Basadre, Jessa G.

BSA

Assignment 1 RFBT

1. Distinguish between Option money and Earnest money.

- Option money is a consideration given separate from the purchase price, that
gives the probable buyer a right to demand from the seller not to consider any
potential buyers. Also, sale is not yet perfected in this case. While earnest money is a
consideration given that serves as a partial payment from the purchase price and
gives rise to the perfection of the contract.

2. Is a sale of future property valid?

- Sale of future property is when the object of sale is yet to be manufactured,
raised, or acquired by the seller. This is considered as valid only as an executory
contract to be fulfilled by the acquisition and delivery of the goods specified

3. Is a sale of undivided interest valid?

- Sale of undivided interest is when the buyer becomes a co-owner of the thing
sold by the sole owner or by reason of another co-owner selling its portion of the thing.
Such sale is considered valid.

4. Discuss traditio.
- Traditio or delivery is one of the obligations of the seller. Usually delivery is
followed by the acquisition of the buyer on the ownership of the thing, but a mere
delivery isn’t always the case. Actual delivery of the thing can be physical delivery.
Actual or manual delivery of an article sold, but in this case it is not always essential to
the passing of title, the parties may extablished stipulations to the acquisition of
ownership. Then last is proof of delivery where in the buyer provide a written
acknowledgement on the thing already received.

5. Is the execution of public instrument necessary for the validity of the sale of real
property?
- The execution of public instrument, such as the notarized deed on the title of a
land, is equivalent to the thing being delivered. Which tradition is an important
element for a sale to be perfected.

6. Discuss the effect of insufficiency of consideration in the contract of sale.

- Insufficiency of consideration is when means the price is insufficient to satisfy
the real or actual price of the object of the sale. A mere inadequacy of the price do not
have an effect on the validity of the sale. However, if the price indicates defect in the
consent such as when fraud, mistake, or undue influence is present, then the contract
may be annuled because the consent have been vitiated. Also, when price is so low
as to be shocking to the conscience, then the sale may be set aside..

7. Discuss the remedy of the buyer when the seller fails to deliver.
- In case of failure to deliver against the seller, the buyer may (1) cancel the
contract and is relieved of any further obligations under the contract. (2) If the buyer
fully or partially paid for the thing to the seller in which the seller is insolvent, the buyer
can revocer the thing by tendering to the seller any remaining balnce. (3) The buyer
has a matter of right, the remedy of specific performance. Only when the goods are
specific or ascertained and an order for damages would not be an adequate remedy.
(4) The buyer can sue to recover the difference between the contract price and the fair
market price of the goods (at the time that the buyer learned of the breach), plus
incidental and consequential damages, less any costs saved.
8. The buyer acquired a piece of land from the seller on installment for 10 years. As
collateral, the buyer encumbered the property to the seller. The buyer failed to pay 2
consecutive installments, because of which the seller demanded full payment of the
contract price. Can the seller raise the defense that the entire obligation is not yet
due?
- The case with installment is that the buyer pays the purchase price in
installments over time. The buyer may claim the possession of the thing but the seller
retains the ownership unless the buyers pays in full. If the buyer has paid at least two
years of installments, the buyer is entitled to the following rights, to pay, without
additional interest, the unpaid installments due within the total grace period earned by
him, which is fixed at the rate of one month grace period for every one year of
installment payments made. If the contract is cancelled, the seller shall refund to the
buyer the cash surrender value of the payments on the property equivalent to fifty per
cent of the total payments made and, after five years of installments, an additional five
per cent every year but not to exceed ninety per cent of the total payments made.

9. Differentiate Inadequacy of price and simulated price in the contract of sale.

- Inadequacy of price means there is a price stipulated but is insufficient to satisfy
the real or actual price of the object of the sale, but does not affect on the contract of
sale While the latter means that a price is stipulated but in fact the seller intended for
the thing to be given gratuitously or the intention in reality is a donation or some other
act or contract, therfore the sale is void.

10. Seller sold his Mercedes-Benz car to the Buyer amounting to 26 million,
delivering the car from Luzon to Mindanao F.O.B Destination. In transit, lightning
struck car was destroyed. Is the obligation extinguished? What are the rights of the
Buyer and Seller?
- The risk of loss by a fortuitous event without the seller’s fault is borne by the
buyer. Consequently, the buyer’s obligation to pay the price subsists if he has not yet
paid the same or if he had, he cannot recover it from the seller although the latter’s
oblugation to deliver the thing is extinguished by it’s loss.