St.

Vincent de Ferrer College of

Camarin, Inc.
SVFC Compound,San Vicente Ferrer St., Area D, Brgy 178, Camarin
Caloocan City Tel. No. 6682575; Email
Address:st.vincentdeferrercollegeofccc@yahoo.com

BL 4 – SALES, AGENCY LABOR AND OTHER COMMERCIAL LAWS

MIDTERM EXAMINATION

NAME: RANNAH JANE S. RAYMUNDO

YEAR/COURSE: 5TH YEAR ACCOUNTANCY

I. Define or give the meaning of the following:

Contract of sales

- A sales contract is an agreement between a buyer and seller covering the sale and
delivery of goods, securities, and other personal property.

Natural elements

- Natural elements are those elements than have been produced by nature, without the
intervention of man. Natural elements can be grouped in: Water. Air. Soil.

Sales by description

- A sale that is made without the buyer seeing the goods and having only a description of
them from the seller: In sales by description, there is an implied condition that the
goods shall correspond with the description in the catalogue.

Fungible goods

- In economics, fungibility is the property of a good or a commodity whose individual

units are essentially interchangeable, and each of its parts is indistinguishable from
another part. ... Other fungible commodities include sweet crude oil, company shares,
bonds, other precious metals, and currencies.

Conditional sale
 - The sale of goods according to a contract containing conditions, typically that ownership
does not pass to the buyer until after a set time, usually after payment of the last
installment of the purchase price, although the buyer has possession and is committed
to acquiring ownership.

Necessaries

- The essentials required for subsistence or survival. It includes all that is reasonably
needed for maintaining a certain lifestyle. Necessaries depend on one's age, status, and
the norms of a particular society. It includes medical attention and education.

Compromise

- An agreement between two or more persons, who, to avoid a lawsuit, amicably settle
their differences, on such terms as they can agree upon. ... A claim connected with a
criminal charge cannot be compromised.

Specific goods

- The goods specifically identified at the time a contract of sale is made, e.g. a shirt made
of cotton and with a Mickey Mouse cartoon on it.

Divisible contract

- Type of contract in which each party's obligations are independent of those of the other,
and each party can demand performance from the other without performing its own
part. Contracts of employment, for example, are usually divisible: the employee must
work even if the salary is not paid on time.

II. Discussions:

Distinguished earnest money from option money.

- Under certain circumstances, the earnest money is refundable to the buyer. Like earnest
money, option money is negotiated between buyers and sellers.

What remedies are available to a vendor in sale of personal property payable in installments?
Is the vendor allowed to recover the unpaid balance of the price?

- The vendor of personal property payable in installments may exercise any of the
following remedies: (A) Exact fulfillment of the obligation, should the vendee fail to pay;
 (B) Cancel the sale, should the vendee’s failure to pay cover two or more installments;
(C) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should
the vendee’s failure to pay cover two or more installments. In this case, he shall have no
further action against the purchaser to recover any unpaid balance of the price. Any
agreement to the contrary shall be void.

Under the Statute of Frauds, what contract of sale must be in writing to be enforceable by
court action?

- Under the Statute of Fraud, the following contracts must be in writing, otherwise they
cannot be enforced in a court litigation: (a) Sale of personal property at a price not less
than P500.00; (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.

Are husband and wife allowed to sell property to each other?

Husband and wife cannot sell property to each other except when a separation of property
is agreed upon in the “ante-nuptial” contract and:
- A. When their property relationship is one absolute community of property
- B. When one of the spouses is still a minor
- C. When there is a pending annulment of their marriage
- D. When one of the spouses is accused of infidelity
- E. When there is a judicial separation of property

Under the law, who may enter into a contract of sale?

- In general all persons who may enter into a simple contract may also enter into a
contract of sale. All persons either natural or juridical is given the legal capacity to buy
and sell. However there are those given by law an absolute and relative incapacity to
enter into a contract of sale.

When is a thing sold considered lost?

- If at the time the contract of sale is perfected, the thing which is the object of the
contract has been entirely lost, the contract shall be without any effect.

Give the effect in case the thing sold (a) Lost totally; and (b) Lost partially.

- Extinguishment of Real Obligation

An obligation to give may be extinguished by the loss of the thing if:

- The thing due is determinate or specific.

 - The loss of the thing occurs without the debtor's fault.
- The debtor has not incurred delay.
However, an obligation may not be extinguished if:
- The law does not allow it.
- The stipulation does not allow it.
- The nature of such obligation requires the assumption of risk.
- The obligation to give arises from criminal offense.

III. Problems: Explain briefly the rule or reason for your answer.

1. S sold to B certain goods. At the time of the sale, C is not the owner of the goods. May
there be a valid sale to B?
- A contract of sale of goods is a contract whereby the seller transfers or agrees to
transfer the property in goods to the buyer for a money consideration called the price.

2. Same example. The only problem now is that the goods sold have not yet been
identified at the time of the contract? May there be a valid sale to B?
- The goods that form the subject of a contract of sale may be either existing goods
owned or possessed by the seller or future goods.

3. The property sold by S is a portion of a parcel of land without indicating the specific
portion thereof. May there be a valid sale to B?
- The property sold by S is a portion of a parcel of land without indicating to the specific
portion thereof. Yes, in Article 1463, the sole owner of a thing may sell an undivided
interest therein. It makes the seller and the buyer co-owners of the land.

4. Same example. The only problem now is that S and B have not agreed upon a definite
price at the time of sale. May there still be a valid contract of sale between them?
- The only problem now is that S and B have not agreed upon a definite price at the time
of sale. May there still be a valid contract of sale between them? No, the price is not
certain.

5. Same example. The only problem in the case is that the price was fixed only by S. Is
the sale valid?
- A written instrument is amended or rectified so as to the parties when by reason of
mistake, fraud, inequitable conduct, or accident, the instrument fails to express such
agreement or intention.

6. B, a minor, bought a pair of imported shoes worth P3, 000.00 from a department
store. Can F, farther cancel the sale on the ground of the minority of B?
- It depends, when the minor has no capacity to act. Therefore, the minor is oblige to pay
a reasonable price.
7. H and W are husband and wife. After selling his property to W, H borrowed a big
amount of money from C. It appears that H is now bankrupt. Gas C the right to
question the sale of H’s property to W in order to have said property answer for H’s
indebtedness to him?
- “All persons who are authorized in this Code to obligate themselves, may enter into a
contract of sale” As a general rule, all persons who can bind themselves by contract also
have the legal capacity to buy and sell.