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UP Sales Reviewer 2007

UP Sales Reviewer 2007

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Sales
Sales

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Categories:Types, Business/Law
Published by: Anthony Rupac Escasinas on Jul 04, 2013
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I. INTRODUCTION
A. Definition of sale
Art. 1458
. By the contract of sale one of thecontracting parties obligates himself to transfer theownership and to deliver a determinate thing, and theother to pay therefor a price certain in money or itsequivalent.A contract of sale may be absolute or conditional.(1445a)The definition in Art 1458 brings about the creation of two sets of obligations: for the seller, (1) to transferownership and (2) deliver possession of the subjectmatter; for the buyer: to pay the price. Obligations,as referred to in the Article, are obligations to give;thus it may be the subject of actions for specificperformance.
(Villanueva)
B. Characteristics of a contract of sale1.
Nominate
– it has a peculiar name and form asprescribed in the law2.
Consensual
– it is founded upon and completedby mere consent of the contracting parties
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(See Article 1475)
Art. 1475.
The contract of sale is perfected at themoment there is a meeting of minds upon the thingwhich is the object of the contract and upon the price.From that moment, the parties may reciprocallydemand performance, subject to the provisions of thelaw governing the form of contracts. (1450a)3.
Commutative
– it is a contract in which each of the contracting parties gives a thing of value andreceives an equivalent4.
Bilateral
it is a contract in which both thecontracting parties are bound to fulfill the obligationsreciprocally towards each other (i.e. the vendorbecomes bound to deliver the thing sold and thevendee to pay the price for it)
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QUIJADA V. CA
: Sale being a consensual contract, isperfected by mere consent, which is manifested the momentthere is a meeting of the minds as to the offer and acceptancethereof on 3 elements: price, subject matter and terms of payment. Ownership by the seller on the thing sold at the time of perfection of the contract of sale is not an element for itsperfection. What the law requires is that the seller has the right totransfer ownership at the time the thing sold is delivered.
5.
Onerous
– as opposed to gratuitous, becausethe thing is sold in consideration of a price andvice versa6.
Principal
– it can stand on its own; unlike anaccessory contractC. Kinds of a contract of sale1.
Absolute
– where the sale is not subject toany condition whatsoever and where title passesto the buyer upon the delivery of the thing sold.2.
Conditional
– where the sale contemplates acontingency and in general, where the contract issubject to certain conditions (usually the fullpayment of the purchase price). Conditions areattached to the contract; the title will only passonce the conditions have been fulfilled.D. Sale as distinguished from other contracts
1. sale vs. contract for a piece of work
2
Art. 1467
. A contract for the delivery at acertain price of an article which the vendor in theordinary course of his business manufactures orprocures for the general market, whether thesame is on hand at the time or not, is a contractof sale, but if the goods are to be manufacturedspecially for the customer and upon his specialorder, and not for the general market, it is acontract for a piece of work. (n)
Art. 1713
. By the contract for a piece of workthe contractor binds himself to execute a piece of work for the employer, in consideration of acertain price or compensation. The contractormay either employ only his labor or skill, or alsofurnish the material. (1588a)
Art. 1714
. If the contractor agrees to producethe work from material furnished by him, heshall deliver the thing produced to the employerand transfer dominion over the thing. Thiscontract shall be governed by the followingarticles as well as by the pertinent provisions on
2
 
CELESTINO V. COLLECTOR
: A factory which habituallymakes sash, windows and doors, and sells the goods to thepublic is a manufacturer. The fact that the windows anddoors are made by it only when customers place their orders and according to such form or combination as suitthe fancy of the purchasers does not alter the nature of theestablishment;
COMMISSIONER V. ENGINEERING
: The test of acontractor is that he renders service in the course of anindependent occupation, representing the will of hisemployer only as to the result of his work, and not as to themeans by which it is accomplished.
1
 
Law on Sales
 
warranty of title and against hidden defects and thepayment of price in a contract of sale. (n)
Art. 1715
. The contract shall execute the work insuch a manner that it has the qualities agreed uponand has no defects which destroy or lessen its valueor fitness for its ordinary or stipulated use. Should thework be not of such quality, the employer mayrequire that the contractor remove the defect orexecute another work. If the contract fails or refusesto comply with this obligation, the employer mayhave the defect removed or another work executed,at the contractor's cost. (n)a) In a contract for work, labor or materials or for apiece of work, the thing transferred is one not inexistence and which never would have existed but forthe order of the party desiring to acquire it; while in acontract of sale, the thing transferred is one whichwould have existed and been the subject of sale tosome other person, even if the order had not beengiven.
(De Leon)
b) This follows the Massachusetts Rule: a contract forthe delivery at a certain price of an article which thevendor, in the ordinary course of his business,manufactures or procures for the general market,whether the same is on hand at the time or not, is acontract of sale. But if the goods are to bemanufactured specially for the customer and upon hisspecial order and not for the general market, it is acontract for a piece of work.
(Baviera)
2. sale vs. agency to buy and sell
3
Art. 1466
. In construing a contract containingprovisions characteristic of both the contract of saleand of the contract of agency to sell, the essentialclauses of the whole instrument shall be considered.(n)
3. sale vs. barter or exchangeArt. 1468
. If the consideration of the contractconsists partly in money, and partly in another thing,the transaction shall be characterized by the manifestintention of the parties. If such intention does notclearly appear, it shall be considered a barter if thevalue of the thing given as a part of the consideration
3
 
