Definition of Contract of Sale

 A contract wherein the seller or vendor obligates himself to deliver something to the buyer,
purchaser, or vendee who, on his part binds himself to pay therefor a price which is a sum of
money or its equivalent

Elements of a Contract of Sale

Essential Elements of a contract of sale
 Those without the presence of all, no sale can validly exist

1. Consent or meeting of the minds

o refers to the consent on the part of the seller to transfer and deliver and on the part of the
buyer to pay a price certain
 In sale, there is no need for delivery for the contract to be perfected unlike other
contracts which require delivery, an example of which is a contract of loan
o parties must have legal capacity
o when there is merely an offer by one party without the acceptance of the other, there is no
consent
 acceptance of payment by seller is an indication of consent
2. Object or subject matter
o Refers to a determinate thing
 so that buyer and seller will not differ in regard to thing sold
3. Cause or consideration
o Refers to price certain in money or it's equivalent
 Price is the cost at which something is obtained in exchange for something else
 There can be no sale without price
o Technically, the cause in a sale is, as to the seller, the buyer's promise to pay the price, and
as to the buyer, the seller's promise to deliver the thing sold

Natural Elements
 Deemed to exist in certain contracts in the absence of contrary stipulations
a. Warranty against eviction
b. Hidden Defects

Accidental Elements
 May be present or absent depending on the stipulation of the parties
a. Conditions
b. Interest
c. Penalty
d. Time or place of payment

Two Kinds of contract of Sale

1. Absolute
 sale is not subject to any condition whatsoever
 Title or ownership passes to the buyer upon delivery of the thing sold
2. Conditional
 Contract subject to certain conditions
 Delivery of the thing sold does not transfer ownership until condition is fulfilled
Characteristics of a contract of sale
1. Consensual - perfected by mere consent
2. Bilateral - both parties are bound to fulfill obligations reciprocally
3. Onerous - thing sold is conveyed in consideration of price and vice versa
4. Commutative - thing sold is considered equivalent of price and vice versa
5. Nominate - given special name in civil code
6. Principal - does not depend validity on another contract

Requisites regarding object

1. Determinate
 a thing is determinate when it is particularly designated or physically segregated from all others
of the same class
 It is sufficient that the thing is determinable or being made determinate without the necessity of a
new or further agreement between the parties
2. Licit or Lawful
 Should not be contrary to law, morals, good customs, public order, or public policy
 If subject matter of sale is illicit contract is void
 There are two kinds of illicit things
 Illicit per se (of its nature)
 Illicit per accidens (because of provisions of law declaring it illegal)
3. Not impossible

Note: Object of contract must be within the commerce of men. Things outside the commerce of
man include those of public ownership and those common to everybody

On sale of rights
- All rights which are not intransmissible or personal may be the object of sale
o Example of rights which may be object of sale
 right of usufruct
 right of conventional redemption
o Example of rights intransmissible by law
 right to vote
 right to public office
 marital and parental rights
o Example of rights personal in character
 right to be a partner in a partnership
 right to act as an agent of another

Right of vendor to transfer ownership

GR: One can only sell what he owns. Vendor must be the owner or at least be authorized by the owner
of the thing sold. It is a well-known principle that nobody can dispose of that which he does not have.
XPN: It is sufficient if the vendor has the right to sell the thing at the time when ownership is to
pass
o Even a future thing not existing at the time the contract is entered into, may be the object of
sale provided it has a potential existence, that is, it is reasonably certain to come into
existence as the natural increment of something in existence already belonging to the seller,
and the title will vest in the buyer the moment the thing comes into existence
Goods which may be the object of sale
1. Existing goods - goods owned or possessed by the seller
2. Future goods - goods to be manufactured, raised or acquired
 Even a future thing not existing at the time the contract is entered into, may be the object if
sale provided it has a potential existence, it is reasonably certain to come into existence as
the natural increment of something belonging to the seller
 The title will vest in the buyer the moment the thing comes into existence

Note: Can you sell hope?

Yes. The sale of hope is valid even if the thing hoped does not come into existence, so long as the
hope is not in vain. If the hope is in vain (ex. falsified sweepstakes ticket which can never win), the
sale is void

Sale of something undivided

1. By sole owner
 The sole owner of a thing may sell the entire thing; or only a specific portion thereof; or an
undivided interest therein and such interest may be designated as an aliquot part of the whole
2. By co - owner
 Can dispose of his share even without the consent of the other co-owners

Can you sell something undivided?

o Yes. For example, a seller can sell the undivided half of a piece of land without specially
designating or identifying the portion sold, in which case the buyer and seller become co-owners.
As co-owner, either may transfer or convey the undivided half of the land.
o The owner of a mass of goods may sell an undivided share, provided the mass is specific or
capable of being made determinate. By such sale, the buyer becomes a co-owner with the seller
of the whole mass in the proportion in which the definite share bought bears to the mass.

Fungible Goods
 goods where any unit is treated as the equivalent of any other unit, individual units are essentially
interchangeable and each part is indistinguishable from another part

Sale of thing subject to resolutory condition

Resolutory condition
 an uncertain event upon the happening of which the obligation (or right) subject to it is
extinguished. Once the resolutory condition happens, seller cannot transfer ownership.

Sale vs. Contract of Agency to sell

SALE
buyer receives the goods as owner
buyer has to pay the price
buyer, as a general rule, cannot return
the object sold
CONTRACT OF AGENCY TO SELL
agent receives the goods as goods of the
principal who retains ownership over them
agent simply has to account for the proceeds of
the sale he may make on the principal's behalf
agent can return the object in case he is unable
to sell the same to a third person
seller warrants the thing sold agent makes no warranty for which he assumes
personal liability as long as he acts within his
authority and in the name of the seller
buyer can deal with the thing sold as he agent must act and is bound to the instructions
pleases, being the owner of his principal

Sale vs. Contract for a piece of work