CHARACTERISTICS OF SALES - Future goods may be subject of sale as well as

mere expectancy and hope. if it is vain expectancy

1. CONSENSUAL or hope,. void
2. BILATERAL - the sole owner of a thing may sell an undivided
3. ONEROUS interest there in
4. COMMUTATIVE - things subject to a resolutory condition may be
5. NOMINATE the object of sale
6. PRINCIPAL

ESSENTIAL REQUISITES OF SALE

The sale of vain hope or expectancy is void
1. CONSENT OR MEETING OF MINDS – There should 1. Sale of things having potential existence- a future
be an offer must be an acceptance of the offer thing not yet existent at the time of perfection of
2. OBJECT OR SUBJCT MATTER - determine thing. the contract may be object of the sale provided
3. CAUSE OR CONSIDERATION – consideration or that it has potential or possible existence and
price certain r its equivalent reasonably certain to come into existence
2 KINDS OF CONTRACT 2. Sale of hope or expectancy- to the condition that
the thing will come into existence. Buying the
1. ABSOLUTE- not subject to conditions. title passes chance. The sale of vain hope or expectancy is
upon delivery of the thing void
2. CONDITIONAL - subject to conditions. title 3. Sale of future goods- goods to be manufacture,
passes upon fulfilment of condition raised or acquired are valid. Executor contract
that will be fulfilled by delivery of goods.
OBJECT OF SALE

1. The thing must be licit and vendor must have the

Art. 1463 The sole owner of a thing may sell an
right to transfer the ownership thereof the time it
undivided interest therein.
is delivered.
2. Not contrary to law moral, public policy and public Art 1465. Things subject to resolutory condition may
order be the subject of contract of sale
3. Must be in commerce of man, must not include
public ownership
4. Only rights which are transmissible or personal FUNGIBLE GOODS
may be the object of sale.
5. Subject must be determinate without a need for - Goods which any unit is treated as the
further agreement equivalent of any other units . Nakikilo/nahahati per
unit.
KINDS OF ILLICIT THINGS - Buyer becomes co-owner of the seller of the
1. illicit per se- of its nature whole ass
2. illicit per accidence- law makes it illegal

RIGHT OF A VENDOR TO TRANSFER OWNERSHIP

GR: you can only sell what you own

XPN: Valid if the right to transfer ownership

occurs at the time the ownership needs to
pass/delivery

- Not required that the seller has the ownership at

the time of perfection of the contract
Contract of sale Contract of agency
A contract where one of A person binds himself to
the parties delivers to do render some service How to determine if sale or barter, if sale is partly in
another a determinate or to do something in money and partly in another thing:
thing in exchange for a representation or on
sum of certain money behalf of another, with 1. Manifest intention of the parties, taking in
consent or authority of consideration the contemporaneous and
the latter subsequent acts of the parties
Buyer receives the goods Agent receives the good 2. If the intention cannot be ascertained. IT IS
as the goods of the
ONLY A BARTER IF the value of the thing
principal who retains his
exceeds the amount of money or its
ownership over them
Buyer has to pay the price The agent has to account equivalent.
for the proceeds of sale
he may make on the No sale if price is not certain or ascertainable
principal’s behalf
Buyer cannot return the Agent can return the Cases when price is considered certain
object as a GR object in case he is
unable to sell the same 1. If parties fixed or agreed certain amount
The seller warrants the Agents makes no 2. If it is reference to another thing certain. This only
thing sold warranty as long as he applies when no specific amount has been
acts within his authority stipulated by parties
and in the name of the 3. If the determination of the price is left to the
seller
judgement of a specified person or persons. This
Buyer can deal with the Agent must act bound
also only applies when no specific amount has
thing as he pleases within instructions of its
principal been stipulated by the parties.

