Module 8 (Sales, Part 6.

5)

Obligations of Vendee:

1. Right of buyer to examine goods;

2. Payment of price by installment;
3. Right to suspend payment of price.
 Art. 1582. The vendee is bound to accept delivery
and to pay the price of the thing sold at the time and
place stipulated in the contract.
If the time and place should not have been
stipulated, the payment must be made at the time and
place of the delivery of the thing sold. (1500a)

 Acceptance
• An offeree’s assent, either by express act or by implication
from conduct, to the terms of an offer in a manner
authorized or requested by the offeror, so that a binding
contract is formed.

• If an acceptance modifies the terms or adds new ones, it is

considered as a counter-offer.
Principal obligations of Vendee

(1) To accept delivery;

(2) To pay the price of the thing sold; and

(3) To bear the expenses for the execution and

registration of the sale and putting the goods in
deliverable state, if such is the stipulation.
Rules on the Obligations of the Vendee

(1) Vendor is not required to deliver the thing sold until the price
is paid nor vendee to pay the price before the thing is
delivered in the absence of an agreement to the contrary;

(2) If stipulated, vendee is bound to accept delivery and to pay

the price at the time and place designated;

(3) If no stipulation as to the time and place of payment and

delivery, vendee – to pay at the time and place of delivery;

(4) No stipulation to the place of delivery – wherever the thing

might be at the moment the contract was perfected; and

(5) If only time for delivery of the thing sold has been fixed in the
contract, vendee is required to pay even before the thing is
delivered to him.
 Art. 1583. Unless otherwise agreed, the buyer of goods
is not bound to accept delivery thereof by installments.
Where there is a contract of sale of goods to be
delivered by stated installments, which are to be
separately paid for, and the seller makes defective
deliveries in respect of one or more instalments, or the
buyer neglects or refuses without just cause to take
delivery of or pay for one more instalments, it depends in
each case on the terms of the contract and the
circumstances of the case, whether the breach of contract
is so material as to justify the injured party in refusing to
proceed further and suing for damages for breach of the
entire contract, or whether the breach is severable, giving
rise to a claim for compensation but not to a right to treat
the whole contract as broken.
Rules on delivery in installments

• General Rule: (Sale of Goods)

 Buyer is not bound to receive delivery of the goods in

installments;
 Thus, buyer is entitled to the delivery of all the goods at
the same time and, is bound to receive delivery of all the
goods at the same time;

 Here, buyer is not required to pay the price in installments;

nor can he be required to make partial payments;
 But parties may agree that the goods be deliverable by
installments, or the price payable in installments.
• Where separate price has been fixed for each installment

 It depends on the terms of contract and circumstances of

case whether the breach thereof is severable or not:

 a. Where breach affects whole contract ― injured party

may sue for damages for breach of the entire contract;

 b. Where breach divisible (severable) ― gives rise only to a

claim for compensation for the particular breach but not
a right to treat the whole contract as broken.
• Where separate price was not fixed for each installment
– a single price was agreed for all installments:

 a. If seller fails to deliver an installment – buyer to choose

between fulfillment and the rescission of the obligation,
with payment of damages in either case;

 b. If buyer fails to pay purchase price within the period

agreed upon – same remedy;

 Note: Rescission is not available for slight or casual

breaches of contract;
 Art. 1584. Where goods are delivered to the buyer,
which he has not previously examined, he is not
deemed to have accepted them unless and until he has
had a reasonable opportunity of examining them for the
purpose of ascertaining whether they are in conformity
with the contract if there is no stipulation to the contrary.
Unless otherwise agreed, when the seller tenders
delivery of goods to the buyer, he is bound, on request,
to afford the buyer a reasonable opportunity of
examining the goods for the purpose of ascertaining
whether they are in conformity with the contract.
 Where goods are delivered to a carrier by the seller,
in accordance with an order from or agreement with the
buyer, upon the terms that the goods shall not be
delivered by the carrier to the buyer until he has paid
the price, whether such terms are indicated by marking
the goods with the words "collect on delivery," or
otherwise, the buyer is not entitled to examine the
goods before the payment of the price, in the absence
of agreement or usage of trade permitting such
examination.
Buyer’s right to examine the goods

• (1) Right of inspection ―

• General rule – buyer is entitled to a fair opportunity to inspect
or examine article tendered to determine whether it conforms
to the contract;
• Buyer may reject – if article/commodity does not correspond
to the kind, quality, condition or amount agreed upon;

• (2) Actual delivery contemplated ―

• Meaning – ownership of goods shall be transferred only upon
actual delivery subject to reasonable opportunity to examine
them to determine if they are in conformity with the contract;

• Right of examination or inspection is a condition precedent to

the transfer of ownership unless there is a contrary stipulation.
• (3) Goods delivered C.O.D./not C.O.D. ―
• Delivery of goods to carrier for the purpose of transmission
to the buyer is deemed to be delivery to the buyer;

