

Differences between contract of sale and for

work
1. Sale, things would exist even the order
had not been given
Work, thing would never have existed but
for the order of the party desiring it
2. Sale, risk of loss is borne by the buyer
Work, risk of loss is borne by the
contractor/worker
3. Sale, within the Statute of Frauds
Work, not within the Statute of Frauds
1468
Contract of barter/exchange one party gives
one thing in consideration of the others promise
to give another thing
Exchange partly in money and partly in thing

1469

1467
Contract for a piece of work contract binds
himself to execute a piece of work for the
employer

Refer to the manifest intention of the

parties
Determine which has greater value

No sale if price is not certain or

ascertainable
When price is certain:
o Agreed definite amount
o Reference to another thing certain
o Price is left to the judgment of
specified person(s)
Price fixed by third parties is binding upon
them, EXCEPT:
o Third person acts in bad faith r by
mistake
o Third
person
disregarding
instructions given by parties
If third person cannot fix the price, the
contract shall be ineffective.
If the third person is prevented for fixing
the price, the party not in fault may obtain
redress against the party at fault which
may be a choice between rescission or
fulfillment. Court fixes the price if the
party chooses fulfillment.

1470
Gross inadequacy of price (voluntary sales)

Mere inadequacy of price does not affect

the contract of sale when both parties are
in a position to form an independent
judgment in the transaction
If low price may indicate defect in the
consent, contract may be annulled

Gross inadequacy of price (involuntary sales)

Judicial or execution sale the court sells

the property of the debtor for the
satisfaction of his unpaid indebtedness.
If the price is so low as to be shocking to
the conscience, of the court, a judicial
sale may be set aside
The validity of the sale is not affected if
the law gives the owner the right to
redeem (sale in public auction)

1471

1476

If the sale is simulated, the sale is void

but the act may be shown to be a
donation.

1472

The price of securities, grain, liquids shall

also be considered certain (although it is
subject to fluctuations on different days)

1473

Fixing of price by one of the contracting

party is not allowed
But if the price fixed by one is accepted
by the other, the contract is deemed
perfected

1474

If price cannot be determined, the

contract is without effect (executory)
When delivery has already been made,
the buyer must pay a reasonable price
market price at the time and place fixed
by contract or law

1475

Contracts are perfected by mere consent

Owner has the right to fix his own price,

reasonable or unreasonable
Failure to pay in cases where price is
stipulated, does not make the contract
invalid. The seller may demand specific
performance or rescission with damages
No price stipulated, sale is void and nonexistent

Sales of separate lots by auction are

separate sales
Sale by auction is perfected when
auctioneer announces its perfection by
the fall of hammer. Until announcement is
made, bidder may retract his bid and
auctioneer may withdraw the goods from
the sale
Seller may in auction sale if:
o Such right was reserved
o Notice was given the sale is
subject for bidding
o Right to bid is not prohibited by law
or stipulation

1477

Delivery to the vendee means transfer of

ownership

1478

Parties may stipulate the ownership is not

transferred unless price has been paid

1479

Policitation unaccepted unilateral

promise to sell or buy a thing which has
no juridical effect or legal bond
Option privilege of a person for which
he has paid a consideration which gives
him the right to buy or sell at any time
within the agreed period at a fixed price
Kinds of promises
o Accepted unilateral promise to sell
(buy) in which the promise elects
to buy (sell)

Does not bind the promisor

and may be withdrawn any
time
o Bilateral promise to buy or sell
reciprocally accepted
Reciprocally demandable,
contract perfected

1480
Risk of loss or deterioration (Rules)
1. Thing lost before perfection seller bears
the loss due to the principle of res perit
domino or the thing perishes with the
owner
2. Thing lost at the time of perfection
contract is void or inexistent
3. Thing lost after perfection but before
delivery, even the buyer takes the
ownership buyer bears the loss
(exception to res perit domino)
4. Thing lost after delivery buyer bears the
loss