Contract of sale Contract of piece of work

PRICE FIXED BY 3RD PERSON
A contract where one of Contractor binds himself
the parties delivers to to execute a piece of GR: price fixed by 3rd persons specified by parties
another a determinate work for the employer in
binds the parties
thing in exchange for a consideration of a certain
sum of certain money price XPN:
The thing sold is existing Not in existence and
and been subject to sale never would existed if it 1. When 3rd person acts in bad faith, or by mistake
were not for the order of 3rd person fix the price having in mind different
the 3rd party
thing. Court may fix the price
Risk of loss is borne by Risk of loss is borne by
buyer the worker or contractor 2. When 3rd person disregard specific instructions or
Within statute of Frauds- Not within statute of the procedure laid down by the parties fixed an
if price is personal frauds arbitrary price
property is not less than
500 , it must be in writing GROSS INADEQUACY OF PRICE
otherwise unenforceable
GR: VALID

Contract of sale Contract of barter XPN: inadequacy of price may indicate defect in the
A contract where one of One of the parties binds consent such as when fraud, mistake, or undue
the parties delivers to himself to give ne thing in influence is present. in this case the contract may be
another a determinate consideration of the annulled not because of inadequacy but because the
thing in exchange for a other’s promise to give consent in vitiated or when the price is so grossly
sum of certain money another thing inadequate or low as to be shocking to the conscience
of court that no man in his right mind would accept.
EFFECT WHEN THE PRICE IS SIMULATED OPTION CONTRACT

1. VOID - Privilege of a person which gives him the right to

2. If parties really intended for a donation, the sale is buy or sell certain merchandise or property if
void but donation is valid chooses
3. If the parties really did not intend any sale at all, - There is a need for payment of option money
the contract is void and inexistent. which is separate from the purchase price
- It is only when the option is exercised when a sale
Fixing of price by one of the contracting party is may be perfected.
not valid however if the price fixed by one party is
accepted by the other the contract is deemed RISK OF LOSS AND DETORIORATION
perfected 1. If the thing is lost BEFORE perfection- seller bears
EFFECTS OF FAILURE TO DETERMINE PRICE all the risks. Contract is void
2. If the thing is lost AT THE TIME of perfection- The
1. if the contract is executory nothing is paid or contract is void and non-existent.
delivered- contract is without effect , there’s no 3. If the thing is lost AFTER perfection but BEFORE
obligation delivery- risk of loss is borne by the buyer. This is
2. Where delivery has been made- buyer must pay an exception to res perit domino. because buyer
reasonable price. It is generally the market price enjoys the fruit of the thing after perfection
at the time and place fixed by the contract or by - fungible goods- pag natimbang na buyer, pag
law for the delivery of goods. hindi pa, seller
4. If the thing is lost after delivery to the buyer-
STAGES OF CONTRACTS buyer bears the risks.
1. NEGOTIATIONS- indicate interest in the contract SALE BY DESCRIPTION
2. PERFECTION – birth of the contract also known as
meeting of the minds - seller sells things as being of a particular kind,
3. CONSUMMATION- extinguishment of contract buyer not knowing the seller’s representation are
true or false but buyer relies on them as true
RULES FOR AUCTION SALES - contract may be rescinded if the bulk of the goods
1. Sales of separate lots by auction are separate do not correspond with the description
sales SALE BY SAMPLE
2. Sale is perfected by call of hammer
3. Seller or agent may bid in an auction provided - The parties contracted solely with reference to
that such right was reserved and that notice was the sample with the understanding that the bulk
given that the sale is subject to a right to bid on was like it
behalf of the seller and the right to bid by seller is - the vendor warrants that the thing sold and to be
not prohibited by law. delivered by him shall conform with the sample in
kind, character and quality.
GR: Ownership of thing is transferred by delivery
Art. 1482. Whenever earnest money is given in a
XPN: when the parties stipulate that despite the contract of sale, it shall be considered as part of the
delivery, the ownership of the thing shall remain with price and as proof of the perfection of the contract.
the seller until purchaser has fully paid the price
EARNEST MONEY
not accepted offer is called policitation
- money given by the buyer to the seller to bind
bargain
- actually a partial payment and considered proof of 3. In remedy of foreclosure – no further action for
the perfection the recovery of unpaid balance. Any agreement to
- option may become earnest if parties agree the contrary is void. Recto law.

