Benzon A.

Ondovilla

Summary of Videos 3 and 4

Formalities and Formation of Contract of Sale

A sale is a special contract that follows the principle of obligation and contract, and it subject only to the special
rule provided for in the law on sales. The general rule that applies to the form of a contract of sale is that the contract is
valid in any form that it may be entered into provided all the requirements for its validity are presented. It may be oral
but subject to other rules like when the law requires a certain form for the contract to be valid, enforceable, or
convenient to bind third parties. The rule in the statute of fraud provided that sale have to be in written and it is only
applied to executory contracts but it will not apply to contract which are partially. The formation of the contract of sale
is similar to a contract under obligation and contract. There are three stages on how the contract of sale forms:
Preparation, Perfection, and Consummation. The first stage is preparation or policitacion, is an unaccepted unilateral
promise to buy or to sell, and it also follows the rule in obligation and contracts on offer and acceptance. The rule
provided that as long as there is no acceptance there will be no juridical effect, no legal bind, can be withdrawn and it is
not yet converted into a contract. An option contract is a separate contract from the actual contract of sale and it grants
a privilege to one of the parties for which he has to pay consideration to give him the right to buy within the agreed
period at a fixed price. It is a preparatory contract that binds the party who gives the option not to enter into the
principal contract with anyone else but only with the person to whom the contract is given. There is also consent involve
and the object, in this case, is not the thing to be sold under the contract of sale but the option right is the accepted
unilateral offer to buy or sell for a price certain which will the consideration and must include the manner of payment.
Consideration in an option contract is any valuable consideration that is sufficient to support a contract. The remedy to
the breach of an option contract is damages. The right of first refusal is a contractual grant of priority to buy when the
owner decides to sell his property but it is not a contract itself. It is usually attached to a contract of lease and it is an
accessory to a contract. If the owner decides to sell the property it must be offered first to the guarantee but if he
refuses to exercise the right, then the sale to the third person is valid. If the seller violated the right of the first refusal,
then the contract to a third person may be rescinded. The second stage is perfection and the general rule provided that
the contract of sale is perfected from the moment the mind of the parties meets upon the thing which shall be the
subject of the contract and upon the price. The exception is that if the sale is subject to a suspensive condition, then the
contract will be perfected when the condition is fulfilled. In elements, there must be consent, object, and cause. Rules in
auction sale provided that a sale of separate lots by auction are considered as a separate contract of sale, wherein the
sale is perfected by the fall of the hammer. Earnest money shows that the buyer is earnest and given to the seller to
bind him to the contract. Forfeited earnest money is not provided by law but rather a contractual stipulation. In earnest
money, the title passes to the buyer upon delivery while in option money the title remains to the seller until the price is
fully paid. The final stage is the consummation which involves the delivery of the thing and payment of the price.
Sale by a Non-owner
The general rule provided that in a sale by a non-owner of the thing whether it be because his title is void, has no title at
all, or no consent or authority of the owner to sell the thing. This follows the principle of nemo dat quod non habet,
literally meaning "no one gives what they do not have". There are exceptions to the general rule. First, if the owner is
estoppel or precludes by his conduct then the buyer will acquire a good title. Second, in case of sale by the registered or
apparent owner according to the registry laws, then the sale is valid and if the buyer may acquire a better title than the
seller ever had. Third, the sale is sanction either by law or by juridical law. Fourth, in case a non-owner subsequently
acquires title then the title will pass to the buyer by operation of law. Last, in case a co-owner sells the whole property
that he co-owns or a definite portion of that property that does not belong to him then the sale will only affect his share
of those who did not consent to the sale, the buyer then will become the co-owner of that property. The second rule, if
the sale has a voidable title and the buyer buys a thing from that seller then the buyer may acquire good title to that
thing if the buyer is in good faith, paid the consideration, and not aware of the defect in the title of the seller. The rule in
case of perfection is the sale by an owner or non-owner doesn’t matter and the sale is valid.