Earnest money money given by the buyer to

the seller to bind the bargain; partial payment of
the purchase price; proof of the perfection of
contract; like an advance payment, thus,
deducted from total price.
Differences between earnest money and option
money
1. Earnest money, part of the purchase price
Option money, distinct consideration for
the option contract
2. Earnest money, there is already a sale
Option money, sale not yet perfected
3. Earnest money, when given, buyer is
bound to pay the balance
Option money, buyer is not required to
buy
1483
Form of contract manner it is executed or
manifested

1481

1482

Sale by description seller sells things

not yet seen by the buyer but the seller
describes it as being of a particular kind
o If the bulk of goods do not
correspond with the description,
contract may be rescinded
Sale by sample parties are contracted
solely with the reference to the sample,
with the understanding that the bulk was
like it.
o The thing to be delivered by the
seller must conform with the
sample in kind, character and
quality
Sale by sample and description goods
must satisfy all the warranties appropriate
to either kind
o It is not sufficient the goods
correspond with the sample if they
do not conform the description
given

Contracts may be entered into any form

provided it has the essential requisites

Contracts covered by Statute of Frauds law

requires that it must be in writing
1. Sale of personal property at a price
greater equal to P500
2. Sale of real property or an interest therein
regardless of the price
3. Sale of property not to be performed from
the year of sale regardless of the nature
of the property and price
Stature of Frauds is applicable only to executory
contract
1484
Right of vendor tor recover unpaid balance of
the purchase price
1. Specific performance
2. Cancellation vendee is unable to pay
two or more installments
3. Foreclosure (of the chattel mortgage)
1485

Lease of personal property with option to buy is

sales of the personal property payable in
installments
1486
The parties may stipulate that the installments or
rents paid are not to be returned.
1987
The expenses for execution and registration of
the sale shall be borne by the vendor

1489

Also prohibited in making donations to each

other.
1491
Persons who are incapacitated to purchase a
property

Other persons disqualified by law

All persons may enter into a contract of sale.

Exceptions are those with incapacities.

Kinds of incapacity

1. Absolute persons who cannot bind

themselves
2. Relative reference to certain persons or
certain classes of property
Necessaries -- things needed for sustenance,
dwelling, clothing and medical attendance in
keeping the financial capacity of the family or
incapacitated person

Guardians
Agents
Executors and administrators
Public officers and employees
Judicial officers and employees and
lawyers

Contracts entered by minors and other

incapacitated
persons
(e.g.
insane/demented person, deaf-mutes
who do not know how to write) are
voidable.
Contract can be valid only when
necessaries are delivered to him, thus, he
must pay a reasonable price.

Sale by minors valid when they pretended to

have reached their majority even if they have not
1490
Husband and wife CANNOT sell property to
each other except:
1. Separation of property was agreed upon
in marriage settlements
2. There has been a judicial separation of
the property

Aliens, disqualified to purchase private

agricultural lands
Unpaid seller
Officer conducting execution sale of
property

Violation of prohibition

Voidable (guardians, agents, executors

and administrators) only private interest
are affected
Null and Void (Public officers and
employees,
judicial
officers
and
employees and lawyers, other persons
disqualified by law)

1492
The prohibitions are applicable to sales by legal
redemption, compromise and renunciation
Compromise contract whereby parties, by
reciprocal concessions, avoid litigation
Renunciation/Condonation/Remission creditor
gratuitously abandons his right against his
creditors
1493

Thing entirely lost at the time of

perfection, contract is void and inexistent
Thing only partially lost vendee may
elect between withdrawing from the
contract and demanding the remaining
part, paying its proportionate price

A thing is lost when it perishes or goes

out of commerce or disappears in such a
way that is existence is unknown or
cannot be recovered
Perishes means that there has been a
material deterioration such that it loses its
former utility

1494
In sale of specific goods, ad goods without the
knowledge of the seller have perished, the buyer
may at his option treat the sale:
1. As avoided
2. Valid in all of the existing goods