SHELA MAE C.

CAMPOMANES BSA 2

CHAPTER 1 NATURE AND FORM OF THE CONTRACT

I. Key terms. Define or give the meaning of the following:

1) Contract of sale – one of the contracting parties obligates himself to

transfer the ownership and to deliver a determinate thing, and the

other to pay therefore a price certain in money or its equivalent.

2) Natural elements – those which are deemed to exist in certain

contract, in the absence of any contrary stipulations, such as

warranty against eviction or hidden defects.

3) Sale by description – occurs when a seller sells things as being of a

particular kind, the buyer not knowing whether the seller’s

representation are true or false, but relying on them as true.

4) Fungible goods – refer to as “consumable” goods of which any unit

is, from its nature or by mercantile usage, treated as the equivalent

of any other unit.

5) Conditional sale - sale contemplates a contingency; subject to

certain conditions. Here, the delivery of the thing sold does not

transfer ownership until the condition is fulfilled.

II. Discussion.

1) Distinguish earnest money from option money.

Earnest money is money given by the buyer to the seller to bind the

bargain, meaning, earnest money is part of the purchase price and given

only when there is already a sale. On the other hand, option money is a

distinct consideration for the option contract and applies to a sale not yet

perfected. Option money may become earnest money if the parties so

agree.

2) What remedies are available to a vendor in sale of personal

property payable in instalments? In each of the remedies

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discussed, is the vendor allowed to recover the unpaid balance of

the price?

Remedies available to a vendor in sale of personal property

payable in instalments:

 Exact fulfilment of the obligation, should the vendee fail

to pay;

 Cancel the sale, should the vendee's failure to pay cover

two or more instalments;

 Foreclose the chattel mortgage on the thing sold, if one

has been constituted, should the vendee's failure to pay

cover two or more instalments. 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.

Yes, the vendor is allowed to recover the unpaid balance of the

purchase price when he exercises his rights. Right of the vendor to

recover unpaid balance of purchase price: (1) remedy of specific

performance, (2) remedy of cancellation and (3) remedy of foreclosure.

3) Give the characteristics of a contract of sale. Explain at least three

of them.

A contract of sale has six (6) characteristics; consensual,

commutative, principal, bilateral, onerous and nominate. Consensual

means the contract is perfected by mere consent of the parties, onerous

means that the thing sold is given in consideration of the price and lastly

commutative, meaning, the thing sold is considered equivalent of the price

paid.
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4) Under the Statute of Frauds, what contract of sale must be in

writing to be enforceable by court action?

Under Statute of Frauds, contract of sale of land, sale of any

goods over $500 in value, and contracts of a year or more in length

must be in writing to be enforceable by court action.

5) Give at least three distinctions between a contract of sale and a

contract of agency.

(1) In sale, the buyer pays the price; the agent delivers the price

which in turn he got from his buyer.

(2) In sale, the buyer after delivery becomes the owner; the agent

who is supposed to sell does not become the owner, even if the property

has already been delivered to him.

(3) In sale, the seller warrants; the agent who sells assumes no

personal liability as long as he acts within his authority and in the name of

the principal.

III. Problems. Answer the questions that follow. Explain briefly the rule or reason

for your answer. A mere YES or NO answer is not allowed.

1) S sold to B certain goods. At the time of the sale, S is not the owner of the

good. May there be a valid sale to B?

Yes, the contract of sale is valid.

According to Article 1459, the thing must be licit and the vendor

must have a right to transfer the ownership thereof at the time it is

delivered. Right of vendor to transfer ownership is sufficient if right exists

at time of delivery.
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In this case, the object is legal and the right to transfer ownership is

still sufficient because when S is known to be not the owner of the certain

goods, the contract is not yet perfected. It is not required that the vendor

must have the right to transfer ownership at the perfection of the contract.

Therefore, the contract of sale is valid.

2) Same example. The only problem now I that the goods sold have not yet

been identified at the time of the contract. May there be a valid sale to B?

No, the contract of sale is void.

According to Article 1460, second paragraph, subject matter must

be determinable, otherwise the contract is void.

In this case, the good sold to B have not yet been identified at the

time of the contract and it is clearly stated in the article that the object or

the subject matter must be determinable. Therefore, the contract of sale is

void.

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?

Yes, the sale is valid.

According to Article 1463, the sole owner of a thing may sell an

undivided interest therein.

In this case, S sold a portion of land to B without specifying which

particular land is being sold. Here, S is selling an undivided interest in the

thing and making B a co-owner of the land. Therefore, the contract of sale

is valid.
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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 be a valid contract of

sale between them?

Yes, there will be a valid contract of sale.

In Article 1458, one of the essential elements of a contract of sale

is the cause or the consideration which is the price certain in money or its

equivalent. According to Article 1469, in order that the price may be

considered certain, if there is no specific amount has been agreed upon, it

shall be sufficient that it be so with reference to another thing certain, or

that the determination thereof be left to the judgment of a special person

or persons or in cases under Article 1472 .

In this case, both parties have not agreed upon a definite price at

the time of sale. The price of a land S sold to B can be determined with

reference to another thing certain. Therefore, the contract of sale is valid.

5) Same example. The only problem in the case is that the price was fixed

only by S. Is the sale valid?

Yes, the contract of the sale is valid if the price fixed by S is

accepted by B.

