wi ot ha (Luzon) Manila 7339344/73479 ‘ Mindanao) Cagayan Excel Professional Services, Management Firm of Professional Review and Visayas) Bacolod City (034) 4346214 * Cebu City (032: Je‘Gro City (085) 3092073 * Inc. Training Center (PRTC) 1 (649) 5453807 00 ge 21 LARTREY 2380048 ATTY. ONG/LOPEZ 103 * Calamba, Lagu! yavao since 1977 BUSINESS LAW : CPA REVIEW BL- SALES, AGENCY, AND CREDIT TRANSACTIONS. OCTOBER 2015 or oe TECTURE NOTES age Rewes cae surang-periace, asbjet tothe provslons of aevooR jobtGo2 = “nuvet [obLices NATURE AND FORM OF THE CONTRACT. ‘contracts. (1475) jaw governing the form of Bi ere ie offer must be certain b.. parties are face to foce ~ Contract af sale. one of the contratting parties obligates Parties Steptance be absolute. quelled himself to Qeansfer_tha oemarahla 9a te deliver a — Beequane constitute couster afer, ‘Meterminate thing, and the other to pay therefore a BL Negotiated, thru phone - As if the parties are price certain In money of its enulvalent. (1459) 4 foce saitttac of ale may be absolie or condone. <4 5 fue) - nt endi te eedence or they telegram ~ Offeror TI GAT HG Ut ROE Yee EAA corse oF has Knowledge of the acceptance» Contract of sale | — agency to sell-7#erd ‘FO Bpthe offeree, yf Buver pay the price Fee eect orice to | CEO" g, “Subject to auspensive condition - Conation | . his principal fulfilled yV Baver become the owner] Agent. does Fat become Tre ership of the ‘thing sold shall be 0? ater delvery the owner ater deivery to Fe eet the. vendee upon the actual OF (seller — resume ny « Z a they |— 4 a + A contract for the delivery at a-certain pret of fn article whieh the vendor in the ordinary course of his Dusiness manufactures. or procures for. the general market, whether the seme(is on hand at the time or fat, 1s contract of-sale, but'if the goods are to be ‘manufactured specily for the customer and upon his Special order ‘2d not forthe general mapket, ts Contract for a passe ofswork (1467) fe im. a hth | There is warranty by the | No warranty by the agent |. Constructive delivery thereof. (1477) , However, the parties may stipulate that ownership. in. the Thing shall not, pBss.to the purchaser until ne has fully paid the orice. (1478) 2 2 ae ctermnate tnd wc s me object oT he contract Pre stpe thing must ge lick And the vendor must have 9 Tit to eanster ner wnershp thereof atthe time (1459), + Gadde hich may.be the object of 3 Bxang wood, cunts dots to be manufactured, } contract of sale assessed by the b, ‘Future goods, Face DL wiork. > sized, oF aauted bythe sel, MOF] geet 8 “parecon oe contact of sale, There may | pea plete a contract of sale of, goods, whose spec Fete acausiton by the selr depends” vpen jimane = EST | I anny ih pr, ay, vo Nath Covered by slatula—af | Not covered by statute of ° {a62) Tenge having’ 9 potential exsstence [renee tne bate ot fraud: provided it wil be may be the object of the contract of sale: The | personal property #2 PSOD| performes within” one J efficacy sof the sale of 9 mere hops or Gr_imare-or sale of real | year, ae Gxpectency is deemed Subject to the condition |property regardless” of | —~ 1 teat the thing will come into. existence. The mount i | pol te, gh tenn ope or expectancy 1S vO. a Tr ghee 48H ‘Schoo! of thought re pe pect 4" Mascachusetts Rule = If speci the order of [-_Emplie rei sparati Emptio sp span’ wear t's conte foc aeegrept\oternse [Steet anenpeted tied See Nene tet another is 9 contract fr Gi ohlipnie setting) | te. expested tTing does [Tt ” does | not » mater = 2. New York Rule ~ Ifthe thing’already Rig arate, [NOt materialize the sale | whether the expected pew if otitis 2 contrac fora piece of wo oteffective, jue | materialized or net; what 3 Lyne tang MESS oT o| 18 Important is that: the Engush Rule lt-materal is more valuabie, it is @ contract of sale; if sill Is more valuable, i. 1s. 3 SHS contract fora piece work : Characteristics of a contract of ier Refers to future thing that which is expected — ‘hope Itself validly existed. Refers tocpresent thing for cestainly the hope or expectancy already exists ! 