FORM OF CONTRACT OF SALE

GR: May be in any form (written or oral)

XPN: If it is covered by the Statute of Frauds

STATUTE OF FRAUDS

1. sale of personal property at a price not less than

500
2. sale of real property or interest therein regardless
of the price
- If the sale is through an agent, VOID unless
agent’s authority is in writing
- sale is in public instrument and registered before
the registry of deeds
- if in private instrument, valid only between
parties and not against third party
3. sale of property not to be performed within a year
from the date thereof regardless of the nature of
the property and the price

XPN: partial payment or performance is reliable

evidence of the intention of the parties of the
existence of contract

REMEDIES OF VENDOR/SELLER IN SALE OF PERSONAL

PROPERTY PAYABLE IN INSTALLMENTS

1. elect fulfilment upon the vendee’s failure to pay

2. cancel the sale, if the vendee have failed to pay 2
or more installment
3. Foreclose chattel mortgage, if one has been
constituted, if the vendee shall have failed to pay
2 or more instalments

note: these remedies are alternatives and not to be

exercised cumulatively or successively

RIGHT OF VENDOR TO REVOVER UNPAID BALANCE

OF THE PURCHASE PRICE

1. In remedy of specific performance- Collect unpaid

balance
2. In remedy of cancellation – buyer can only
demand the return of payments already made
unless there is a stipulation of forfeiture
 - Officer conducting an execution sale of property
to enforce a court judgement rendered against
the owner

CHAPTER 2 AND 3 EFFECT OF LOSS AT THE TIME OF SALE

PERSONS WHO MAY ENTER CONTRACT OF SALES 1. When the thing is ENTIRELY LOST AT THE TIME
GR: All persons, whether natural or juridical OF PERFECTION- the contract is void and
inexistent because there is no object.
XPN: those who suffer from either absolute or relative 2. When the thing is only PARTIALLY LOST- vendee
incapacity may elect between withdrawing from the contract
or demanding the remaining part paying its
- if buyer and seller were both minor, contract is
proportionate price which is lower in its damaged
unenforceable
or deteriorated state
- if one party is minor voidable
EFFECT OF LOSS IN CASE OF SPECIFIC GOODS

(Goods identified and agreed upon at the time a

GR: contracts entered into by minors and other
contract of sale is made)
incapacitated minors are voidable .
1. If sale is divisible- can be avoided or valid as to
XPN: if it is necessaries such as clothing, medical
those not yet deteriorated
attendance, education, transportation and for
2. If sale is indivisible- can be avoided or continued
sustenance it is valid and must pay reasonable price
but the buyer should be made to pay only the
therefor
proportionate price of the remaining goods.
GR: Husband and wife cannot sell property to each
other

XPN:

1. when a separation of property was agreed upon in

the marriage settlements
2. when there has been a judicial separation of
property

INCAPACITY BY RESON OF RELATION TO PROPERTY

- The guardian, agents and administrators, public

officers , judicial officers and employees and
lawyers
- These persons cannot acquire by purchase even at
a public auction, either in person or through the
mediation of another to prevent frauds