• a. While title passes to buyer by the mere delivery to the

carrier, the buyer, unless the goods are sent C.O.D., has
the right to examine the goods before paying;
• Here, right to examine the goods is a condition precedent
to paying the price after ownership has passed;

• b. But even in a C.O.D. sale, buyer is allowed to examine

the goods before payment of the price if it has been
agreed upon or permitted by usage;
Right of examination not absolute

• Buyer does not have an absolute right of examination;

• Refers to the “time of examination”;

• The opportunity to examine should be availed of within a

reasonable time in order that the seller may not suffer
undue delay or prejudice;

 Waiver of right to examine before payment

• Buyer may waive his right of inspection;

• Waiver need not be in expressed terms;
Effect of a valid rejection of goods:

 Goods are proved to be unsuitable or fail to conform to

the contract, buyer may refuse to accept them:

• (a) Buyer is not bound to return them to the seller and it is

sufficient if he notifies seller that he refuses to accept them;

• (b) The option to reject must be exercised and notice of

rejection given to the seller within a reasonable time unless a
definite period is fixed by the contract;

• (c) Receipt of goods under a contract of sale constitutes an

acceptance of them if the right of rejection is not exercised
within a reasonable time.
 Art. 1585. The buyer is deemed to have accepted
the goods when he intimates to the seller that he has
accepted them, or when the goods have been
delivered to him, and he does any act in relation to
them which is inconsistent with the ownership of the
seller, or when, after the lapse of a reasonable time, he
retains the goods without intimating to the seller that he
has rejected them.
What constitute acceptance; Modes

• 1. Express acceptance ― when the buyer, after delivery of

goods, intimates to the seller (verbally or in writing) that he
has accepted them.

• 2. Implied acceptance takes place ―

• a. when the buyer, after delivery of goods, does any act
inconsistent with seller’s ownership (buyer sells or attempts
to sell the goods, or uses, or makes alteration in them as
an owner); or

• b. when the buyer, after the lapse of a reasonable time,

retains the goods without intimating his rejection;

- Buyer failed to interpose objection to the invoices issued

to evidence delivery of the materials ordered;
Delivery and Acceptance are separate acts of different
parties

• 1. Acceptance is not a condition to complete delivery

 Delivery is an act of the vendor; Vendee has nothing to
do with the act of delivery by the vendor;

 Acceptance is an obligation on the part of the vendee;

 Thus, acceptance cannot be regarded as a condition to
complete delivery;
 Seller must comply with his obligation to deliver although
there is not acceptance yet by the buyer.

• 2. Acceptance and actual receipt do not imply the other

 Acceptance of the buyer may precede actual delivery;
 There may be an actual receipt without any acceptance
and there may acceptance without any receipt;
 Art. 1586. In the absence of express or implied
agreement of the parties, acceptance of the goods by
the buyer shall not discharge the seller from liability in
damages or other legal remedy for breach of any
promise or warranty in the contract of sale. But, if, after
acceptance of the goods, the buyer fails to give notice
to the seller of the breach in any promise of warranty
within a reasonable time after the buyer knows, or ought
to know of such breach, the seller shall not be liable
therefor.
• Acceptance is not a bar to action for damages;
 Thus, unless otherwise agreed, acceptance of the goods
by the buyer does not discharge the seller from liability in
damages or other legal remedy (like rescission) for breach
of any promise or warranty in the contract of sale;

• Notice to seller of breach of promise or warranty;

 Art. 1586 requires the buyer, in order to hold the seller for
breach of promise or warranty, to give notice to the seller
of any such breach within a reasonable time;

 Purpose – to protect the seller against the belated claims

which prevent him from making prompt investigation to
determine the cause and extent of his liability;
 Art. 1587. Unless otherwise agreed, where goods are
delivered to the buyer, and he refuses to accept them,
having the right so to do, he is not bound to return them
to the seller, but it is sufficient if he notifies the seller that
he refuses to accept them. If he voluntarily constitutes
himself a depositary thereof, he shall be liable as such.
Where buyer’s refusal to accept is justified

• 1. If buyer’s refusal of goods is rightful (goods are not of

kind and quality agreed upon), he has duty /obligation to
take reasonable care of such goods;

• 2. After buyer’s notice that goods have not and will not
be accepted, the seller must have the burden of taking
delivery of said goods;

• 3. While the goods remain in buyer’s possession, they are

at the seller’s risk;

• 4. If seller failed to take delivery of goods after being

notified, the buyer may resell the goods;
 Here, provisions on resale by seller when buyer is in default
will generally apply.
 Art. 1588. If there is no stipulation as specified in the
first paragraph of article 1523, when the buyer's refusal
to accept the goods is without just cause, the title
thereto passes to him from the moment they are placed
at his disposal.