1.- Consensual ’ caer 3 2. Bilateral: : + A-thing ‘is determinate When it is particularly gi Opera est Tee or physical seareaated from. ali 5. Nominate ¥ ye uP | be: determinate Is satisied «fat the time. the 6. Principal 7 P contract fs entered, into, the thing 1s capable of : Being" made determinate without _ the ‘Elements of contract of sales 1. Consent, between the parties. (1460) 2 The sole owner’ of thing’ may sell ap, undivided > Tinie sobjes fesohta Insane (2463) ae the object of he contract of sale, (1465) ale Moment, * Inthe cose.otfungible goods, there may be a sale there is ‘pon-the thing wich yg of anundivided share of a specific. mass, though 2 22S.. qpanpbebjeet oF the, contenck-80d upon the price... (eyy.the seller DURpOrS to sell and the buyer to buy 2 From that moment” the parties may reciprocely Vy definite nlmber, WelghC'St rMebsure"Br TNE: goods Page 1 of 18 www, prte,com.ph BL.1904 zEXCEL PROFESSIONAL SERVICES, INC mete 388, and though the. numba, measure of the goods in the mass Is Wodelesmined. By'such a sale the buyer becomes Sriner in common of such a share of the mass as Ing Ramber, weight or measure bought beprs to te sumber, weight or meagure of the mass fil the ‘Mass contains less than the number, weight of ‘measure bought, the buyer becomes the owner of the whole mass’ and the seller is bound to make (900d the deficiency. from_goods of the same Kind we aun, unless @ contrary intent appears, 3. Gause or Consideratich (Price) - price certain in money os ‘equivalent "Gross Inagequtcy of price. does nat afet + contact of sale, eucept as tray nate Stet ibe asset or HAE Ue prey Fal ne eration or some ater 0a enact (1450) ja. Tefung’ of te price con neve be fet tne OF etn tan othe Couey grit ‘However, if the price by one of the parties is accepted by the other, the sale. is perfected (1473) + Where the price cannot be determined or in any fther manner, the contract. Is. Inefcacious ctever the wing or any gut thera hes eer 4 Beaeiverss: toad approoristed bythe buyer he ‘rust pay # Teasapasie prce therefor What it 6 reasonable price is @ question of fact dependent on the creumstances of each particular case. fer + the pice s simulated. the sole is amid) but the act may be. shown to have Beer in fealty 9 donation; some other ator conta. (1471) + When price certo J}. 2° Speatic omount agreed upon 7b. Wespente omauntspreed upon fF erty wih etree to anoter thing eran 2. Determination of price was left 10 the Jvegment of tad ners. ‘Should $veh person or persons be unable or unwiing to fx tthe Contract sna be: fice, unless the parues subsequertiy agree’ upon the pie IP te third person or persons acted n bad faith or by mistake, the courts tony fm the pce Where such third person. or persons tre prevented trom fing the pice oF terms by foult of the ler or the Dover, tme party not fut may have such ‘remedies, ogainatthe partyin faut as are alloned the Sele or the buyer, a8 the case may Be, (1463) 3. Te ance’ of secunties, ard Hinulds, and ater things shall also. be considered ert, wen the price fixe is tha which the thing sold would have on ® definte J+ Gaytoein« partclar exchange or marie, ‘or when an ariount 1S THE above or below fhe pice-00 such day, oF heh exchange certain. (1473) tt the consideration of the contract consists partly In money, end party another hing (1468) +E Manes intention ofthe parties 8. fsuen intention does not clearly apne, 1. barter value ofthe thing > money pai 3) Sate t value ofthe thing =< money pald- anit) 1e case of a sale by auction: ‘goods are put up for sale by auction. is, the subject. of aGsanavate id a Woight or - rrarket, proved sale amount -be 719! one onttact-oF sad, b. “A sale by auction Is perfectdd when the ‘auttioneer announces its perfectibn by the fal of the hammer, or in other-custorpa ‘uch, ahnouncement.Is ma " 3 the au ty fe as ne sd may ‘auction figg_been. announced to be without «. Arfignt to bid may be reserved expressly by or ‘on behalf of "the .seler, unless. otherwise provided by la or by stipulation 4. . Where notice has not been given that a sale by ‘auction Ig subject to aright t9.b on behalf of ‘the seller it shall not be lawful for'the seller to ‘id himself oF to employ or induce any person to bidet such sole on his behalf or for the fauctioneer, to employ or induce any person to bid at such sale on behalf of the seller or knowingly to take: any bid from the seller or any person employed by him. Any sale contravening’ this rule may, be treated as fraudulent by the buyer. (1476) bromine (1479) iereralpromae to, buy ané sell reciprocally ceed ao nr cert uniatra promise to buy 73. &._ eceped uniatral promise to Sel hes + Balitallan«"Unacceted unite! promise or ery | fort arta a tng. ee Kings of i aa ss given in cintract of + Whenever earnest money sole, It shall be considered as (1482) + Risk of oss (1480), 1. Fungitle end non fungible things sola independently and for a single price, of without consideration of their weight, number, or measure. | 4% Lost before perfection’ Seller (Res pent | ornino) . Lost of the time of perfection + Seller (Res ent domino) ewer le rene © After perfection Gut before delwery - Buyer (exception to Res perit domino) After delivery = Buyer (Res perit domino) 2. Fungibie things be sold for'a price fixed according to weight, number, or measure. General rule: Vendor shall suffer (Exception to the tule at vende. anal utler the ro oss after perfection but shebdelwacy) Exception er tar oseds nave been weighed, counted, or measured and delivered, unless the latter has incurre in delay + Unless otheniise agreed, the’ goods remain at the ransferred to-the buyer, but when thegwnershi "whether actual delivery has been he. (2504) Wher the goods hes been made to the buyer or to a baile fer the buyer, in pursuance of the contract and the ownership in the goods has edn fetalned py the seller merely to secure Hiea-performanee. by the buyer of is obligations under {the contract, the goods ore atthe buyer's gk Pom made or not; ex ea) ot page ne ine of such devery: ‘Wherfectusl delivery hes been delayeo enough i fait of either the buyer or seller the goods are at the risk ofthe party in faut ‘+ Effects of the contract when the thing sold has been lost (1493) a, IC at the Ume the contract of sale is perfected, jneWe |L PROFESSIONAL SERVICES, INC. —— “ thing whieh i the abject ofthe contract entirely lost, the ra val okheut-ory cata emt Sonia shal be wana oy D. BUT IF the thing should nave been(iost in part only, the vendee may choose between from the contract and demanding the remaining part, Paying Its price in proportion to the total sum bated upon : «Where the pares purpoit'a sae of specie good and the goods without the knowledge of the seller have pershed ‘in pat or Rave wooly ott mater part. 40'deerorated in uly os to be Substantially changes In character the buyer oy at his option treat the sale: (1494) 1 As wvlcedr gr 2, As valid lof the existing goods or in so mut therect es nave hot deeoratedy and 8 Binding the buyer fo pay the agreed price for the goods mn which the twneroip wl pos, the sale was divisible. -. + Sale.of good by description, Sample of Description - the contract may be rescinded the Bulk ofthe obs gelvereo donee ond with the description or the samole 1b. Sample and description ~ the bulk of goods must correspén with the admple and the description. The buyer shall have 8 reasonable opportunity of comparing tne Bulk with the description or the semole. o) open tent qr ceape ae eae + Forms “General rule - a cohtract of fale may be mace jn writing, or by word_of mouth, /ar partly In writing and. Bary by word ot mouth fr tay be ifved tom the » Eondvet ofthe parties. (1483) - - Exception: a. Contract covered by statute of fraud (1403) 1. Sale of property not to be performed within a <1” year from the making thereof; 9" 2, Sale of real property or ef 8 Interest therein regerteos athe pte, 3," Sale of personal property at a price not less than five hundred pesos (P500) b. Contract