Elements of a Sale

A. Essential Elements
1. Consent of the Contracting Parties
(a) Parties to the Contract
(b) Capacity of the parties
 
Article 1489. All persons who are authorized in this Code to
obligate themselves, may enter into a contract of sale,
saving the modifications contained in the following
articles.
Article 1390. The following contracts are voidable or
annullable, even though there may have been no
damage to the contracting parties:
(1) Those where one of the parties is incapable of giving
consent to a contract;
(2) Those where the consent is vitiated by mistake,
violence, intimidation, undue influence or fraud.
These contracts are binding, unless they are annulled by a
proper action in court. They are susceptible of ratification.
(n)
 
Article 1403. The following contracts are unenforceable,
unless they are ratified:
(i)Those entered into in the name of another person by
one who has been given no authority or legal
representation, or who has acted beyond his powers;
(ii) Those that do not comply with the Statute of Frauds as
set forth in this number. In the following cases an
agreement hereafter made shall be unenforceable by
action, unless the same, or some note or memorandum,
thereof, be in writing, and subscribed by the party
charged, or by his agent; evidence, therefore, of the
agreement cannot be received without the writing, or a
secondary evidence of its contents:
 
1. An agreement that by its terms is not to be performed within a
year from the making thereof;
2. A special promise to answer for the debt, default, or miscarriage
of another;
3. An agreement made in consideration of marriage, other than a
mutual promise to marry;
4. An agreement for the sale of goods, chattels or things in action, at
a price not less than five hundred pesos, unless the buyer accept
and receive part of such goods and chattels, or the evidences, or
some of them, of such things in action or pay at the time some part
of the purchase money; but when a sale is made by auction and
entry is made by the auctioneer in his sales book, at the time of the
sale, of the amount and kind of property sold, terms of sale, price,
names of the purchasers and person on whose account the sale is
made, it is a sufficient memorandum;
 
5. An agreement for the leasing for a longer period than one year, or
for the sale of real property or of an interest therein;
6. A representation as to the credit of a third person.
(iii) Those where both parties are incapable of giving consent to a
contract.
(iv) Absolute
(i) Article 1327. The following cannot give consent to a contract:
1. Unemancipated minors;
2. Insane or demented persons, and deaf-mutes who do not know
how to write. (1263a)
(ii) Article 1328. Contracts entered into during a lucid interval are
valid. Contracts agreed to in a state of drunkenness or during a
hypnotic spell are voidable. (n)
 
2. Subject Matter (Things and Rights) which should be a determinate
thing
Requisites:
Article 1458. By the 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 therefor a price certain in
money or its equivalent.
A contract of sale may be absolute or conditional. (1445a)
Rules on the Object of the Contract of Sale:
Article 1463. The sole owner of a thing may sell an undivided interest
therein. (n)
 
Article 1464. In the case of fungible goods, there may be a sale of an
undivided share of a specific mass, though the seller purports to sell
and the buyer to buy a definite number, weight or measure of the
goods in the mass, and though the number, weight or measure of the
goods in the mass, and though the number, weight or measure of the
goods in the mass is undetermined. By such a sale the buyer becomes
owner in common of such a share of the mass as the number, weight
or measure bought bears to the number, weight or measure of the
mass. If the mass contains less than the number, weight or measure
bought, the buyer becomes the owner of the whole mass and the
seller is bound to make good the deficiency from goods of the same
kind and quality, unless a contrary intent appears. (n)
Article 1465. Things subject to a resolutory condition may be the
object of the contract of sale. (n)
 
Assignment of Credit and Other Incorporeal Rights
Article 1624. An assignment of creditors and other incorporeal rights
shall be perfected in accordance with the provisions of article 1475.
(n)
Article 1625. An assignment of a credit, right or action shall produce
no effect as against third persons, unless it appears in a public
instrument, or the instrument is recorded in the Registry of Property in
case the assignment involves real property. (1526)
Article 1626. The debtor who, before having knowledge of the
assignment, pays his creditor shall be released from the obligation.
(1527)
Article 1627. The assignment of a credit includes all the accessory
rights, such as a guaranty, mortgage, pledge or preference. (1528)
 