Effect of buyer’s wrongful refusal to accept

• General rule – delivery of the goods to a carrier is deemed
to be a delivery of the goods to the buyer;

• This rule applies even if the buyer refuses to accept the

goods in case his refusal is without just cause;

• The title passes to the buyer and, thus, he assumes the risk
of loss is from the moment they are placed at his disposal;
 Art. 1589. The vendee shall owe interest for the period
between the delivery of the thing and the payment of the
price, in the following three cases:
(1) Should it have been so stipulated;
(2) Should the thing sold and delivered produce fruits or
income;
(3) Should he be in default, from the time of judicial or
extrajudicial demand for the payment of the price.

Vendee’s liability for interest where payment was made after delivery
• Here, the delivery of the thing sold and the payment of the price
were not made simultaneously;
• The thing sold was delivered first, followed by payment of the price
after the lapse of a certain period of time;
• The vendee is liable to pay interest from the delivery of the thing
until the payment of the price.
• 1. Interest is expressly stipulated (may be oral);
 Agreed rate to be followed; of none – the legal rate applies;
 Art. 1956 – “no interest shall be due unless it has been expressly
stipulated in writing” applies only to contracts of loan.

• 2. Fruit or income received by vendee from thing sold

 Two (2) conditions must exist: (a) that the thing sold has been
delivered; (b) that it produces fruits or income.

• 3. Vendee guilty of default (delay in payment of agreed price)

 Interest is due from the time of judicial or extrajudicial demand
by the vendor for the payment of the price;
 Under Nos. 1 and 2 of Art. 589, no demand is needed;

• 4. Partial payment made of purchase price

 Payment of the balance of purchase price will not obligate the
buyer to pay interest if none of the 3 cases is present;
 Art. 1590. Should the vendee be disturbed in the
possession or ownership of the thing acquired, or should
he have reasonable grounds to fear such disturbance,
by a vindicatory action or a foreclosure of mortgage, he
may suspend the payment of the price until the vendor
has caused the disturbance or danger to cease, unless
the latter gives security for the return of the price in a
proper case, or it has been stipulated that,
notwithstanding any such contingency, the vendee
shall be bound to make the payment. A mere act of
trespass shall not authorize the suspension of the
payment of the price.
When vendee can suspend payment of price

• 1. If he is disturbed in the possession or ownership of the

thing bought; or

• 2. If he has a well-grounded fear that his possession or

ownership would be disturbed by a vindicatory action or
foreclosure of mortgage.

 Art. 1590 states that vendee cannot avail of rescission; but

suspension of payment;
 Reason – Vendor might become the victim of collusion
(secret agreement for a fraudulent purpose) between the
vendee and the third person;
When vendee cannot suspend payment of price even if
there is disturbance in his possession of the thing sold

• 1. If the vendor gives security for the return of the price in

a proper case;
• 2. If it has been stipulated that notwithstanding any such
contingency the vendee must make payment;
• 3. If the vendor has caused the disturbance or danger to
cease;
• 4. If the disturbance is mere act of trespass; and
• 5. If the vendee has fully paid the price.

 There is a mere act of trespass when the third person

claims no right whatever;
 Vendor is not liable thereof;
 Vendee has a direct action against the intruder.
 Art. 1591. Should the vendor have reasonable
grounds to fear the loss of immovable property sold and
its price, he may immediately sue for the rescission of
the sale.
Should such ground not exist, the provisions of
article 1191 shall be observed.

 Sale of real property where vendor has good reasons to

fear the loss of the property and its price;

 Here, there has been a delivery of immovable property but

the vendee has not yet paid the price;

 The rule applies to both cash sales and sales in installments.

 Art. 1592. In the sale of immovable property, even
though it may have been stipulated that upon failure to pay
the price at the time agreed upon the rescission of contract
shall of right take place, the vendee may pay, even after the
expiration of the period, as long as no demand for rescission
of the contract has been made upon him either judicially or
by a notarial act. After the demand, the court may not grant
him new term.

 No law allows automatic rescission of contract for non-payment

of the purchase price;

 Right to rescind is not absolute and the court may extend the
period for payment;

 But if a demand for rescission (by suit or notarial act) was made,
the court can no longer grant the vendee a new period.
 Art. 1593. With respect to movable property, the
rescission of the sale shall of right take place in the
interest of the vendor, if the vendee, upon the expiration
of the period fixed for the delivery of the thing, should
not have appeared to receive it, or, having appeared,
he should not have tendered the price at the same time
unless a longer period has been stipulated for its
payment.

 To recall – In sale of real property, vendor must male a

demand before he can exercise the right to rescind the
contract;
 Sale of personal property (not yet delivered to vendee), vendor
can rescind the contract (a matter of right) if vendee without
any valid cause:
 (1) does NOT accept delivery; or
 (2) does NOT pay the price, unless payment is on a credit period;

 Mere vendee’s failure to comply with the terms of the contract

does not rescind the same; vendor must take affirmative action
indicating his intention to rescind.

 Reason for the different rule: Personal properties (unlike real

properties) have no stable price in the market.

• S sold his piano to be delivered on October 18.

• If on October 18, B does not accept delivery or pay the price
without lawful cause, then S may elect to enforce compliance or
to rescind the contract with the right to damages in either case.