QUIROGA V. PARSONS
: In the contract in the instant case,what was essential, constituting its cause and subject matter, wasthat the plaintiff was to furnish the defendant with the beds whichthe latter might order, at the stipulated price, and that thedefendant was to pay this price in the manner agreed upon.These are precisely the essential features of a contract of purchase and sale. There was the obligation on the part of theplaintiff to supply the beds, and, on that of the defendant, to paytheir price. These features exclude the legal conception of anagency or older to sell whereby the mandatory or agent receivesthe thing to sell it, and does not pay its price, but delivers to theprincipal the price he obtains from the sale of the thing to a thirdperson, and if he does not succeed in selling it, he returns it,
exceeds the amount of the money or itsequivalent; otherwise, it is a sale. (1446a)
Art. 1638
. By the contract of barter or exchangeone of the parties binds himself to give one thingin consideration of the other's promise to giveanother thing. (1538a)
Art. 1639
. If one of the contracting parties,having received the thing promised him inbarter, should prove that it did not belong to theperson who gave it, he cannot be compelled todeliver that which he offered in exchange, but heshall be entitled to damages. (1539a)
Art. 1640
. One who loses by eviction the thingreceived in barter may recover that which hegave in exchange with a right to damages, or hemay only demand an indemnity for damages.However, he can only make use of the right torecover the thing which he has delivered whilethe same remains in the possession of the otherparty, and without prejudice to the rightsacquired in good faith in the meantime by a thirdperson. (1540a)
Art. 1641
. As to all matters not specificallyprovided for in this Title, barter shall begoverned by the provisions of the preceding Titlerelating to sales. (1541a)
4. sale vs. dacion en pagoArt. 1245
. Dation in payment, whereby propertyis alienated to the creditor in satisfaction of adebt in money, shall be governed by the law of sales. (n)
Dacion En PagoSale
Presupposes apreexisting debt & extinguishes the debtObligations arecreated from theperfection of thecontractPrice is the value of thething givenFixing of the price ismore freely agreedupon
(Manresa)
5. sale vs. donationArt. 725
. Donation is an act of liberalitywhereby a person disposes gratuitously of athing or right in favor of another, who accepts it.Under Art 1471, when the price of the contract of sale is simulated, the sale may be void but theact may be shown to have been in reality adonation x x x On the other hand, a purporteddonation may have other considerations placedon the donee, thus it becomes critical to
2
 
determine what rule applies (law on sales or law ondonations)
(Villanueva)
6. summation: tests to determine the nature of the contract4 TestsSale = object:transfer of ownershipPiece of Work =object:service(mental,physicallabor)
1. Nature of businessOrdinaryExtra-ordinary2. Existenceof thingDoes notDepends onorder3. MarketGeneralSpecificClientele4. Statute of fraudsCoveredNot covered
4 Tests (butthe ultimatetest is:intention of the parties)SaleAgency to Sell
1. Risk of LossBorne bysellerBorne byprincipal, notagent2. PaymentBuyerPrincipal, notagent3. ExclusiveDealershipRemittance test4. Return of unsold goodsNoneMandatory
SaleBarter
1. Intention of parties2. Value of thing vs. Valueof moneyMoney >thingThing >Money
2 TestsSaleDacion En Pago
1. DebtNonePre-existing2. Stage of contractPerfectionExtinguishment
II. PARTIES TO A CONTRACT OF SALE
A. Capacity of parties
Art. 1489
. All persons who are authorized in thisCode to obligate themselves, may enter into acontract of sale, saving the modifications contained inthe following articles.Where necessaries are those sold and deliveredto a minor or other person without capacity toact, he must pay a reasonable price therefor.Necessaries are those referred to in Article 290.(1457a) 
Art. 1490
. The husband and the wife cannotsell property to each other, except:(1) When a separation of property was agreedupon in the marriage settlements; or(2) When there has been a judicial separation orproperty under Article 191. (1458a)
Art. 1491
. The following persons cannot acquireby purchase, even at a public or judicial auction,either in person or through the mediation of another:(1) The guardian, the property of the person orpersons who may be under his guardianship;(2) Agents, the property whose administration orsale may have been entrusted to them, unlessthe consent of the principal has been given;(3) Executors and administrators, the property of the estate under administration;(4) Public officers and employees, the propertyof the State or of any subdivision thereof, or of any government-owned or controlledcorporation, or institution, the administration of which has been intrusted to them; this provisionshall apply to judges and government expertswho, in any manner whatsoever, take part in thesale;(5) Justices, judges, prosecuting attorneys,clerks of superior and inferior courts, and otherofficers and employees connected with theadministration of justice, the property and rightsin litigation or levied upon an execution beforethe court within whose jurisdiction or territorythey exercise their respective functions; thisprohibition includes the act of acquiring byassignment and shall apply to lawyers, withrespect to the property and rights which may bethe object of any litigation in which they maytake part by virtue of their profession.(6) Any others specially disqualified by law.(1459a)
Art. 1492
. The prohibitions in the two precedingarticles are applicable to sales in legalredemption, compromises and renunciations. (n)
1. absolute incapacity
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