OTHER PERSONS ESPECIALLY DISQUALIFIED

- Aliens who are disqualified to purchase private

agricultural lands
- An unpaid seller, having the right of lien or having
stopped goods in transit
 - When vendor merely points to the thing sold
which shall be thereafter be at the control and
disposal of the vendee
4. Traditio brevi manu- when the vendee already in
the possession of the thing sold by virtue of
another. Buyer has the possession before it is
actually sold.
CHAPTER 4
5. Traditio constitutum possessorium- when the
PRINCIPAL OBLIGATIONS OF THE VENDOR vendor continued in possession of the property
sold not as owner but in some other capacity.
1. To transfer the ownership of the determinate Seller sold the thing but continue to have
thing possession of the thing
2. To deliver the thing 6. Quasi-traditio- delivery by incorporeal things
3. To warrant against eviction and hidden defects (stocks)
4. To take care of the thing pending delivery with
proper diligence
5. To pay for the expenses for the execution and
CONTRACT PF SALE OR RETURN
registration of the deed of sale, unless there is a
stipulation to the contrary 1. Property is sold
2. Buyer becomes the owner of the property on
delivery
TRANSFER OWNERSHIP AND DELIVER 3. Buyer has the option to return the property to
- Vendor does not need to be the owner of the the seller instead of paying the price
thing at the time of perfection but needs to have 4. The option to purchase or return the goods rests
the right to transfer the thing at the time of it is entirely on the buyer regardless of the quality of
delivered. the goods
- Buyer acquires real right or ownership upon 5. Subject to resolutory condition.
delivery actual or constructive
SALE ON TRIAL OR APPROVAL
WAYS OF EFFECTING DELIVERY
- No sale of property yet
1. By accrual or real delivery – when the object is - Approval of buyer is still needed
place in the control and possession of the vendee. - Title shall continue in the seller until buyer’s
2. By constructive or legal delivery approval of the goods or by buyer’s failure to
3. By delivery in any other manner signifying an comply with express and implied conditions of the
agreement that the possession is transferred to contract as to giving notice of dissatisfaction or as
the vendee to returning goods
- Subject to suspensive condition
WAYS OF CONSTRUCTIVE DELIVERY
DELIVERY TO CARRIER
1. By execution of a public instrument – it is
equivalent to an actual delivery only when the GR: Delivery to the carrier is deemed to be a delivery
thing is subject to the control of the vendor to the buyer
- A seller cannot deliver constructively if he cannot XPN: When the bill of lading provides that the goods
deliver even if he wants to are deliverable to the seller or his agent or to the
2. By symbolical tradition or traditio symbolica- order of the seller or his agent, the seller reserves the
parties makes use f token symbol to represent ownership
thing delivered
3. Traditio longa manu- takes place my mere Bill of lading- a contract or receipt for the transfer of
agreement or consent of the contracting party goods
3parties- shipper, consignee, carrier - A contract of sale is bilateral and obligations ar
reciprocal
- If there’s no date set for delivery neither party
incurs delay if neither party is ready to fulfil his
her obligations