where form is required for validity f 1. Sale of a piece of land or any interest therein fs through an agent, the authority of the latter Shall be tn writing. (1874) — + Recto law 2. Ina contract of sale of personal property the price ‘of which is payable In installments. — b,, ‘Contracts purporting to be leases of personel ppeoperty with option to buy, when the lessor has Geprived the Jessee of the possession or enjoyment cof the thing |. the vendor may exercise any of the following remedies native and not cumulative or successive remesy) $ Exact fulfilment of the obligation, should the ¥ vendee foto pay; 2. Cancel the sale, should the vendee'sfallure to pay u cover two or more installments. Stipulation that the Installments or rents paid shafl not be roturned tothe vendee or lessee shall be valid insofar a5 the seme may not be unconscionable under the circumstances, (1486) 4 Foreclose the chattel mortgege on the thing sold, i Ene has been ‘constituted, should. the vendee's failure to pay cover two oF more installments, in this case, he shall have: no further action against the purchaser to recover any unpaid balance of the AM price. Any egrgement to the contrary shallbe.vaid ‘+ The expenses for the i ‘the-anle shail be borne by the yendar, unless there is Fage 3 of 18 2 stipulatién to the contrary. (1487), + The expropriation of property for governed by special laws, (1488) public use Maceda Law - Realty Installment Buyer Act (R-A- 6552) Coverage ~ All transactions or, contracts involving the sale or financing of real estate on installment payments, Including jadominivi but Senonts where tre pUyer hes pold at lenst (wo-veare ot the buyer is entitled to the following Apnte in case he defaults in the payment of succeeding installments: (Sec 3) nett or rs tay a, To pay, without Interest, the unpaid ithin the total grace period earned K instalments ove by him which is hereby fixed at the rate of one month Installment se” period. for every vane year of once AS side rovided, That this right shall De, Payrsed by tne Buyer only once in every five years of the life Of the contract and its extensions, if any. b. Ifthe contract is cancelled, the she cas! or the Sn ehe oreery eau fen aayments mada, 20d, after fea mut not to-exeeed ninety per cent of ‘avery vear bi the total payments made. Provices, That the actual ~ cancellation of the contract shall toke place after fhirty_davs_from_recelpt by the buyer of the potica_of cancellation “or_—the demand for rescission of the contract py anotarial_act_and, ‘upon full payment of the cash surrender value to the buyer Bonn payments, deposits oF options on the contract Shall Ge included im the computation of the total umber of installment payments made i In-eace where Aware paig. the sell fram the cate the instalment becamedue. (0%)! It the buyer fails to pay the Installments due at the expiration of the grace period, the seller may cancel ‘rom receipt by the buyer of nd tor rescisslon.of the contract by a fatarial act. (Sec 4) + The buver-shab have the-riGht fo sell his nants or assign the same to_anothet person oto reinstate the sgntract-by updating the account during the grace pid elore_actval cancellation of 3 ‘The deed of sale or assignment shall be one by notarial act. (See 5) +The buyer shall have the right to pay Jn adv _ installment or the full unpaid balance of the price any time without interest and to have such full Dayment’ of the purchase price annotated in. the certificate of title covering tne property. (Se¢ 6) i + Any stipulation in any contract hereafter entered Into shall be null and void. (See 7) ean at CAPACITY TO BUY OR SELL ‘ General rule: All persons who can_obligate them may enter into a contract of "sale (1 recites are Nae ah etd Go 8 neat Cie person wine apy (2c hi At BOY 8 reasonable price therefor, sa Exception: Sale of, oroperty inc redemption, comprorhises and renut the following: priest At A ae 1 tne tbat oe he wt cong other, except: (1490) ‘a. When @ separation of the marriage settlement ke