According to Article 1473, the fixing of the price can never be left to

the discretion of one of the contracting parties. However, if the price fixed

by one of the parties is accepted by the other, the sale is perfected.

Therefore, if the price fixed by S is accepted by B, then the sale is

perfected and the contract of sale is valid.

SHELA MAE C. CAMPOMANES BSA 2

CHAPTER 2 CAPACITY TO BUY OR SELL

I. Key Terms. Define or give the meaning of the following:

1. Necessaries - things which are needed for sustenance, dwelling,

clothing, and medical attendance, in keeping with the financial capacity of

the family of the incapacitated person.

2. Compromise - an agreement between opposing parties to settle a

dispute or reach a settlement in which each gives some ground, rather

than continue the dispute or go to trial.

II. Discussions. Discuss the following:

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

The general rule is the husband and wife cannot sell property to

each other meaning the contract of sale is void except when a separation

of property was agreed upon in the marriage settlements or when there

has been a judicial separation of property under article 191.

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

According to Article 1489, all persons who are authorized in this

Code to obligate themselves, may enter into a contract of sale. The

general rule is all persons, whether natural or juridical, who bind

themselves by contract have also legal capacity to buy and sell except if

the otherwise states that a party is incapacitated.

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III. Problems. Answer the questions that follow. A mere YES or NO answer is

not allowed.

1. B, a minor, bought a pair of imported shoes worth P3, 000 from a

department store. Can F, father, cancel the sale on the ground of the

minority of B?

It depends.

A minor can legally enter into a contract. However, whether the

contract is enforceable will depend on a number of factors. This right does

not belong to the other contracting party; it is only at the discretion of the

minor. So while the contract is still valid, the minor can basically leave it as

he or she sees fit. According to Article 1489, second paragraph, where

necessaries are those sold and delivered to a minor or other person

without capacity to act, he must pay a reasonable price therefor.  

In this case, a pair of imported shoes worth P3, 000 may be a

necessary for the minor. The minor’s and his or her parents’ economic

status can be considered in determining whether an item is considered a

necessary. Therefore, the minor must pay a reasonable price.

2. 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. Has 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?

Yes, C has the right to question the sale of H’s property to W.

According to Article 1490, the husband and the wife cannot sell

property to each other because generally, a sale between a husband and

wife is void ab initio except when a separation of property was agreed

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upon in the marriage settlements, or when there has been a judicial

separation of property under article 191.

In this case, H and W are married couple and the situation does not

state that they are separated, so, the selling of property between them is

void. Therefore, C has the right to question the sale of H’s property to W in

order to have the said property answer for H’s indebtedness to him.
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CHAPTER 3 EFFECTS OF THE CONTRACT OF SALE WHEN THE THING

SOLD HAS BEEN LOST

I. Key Terms. Define or give the meaning of the following:

1. Specific goods - goods identified and agreed upon at the time a

contract

of sale is made.

2. Divisible contract – a contract containing agreements one of which can

be separated from the other so that one part may be valid or enforceable

although another is void or so that a right may accrue on one and not on

another.

II. Discussions. Discuss the following:

1. When is a thing sold considered lost?

A thing is considered lost when it perishes or goes out of

commerce or disappears in such a way that its existence is unknown or it

cannot be recovered.

2. Give the effect in case the thing sold is

a. Lost totally b. Lost partially

If the thing sold is lost totally, there being no object, the contract will

be then inexistent and void. However, if the thing sold is only lost partially,

the vendee may choose between withdrawing from the contract and

demanding the remaining part paying its proportionate price.

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III. Problems. Explain or state briefly the rule or reason for your answer. A mere

YES or NO answer is not allowed.

1. S sold to B 100 bags of sugar at P70.00 per bag for a total price of P70,

000. S was able to deliver only 98 bags because the two (2) bags were

stolen without the fault of S. Has S the right to insist that B pay for the 98

bags since there was no fault in his part and only two (2) bags are

lacking? What rights, if any, are given by law to B?

No, S has no right to insist that B should pay for the remaining bags

of sugar.

In Article 1493, the law gives B, the vendee, the right if the thing

should have been lost in part only, B may choose between withdrawing

from the contract and demanding the remaining part, paying its price in

proportion to the total sum agreed upon.

In this case, the thing sold is a mass of specific goods and since

the vendee is given the rights by law, S, the vendor, therefore, has no

right to insist that B should pay for the 98 bags of sugar.

2. Same example. The price was fixed at P70, 000 for the whole lot,

irrespective of the number of bags which happens to be also 100 bags.

Will your answer be the same? Why or why not?

No, my answer will not be the same.

According to Article 1480, any injury to or benefit from the thing

sold, after the contract has been perfected, from the moment of the

perfection of the contract to the time of delivery, shall be governed by

articles 1163 to 1165, and 1262. This rule shall apply to the sale of
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fungible things, made independently and for a single price, or without

consideration of their weight, number, or measure. Should fungible things

be sold for a price fixed according to weight, number, or measure, the risk

shall not be imputed to the vendee until they have been weighed, counted,

or measured and delivered, unless the latter has incurred in delay.

In this case, partly of the thing sold is stolen without the fault of S.

Since it was agreed by both parties the fixed price of the goods and the

vendor is innocent of the incident, therefore, B, the buyer will bear the

loss, meaning, B will pay the whole P70, 000 irrespective of the number of

bags.