DELIVERY OF GOODS LESS THAN THE QUANTITY

CONTRACTED
SALE BY PERSON NOT THE OWNER 1. The buyer may reject goods so delivered
2. Buyer may accets goods in which case he
GR: a seller can only sell what he own. The buyer gets must pay for their price at the contract rate if
only such right as the seller had. he knew that no more were to be delivered or
XPN. the FV of the goods , if he did not know that
1. When the owner of the goods by his the seller is going to be guilty if a breach of
acts/conducts precluded from denying the seller contract
has no authority to sell Note: in any case the buyer cannot be liable for
2. Where the law enables the apparent owner to more than the contract price with respect to the
dispose of the goods as if he were the true owner smaller quantity of goods he received.
thereof. (not applicable in Philippines)
3. Where sale is sanctioned by statutory or judicial DELIVERY OF GOODS MORE THAN QUANTITY
authority CONTRACTED
4. Where sale is made at merchant’s stores, fairs or 1. Buyer may accept the quantity contracted and
markets – to promote stability to business reject the excess
transactions 2. Buyer accepts all goods delivered and be
5. Where the seller has a voidable title which has liable for the price of all of them
not been avoided at the time of sale- buyer EFFECT IF SUBJECT MATTER IS INDIVISIBLE
acquire thing through vices of consent and then - Buyer may reject the whole of the goods,
sell to 3rd person which has no knowledge of such
6. Where the seller subsequently acquires title DELIVERY TO CARRIER ON BEHALF OF BUYER
GR: delivery of goods to the carrier constitutes
PLACE AND MANNER OF DELIVERY OF GOODS delivery to the buyer, whether the carrier is named by
1. whatever is agreed upon by the parties, implied or the buyer or not
express XPN: when contrary intent appears
2. if there’s no agreement, the place of delivery is
that determined by the usage of trade SELLER’S DUTY AFTER DELIVERY TO CARRIER
3. if there’s no agreement and no prevalent usage, 1. To enter into a contract with the carrier on
the place of delivery is the seller’s place of behalf of the buyer as may be reasonable
business under the circumsatnces to deliver the thing
4. seller’s place of business 2. To give notice to the buyer regarding the
5. seller’s residence necessity to insure goods
6. in case of specific goods, where the specific goods
are C.O.D – Collect on delivery
- buyer must pay for the goods before he can obtain
- presumption is that buyer must take the goods possession
from the sellers place of business or residence
- unless otherwise agreed, the seller bears the F.O.B free on board- goods are to be delivered free of
expenses to place the thing in a deliverable state. freight expenses to the buyer to the point where they
- The buyer is not bound to make tender or offer are FOB
payments until seller has complied with his
obligations
FOB Shipping point- ownership passes to the buyer at - The right is exercised either buy obtaining actual
the time the goods are delivered o carrier possession of goods or by giving notice of his
FOB destination- ownership passes to buyer only at claim to the carrier or bailee in possession
the time it has reached its destination - Buyer’s insolvency need not to be judicially
declared.
FAS Free Alongside Vessel
- Seller pays al charges ad bears risks until the
goods are placed alongside the vessel and within
reach of its loading tackle
MEANING OF UNPAID SELLER
- One who has not been paid or tendered the REQUISITES OF RIGHT OF STOPPPAGE IN TRANSITU
whole price who gas received a bill in exchange or
other negotiable instruments 1. Seller must be unpaid
- Payment by negotiable instruments shall produce 2. Buyer must be insolvent
effect when they have been cashed or when 3. Goods must be in transit
through the fault of the creditor they have been 4. Seller must ether actually take possession of the
impaired goods sold or give notice of his claim
5. Seller must surrender negotiable document of
REMEDIES OF UNPAID SELLER sale , if any, issued by carrier or bailee
1. Lien on the goods or right to retain them for the 6. Seller must bear the expenses of delivery of the
price while he is in the possession of them goods after the exercise of the right
2. If buyer is insolvent, a right of stopping the goods
in transit after the seller has parted with the
possession of the goods WHEN GOODS ARE IN TRANSIT?
3. Right for resale is limited by law
4. Right to rescind is limited by law - After delivery to a carrier or other baile and
before the buyer or his agent takes delivery from
LIEN- charge upon real or personal property for the them
satisfaction of debt or duty ordinarily arising by - If goods are rejected by buyer and in possession
operation of law of carrier or other bailee continues

WHEN UNPAID SELLER’S LIEN MAY BE EXERCISED

WHEN GOODS ARE NOT IN TRANSIT?
WHEN HE IS STILL IN POSSESSION OF GOODS
1. Sales without stipulation as to credit - After delivery to the buyer or his agent
2. Expiration of credit term - If buyer or his agent obtains possession of goods
3. Insolvency of the buyer at a point before the destination originally fixed
- If carrier or bailee acknowledges to hold the
WHEN UNPAID SELLER LOSES POSSESSORY LIEN goods on behalf of the buyer
1. Delivery to an agent or bailee of buyer - If carrier or bailee wrongfully refuses to deliver
2. Lawful possession by buyer or his agent the goods to the buyer
3. Waiver of lien

RIGHTS OF SELLER TO STOP GOODS IN TRANSIT

ATTORNMENT (formal transference) BY THE BAILEE
- If unpaid seller already parted with the possession
of goods, he may still exercise the right of - Acknowledgement of the bailee to the buyer that
stoppage in transitu the bailee holds the goods on behalf of the buyer
- The seller may resume possession of the goods - The carrier first acts as an agent of the seller for
while they are in transit when the buyer is or the purpose of carrying out the transit, and in
become insolvent order to terminate the seller’s right to stop the
 transit, the carrier then act as an agent of the
buyer in holding the goods
- The carrier is not allowed to enlarge the seller’s
right by wrongfully refusing to deliver or attorn as
the buyer’s agent S