Article 1628. The vendor in good faith shall be responsible for the
existence and legality of the credit at the time of the sale, unless it
should have been sold as doubtful; but not for the solvency of the
debtor, unless it has been so expressly stipulated or unless the
insolvency was prior to the sale and of common knowledge.
Even in these cases he shall only be liable for the price received and
for the expenses specified in No. 1 of article 1616.
The vendor in bad faith shall always be answerable for the payment
of all expenses, and for damages. (1529)
Article 1629. In case the assignor in good faith should have made
himself responsible for the solvency of the debtor, and the contracting
parties should not have agreed upon the duration of the liability, it
shall last for one year only, from the time of the assignment if the
period had already expired.
If the credit should be payable within a term or period which has not
yet expired, the liability shall cease one year after the maturity.
(1530a)
Article 1630. One who sells an inheritance without enumerating the
things of which it is composed, shall only be answerable for his
character as an heir. (1531)
Article 1631. One who sells for a lump sum the whole of certain rights,
rents, or products, shall comply by answering for the legitimacy of the
whole in general; but he shall not be obliged to warrant each of the
various parts of which it may be composed, except in the case of
eviction from the whole or the part of greater value. (1532a)
Article 1632. Should the vendor have profited by some of the fruits or
received anything from the inheritance sold, he shall pay the vendee
thereof, if the contrary has not been stipulated. (1533)
 
Article 1633. The vendee shall, on his part, reimburse the vendor for all
that the latter may have paid for the debts of and charges on the
estate and satisfy the credits he may have against the same, unless
there is an agreement to the contrary. (1534)
ARTICLE 1634. When a credit or other incorporeal right in litigation is
sold, the debtor shall have a right to extinguish it by reimbursing the
assignee for the price the latter paid therefor, the judicial costs
incurred by him, and the interest on the price from the day on which
the same was paid.
A credit or other incorporeal right shall be considered in litigation from
the time the complaint concerning the same is answered.
The debtor may exercise his right within thirty days from the date the
assignee demands payment from him. (1535)
Article 1635. From the provisions of the preceding article shall be
excepted the assignments or sales made:
(i) To a co-heir or co-owner of the right assigned;
(ii) To a creditor in payment of his credit;
(iii) To the possessor of a tenement or piece of land which is subject to
the right in litigation assigned. (1536)
3. Cause
Article 1350. In onerous contracts the cause is understood to be, for
each contracting party, the prestation or promise of a thing or
service by the other; in remuneratory ones, the service or benefit
which is remunerated; and in contracts of pure beneficence, the
mere liberality of the benefactor. (1274)
Article 1352. Contracts without cause, or with unlawful cause,
produce no effect whatever. The cause is unlawful if it is contrary to
law, morals, good customs, public order or public policy. (1275a)
Article 1353. The statement of a false cause in contracts shall render
them void, if it should not be proved that they were founded upon
another cause which is true and lawful. (1276)
 
(a) Price Certain in Money
Article 1469. In order that the price may be considered certain, 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.
Should such person or persons be unable or unwilling to fix it, the
contract shall be inefficacious, unless the parties subsequently agree
upon the price.
If the third person or persons acted in bad faith or by mistake, the
courts may fix the price.
Where such third person or persons are prevented from fixing the price
or terms by fault of the seller or the buyer, the party not in fault may
have such remedies against the party in fault as are allowed the seller
or the buyer, as the case may be. (1447a)
Article 1471. If the price is simulated, the sale is void, but the act may
be shown to have been in reality a donation, or some other act or
contract. (n)
Article 1472. The price of securities, grain, liquids, and other things shall
also be considered certain, when the price fixed is that which the
thing sold would have on a definite day, or in a particular exchange
or market, or when an amount is fixed above or below the price on
such day, or in such exchange or market, provided said amount be
certain. (1448)
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. (1449a)
Article 1474. Where the price cannot be determined in accordance
with the preceding articles, or in any other manner, the contract is
inefficacious. However, if the thing or any part thereof has been
delivered to and appropriated by the buyer he must pay a
 
reasonable price therefor. What is a reasonable price is a question of
fact dependent on the circumstances of each particular case. (n)
(b) Earnest Money
Article 1482. Whenever earnest money is given in a contract of sale,
it shall be considered as part of the price and as proof of the
perfection of the contract. (1454a)
(c) Lesion
Article 1470. Gross inadequacy of price does not affect a contract of
sale, except as it may indicate a defect in the consent, or that the
parties really intended a donation or some other act or contract. (n)
B. Natural Element of a Contract of Sale
1) Warranties
2) Subrogation