Remedies of Parties for Breach of Contract of Sale Notes: 1.

Rule: caveat emptor; Exception: Torrens System; Rationale- to determine 1) whether the buyer is in good faith, 2) whether the buyer assumed the risks and contingencies attached to the subject matter of sale 2. buyer is not liable for the loss of the thing if there is no formal recission of sale 3. caveat emptor applies to execution sales Remedies in Case of Movables A. Ordinary Remedies of the Seller 1. Movables in General -recission 2. Sale of Goods a) Non-payment of Price by Buyer if ownership is transferred to buyer- action for specific performance if no transfer of ownership to buyer- the seller will held the goods as a bailee for the buyer upon notification to the latter and later on may maintain an action for the price when price is payable on certain day- action for the price; Exception- if the seller has manifested an inability to perform the contract of sale on his part or an intention not to perform it at any time before the judgment in such action b) When Buyer Wrongfully Neglects/ Refuses to Accept Goods Rules:  damages- covers the estimated loss directly and naturally due to buyer¶s breach of contract  if there is an available market for the goods- difference between the contract price and market or current price at the time or time when the goods ought to have been accepted; if no time was fixed for acceptance- at the time of refusal to accept  if buyer repudiates the contract or notifies the seller thereofbuyer shall be liable for labor performed or expenses of material amount incurred by the seller for the fulfillment of his obligations  would-be profits of the seller shall be considered in awarding damages B. Special Remedies of ³Unpaid Seller´ 1. Definition Art. 1525, CC- The seller of goods is deemed to be an ³unpaid seller´ either: a) When the whole price has not been paid or tendered; or b) When a BOE or other negotiable instrument has been received as conditional payment, and the condition on which it was received has been broken due to dishonor of the instrument, the insolvency of the buyer, or otherwise. - It includes an: a) agent of the seller to whom the bill of lading has been indorsed b) consignor or agent who: i. has himself paid ii. is directly responsible for the price c) any other person who is in the position of a seller 2. Rights a) possessory lien i. where the goods have been sold w/o any stipulation as to credit; ii. where the goods have been sold on credit but the term of credit has expired; iii. where the buyer becomes insolvent  Gen. Rule: the unpaid seller¶s right of lien is not affected by any sale, or other disposition of the goods w/ch the buyer may have made; Exceptions: 1) if the seller assented thereto, 2) if a negotiable document of title is issued  Gen. Rule: if partly delivery is effected, he may exercise his right of lien on the remainder; Exceptions: 1) waiver of the lien, 2) waiver of right of retention Instances when Possessory Lien is Lost

1. seller delivers the goods to a carrier or other bailee for the purpose of transmission to buyer w/o reservation of ownership in the goods or the right to possession thereof; 2. buyer or his agent lawfully obtains possession of the goods; 3. by waiver thereof b) stoppage in transitu- can be exercised in case of buyer¶s insolvency; Exception: when negotiable document of title is issued insolvent- who either ceased to pay his debts in the ordinary course of business or cannot pay his debts as they become due, whether insolvency proceedings have been commenced or not When Goods Deemed In Transit 1. From the time when they are delivered to a carrier by land, water, or air, or other bailee for the purposes of transmission to the buyer, until the buyer, or his agent in that behalf, takes delivery of them from such carrier or other bailee; or 2. If the goods are rejected by the buyer, and the carrier or other bailee continues in possession of them, even if the seller has refused to received them back. When Goods Deemed No Longer In Transit 1. If the buyer, or his agent in that behalf, obtains delivery of the goods before their arrival at the appointed destination; 2. If, after the arrival of the goods at the appointed destination, the carrier or other bailee acknowledges to the buyer or his agent that he holds the goods on his behalf and continues in possession of them as bailee for the buyer or his agent; and it is immaterial that further destination for the goods may have been indicated by the buyer; 3. If the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his agent in that behalf.  case to case basis- if the goods are delivered to a ship, freight, train, truck or airplane chartered by the buyer  Gen. Rule: when partly delivery is made, the remainder of the goods may be stopped in transitu; Exception: if the buyer gives up possession of the whole of the goods How Right Exercised 1. obtaining actual possession of the goods, or 2. giving notice of his claim to the carrier or other bailee in whose possession the goods  negotiable document of title must be first surrendered to the carrier or bailee for cancellation to justify the delivery of the goods to the unpaid seller c) special right of resale 1. The goods are of perishable nature; 2. Where the seller expressly reserves the right of resale in case the buyer should make default; or 3. Where the buyer has been in default in the payment of the price for an unreasonable time  applicable even the contract of sale is still executor  Effect: unpaid seller is not liable to the original buyer for the profits he made by such resale but he may recover damages for any loss thereof d) special right to rescind C. Remedies of Buyer 1. Failure of the Seller to Deliver Remedy: specific performance w/o giving the seller the option of retaining the goods on payment of damages (Art. 1598) 2. Breach of Seller¶s Warranty Remedies: i. Accept or keep the goods and set up against the seller, the breach of warranty by way of recoupment in diminution or extinction of the price; ii. Accept or keep the goods and maintain an action against the seller for damages of breach of warranty; iii. Refuse to accept the goods, and maintain an action against the seller for damages for breach of warranty;

iv. Rescind the contract of sale and refuse to receive the goods or if the goods have already been received, return them or offer to return them to the seller and recover the price or any part thereof w/ch has been paid. 3. Suspension of Payments in Anticipation of Breach Grounds: a) disturbance in the buyer¶s possession or ownership of the thing acquired b) reasonable grounds to fear such disturbance c) pending suit over the subject matter Remedies: a) vindicatory action b) foreclosure of mortgage Exceptions: a) cessation of the cause of disturbance or danger b) security for the return of the price c) stipulation  mere act of trespass shall not authorize suspension of the payment of price

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