Contract of Sale

Definition: The contract of sale is an agreement whereby one of

contracting parties obligates himself to transfer the ownership of and
deliver a determinate thing to the other who, on his part, binds himself
to pay therefore for a sum of money or its equivalent.

Characteristics:

1) Consensual - in order to be perfected, it requires no other things

other than mere consent and meeting of minds upon the thing to
be object of the contract and the price of such thing.
2) Bilateral - gives rise to reciprocal obligations for both parties: the
obligation of the seller to deliver and transfer ownership of the
thing sold and the obligation of the buyer to pay the price.
3) Onerous - one party performs his obligation with the expectation
that the other party will perform his obligation in return. Therefore
the thing sold is delivered in consideration of the price paid and
vice versa.
4) Commutative - the thing sold is considered the equivalent of the
price sold; except in the case of aleatory contract such as the sale
of hope.
5) Nominate - it is designated in the Civil Code with the special name
“Sale”.
6) Principal - its existence and validity do not depend upon any other
contract.

Essential Elements of a Contract of Sale:

1. Consent or meeting of the minds – refers to the conformity of the

parties to the terms of the contract.
2. Object or subject matter – refers to the determinate thing which is
the object of the contract. The object of the contract must be
determinate, lawful, and within the commerce of men.
Any of the following goods can be object of a contract of sale:
a. Existing Goods –those owned or possessed by seller at the time
of perfection;
b. Future Goods – those to be manufactured, raised, acquired by
seller after perfection of the contract or whose acquisition by
seller depends upon a contingency (Art. 1462)
Even a sale of future goods is valid but only as an executory
contract to be fulfilled by the acquisition & delivery of goods
specified.
 c. Sale of Undivided Interest or Share:
 A sole owner may sell an undivided interest or portion of his
property. (Art. 1463)
 Sale of an undivided share in a specific mass of fungible
goods makes the buyer a co-owner of the entire mass in
proportion to the amount he bought. (Art. 1464)
 A co‐ owner cannot sell more than his share
d. Sale of Things in Litigation
 Sale of things under litigation is rescissible if entered into by
the defendant , without the approval of the litigants or the
court (Art. 1381)
 No rescission is allowed where the thing is legally in the
possession of a 3rd person who did not acted in bad faith.
e. Things subject to Resolutory Condition, such as things acquired
under legal or conventional right of redemption.

Indeterminate Quantity of Subject Matter

The fact that the quantity is not determinate shall not be an
obstacle to the existence and validity of the contract provided it is
possible to determine the same, without need of a new contract.
(Art. 1349).

3. Cause or consideration – refers to the price certain in money or its

equivalent. The term ‘price’ is the money consideration for a sale of
goods. Accordingly, consideration in a contract of sale has
necessarily to be in money.
If the ownership of the goods is transferred for any consideration
other than the money, that will not be a sale but a barter or
exchange. However, consideration can be paid partly in money and
partly in goods. In that case the intention of the parties shall be
observed in order to determine whether the contract is a sale or a
barter.
Similarly, if a person offers the goods to another person without
consideration, it amounts to a gift or charity and not a
sale.Furthermore, payment is not necessary at the time of making
the contract of sale.

Other Elements:

Natural Elements – those which are deemed to exist in certain

contracts, in the absence of any contrary stipulations, like warranty
against eviction.
 Accidental Elements – those which may be present or absent
depending on the stipulations of the parties, like conditions, interest,
penalty, time or place of payment.

Stages in the Contract of Sale

I. Negotiation
II. Perfection - meeting of minds
III. Consummation - when the object is delivered and the price is paid.

Parties to the Contract:

Vendor/Seller:the one obliged to deliver and transfer the ownership of

the thing that he or she sold.

Vendee/Buyer:the one obliged to pay the price certain in money or its

equivalent

Kinds of a Contract of Sale:

 As to presence or absence of conditions:

 Absolute – the contract is not subject to any condition and the

title passes to the buyer upon delivery of the thing sold.
 Conditional – the contract is subject to certain conditions, such as
the full payment of the purchase price. Ownership in this case is
transferred only upon fulfillment of the conditions.

 Other kinds:

 As to the nature of the subject matter – real or personal, tangible or

intangible.
 As to the manner of payment – cash or installment.
 As to its validity – valid, rescissible, unenforceable, void.

Forms of Contract of Sale

 In general there are no required forms for a contract of sale as it may
be entered into in any form, be in writing, oral, or partly in writing and
partly oral, provided that all the essential requisites for its validity are
present.
Exception is made when the contract of sale should be covered by the
Statute of Frauds where the law requires that the agreement must be in
writing; otherwise, the contract cannot be enforced by action (Art.
1403).
Under the Statute of Frauds of the Civil Code, the following contracts
must be in writing to be enforceable:
a) sale of personal property at a price not less than P500;
b) sale of real property or an interest therein regardless of the price
involved; and
c) sale of property not to be performed within a year from the date
thereof regardless of the nature of the property and the price
involved.

Sources of the Law on Sales

Sales are governed by the provisions of the Civil Code:
1. Book IV, Title VI, Articles 1458-1637 (Sales).
2. Title I, Arts. 1156-1422 (Obligations and Contracts).