Study Guide – 4

(Chapter 4)

I. DEFINITION

1. Unpaid seller of goods – one who has not been paid or tendered the whole price.

2. Traditio brevi manu – This mode of legal delivery which happens when the vendee
has already the possession of the thing sold by virtue of another title as when the
lessor sells the thing leased to the lessee.

3. Sale or return – A contract by which property is sold but the buyer (who becomes the
owner of the property on delivery), has the option to return the same to the seller
instead of paying the price.
 Option to ‘sale or return’ rests on the buyer

4. Tradition – a derivative mode of acquiring ownership by virtue of which one who has
the right and intention to alienate a corporeal thing, transmits it by virtue of a just title
to one who accepts the same.

5. Redhibitory defect – a defect in the article sold against which defect the seller is
bound to warrant
 Defect must be hidden; and
 It must be of such nature that expert knowledge is not sufficient to discover it
 If veterinarian acts in bad faith (through ignorance or failure of disclosure), he
shall be liable for damages
*Article only applies tosale of animals

6. Implied warranty of fitness - seller guarantees that the thing sold is reasonably fit for
the known particular purpose for which it was acquired by the buyer
 If bought by description, it should be reasonably fit on its merchantable
quality

7. Eviction – judicial process whereby the vendee is deprived of the whole or part of the
thing purchased by virtue of a final judgement based on a right prior to the sale or an
act imputable to the vendor

8. Caveat Venditor - doctrine that states that the vendor is liable to the vendee for any
hidden faults or defects in the thing sold, even though h was not aware thereof.

II. DISCUSSION

1. Sale by a person not the owner

 Where the owner of the goods is, by his conduct, precluded from denying the
seller’s authority to sell.
 Where the law enables the apparent owner to dispose of the goods as if he were
the true owner thereof
 Where the sale is sanctioned by statutory or judicial authority
  Where the sale is made at merchant’s stores, fairs or markets
 Where the seller has a voidable title, which has not been avoided at the time of the
sale
 Where seller subsequently acquires title.

2. Ways of effecting delivery

 By actual or real delivery
 By constructive or legal delivery
 Execution of a public instrument or document
 Symbolic delivery
 Traditio Longa Menu – takes place by mere consent or agreement of the
contracting parties as when the vendor merely points to the thing sold which
shall thereafter be at the control/disposal of the vendee. place by mere consent
or agreement of the contracting parties as when the vendor merely points to
the thing sold which shall thereafter be at the control/disposal of the vendee.
 Only qualifies if the thing sold cannot be delivered to the vendee at
time of sale
 Traditio Brevi Manu
 Traditio Constitutum Posessorium
 Quasi-Traditio
 By delivery in any other manner signifying an agreement that the possession is
transferred to the vendee

3. Requisites for the exercise of right of stoppage in transit

 Seller must be unpaid
 Buyer must be insolvent
 Goods must be in transit
 Seller must either actually take possession of the goods sold or give notice of his
claim to the carrier or other person in possession
 Seller must surrender the negotiable instrument of title, if any, issued by the
carrier or bailee
 Seller must bear the expenses of delivery of the goods after the exercise of the
right

4. Implied warranties in sale

 Implied warranty as to seller’s title – seller guarantees that he has a right to the the
sell the thing sold and transfer ownership
 Implied warranty against hidden defects or unknown encumbrances – seller
guarantees that the thing sold is free from any hidden defects
 Implied warranty as to fitness or merchantability

5. “Sale or return” distinguished from “Sale on Trial”

Sale or Return Sale on Trial
Sale subject to a resolutory condition Subject to a suspensive condition
Depends entirely on the will of the Depends on the character or quality of
buyer the goods
Ownership of the goods passes to the Ownership remains in the seller until the
buyer on deliveryand subsequent return buyer signifies his approval or
of the goods revert ownership in the acceptance to the seller
 seller
Risk of loss or injury rests upon the Risk remains with the seller
buyer

6. Place of delivery of goods sold (with no agreement)

 Place of delivery is that determined by usage of trade
 When there is also no prevalent usage, the place of delivery is the seller’s place of
business

7. Principal Obligations of the Vendor

 To transfer ownership of the determinate thing sold
 To deliver the thing
 To warrant against eviction and hidden defects
 To take care of the thing, pending delivery, with proper diligence
 To pay for the expenses for the execution and registration of the deed of sale,
unless there is stipulation to the contrary

8. Risk of loss by fortuitous event after perfection but before delivery

 Borne by the buyer (as an exception to the rule of res perit domino)

III. PROBLEMS

1. No. The vendee may choose between a proportional reduction of the price and the
rescission of the contracts, provided that, the lack in the area be not less than one-
tenth of that stated in the contract.

2. No. In the sale of real estate, made for a lump sum and not at the rate of a certain sum
for a unit measure or number, there shall be no increase or decrease of the price,
although there be a greater or less area or number than that stated in the contract.

In this case, the law presumes that the purchaser had in mind a determinate price for
the real state and that he ascertained its area and quality before the contract was
perfected.

3. A. The property sold is immovable, the ownership shall belong to C, the vendee who
first registers the sale in good faith in the Registry of Property (Registry of Deeds).

B. In the absence of registration, B, the vendee who first takes possession in good
faith shall be the rightful owner of the property.
.
In the absence of registration and possession by B and C, the ownership shall pertain
to B, his title being older than that of C.

4. Yes. The remedy of B is to sue S for breach of warranty against eviction. (Art. 1548.)

The vendor shall answer for the eviction even though nothing has been said in the
contract on the subject.
5. Yes. The provision of Article 1524 contain a rule and an exception: the rule is that the
thing shall not be delivered unless the price be paid; and the exception is that the thing
must be delivered though the price be not first paid, if a time for such payment has
been fixed in the contract.

If this period was fixed, the vendor, notwithstanding that such period has not
terminated, nor, consequently, that he has not collected the price, is obliged to deliver
the thing sold.

6. Yes. The validity of the negotiation of a negotiable document of title is not impaired
by the fact that the negotiation was a breach of duty on the part of the person making
the negotiation, or by the fact that the owner of the document was deprived of the
possession of the same by loss, theft. fraud, accident, mistake, duress, or conversion,
if the person to whom the document was negotiated or a person to whom the
document was subsequently negotiated paid value therefor in good faith without
notice of the breach of duty, or loss, theft, fraud, accident, mistake, duress or
conversion.

7. No. A mere expression of opinion, no matter how positively asserted, does not import
a warranty unless the seller is an expert and the opinion were relied upon by the
buyer. Thus, assertion that thing is fine or valuable or better than products of rival
manufacturers are in their nature so dependent on individual opinion that no matter
how positive the seller’s assertion may be, they are not held to create a warranty.

8. Yes, B is already the owner of the property.

The ownership of the thing sold shall be transferred to the vendee upon the delivery
thereof which may be effected in any of the following ways:
(1) By actual or real delivery (Art. 1497.);
(2) By constructive or legal delivery (Arts. 1498-1501

The execution of public instrument is one of the constructive or legal delivery as

equivalent to actual delivery.