Nature and Form of

the Contract
Chapter 1

SALES
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 Concept of Contract of sale
The contract of sale is an agreement whereby one of the parties
(called the seller or vendor) obligates himself to deliver something
to the other (called the buyer or purchaser or vendee) who, on
his part, binds himself to pay therefor a sum of money or its
equivalent (known as the price).
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 CHARACTERISTICS OF A
CONTRACT OF SALE
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 The contract of sale is:
(1) Consensual
because it is perfected by mere
consent without any further
act;
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(2) Bilateral (3) Onerous
because both the contracting because the thing sold is
parties are bound conveyed in consideration of
to fulfill correlative obligations the price and vice versa
towards each other — the seller,
to deliver and transfer
ownership of the thing sold
and the buyer,
to pay the price;
 The contract of sale is:

(4) Commutative (5) Nominate (6) Principal

because the thing sold is because it is given a special because it does not depend for
considered the name or designation in the its existence and
equivalent of the price paid Civil Code, namely, “sale”; and validity upon another contract.
and vice versa. (see Ibid.)
However,
the contract may be aleatory
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 ELEMENTS OF CONTRACT OF SALE
1. Essential Elements/Requisites
a. Consent or Meeting of the minds
b. Object or Subject Matter
c. Cause or Consideration

2. Natural Elements

3. Accidental Elements
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 Stages in the life of Sale
● Negotiation, preparation, or policitation

● Perfection, conception or “birth”

● Consummation or ‘“death”
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 Kinds of Contract of Sales
(a) Absolute
- where the sale is not
subject to any condition
whatsoever and where title
passes to the buyer upon
delivery of the thing sold.
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(b) Conditional
- where the sale contemplates a
contingency and in general, where
the contract is subject to certain
conditions usually the full
payment of the purchase price.
 Contract of sale from any other Contract
Sale Distinguished from other similar Contracts:
SALE VS DONATION
Donation is an act of liberality whereby a
person disposes gratuitously of a thing or
right in favor of another person, who accepts
it.
● Sale is essentially an onerous contract,
whereas donation is gratuitous contract
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SALE VS BARTER
By barter or exchange, one of the parties binds
himself to give one thing in consideration of
the other’s promise to give another thing;
whereas, by sale, one of the parties binds
himself to deliver a thing in consideration of
the other’s undertaking to pay the price in
money or its equivalent.
 Contract of sale from any other Contract
Sale Distinguished from other similar Contracts:
SALE VS AGENCY TO SELL/BUY SALE VS DACION EN PAGO

A contract of agency is one that essentially

establishes a representative capacity in the ● In sale, there is no pre-existing credit,
person of the agent on behalf of the principal, while in dacion en pago, there is a
and one characterized as highly fiduciary. pre-existing credit.

● In sale, title to the goods is transferred to

the buyer upon delivery of the thing sold. ● A sale creates obligations, while dacion
en pago extinguishes obligations.
in agency to sell/ buy, title to the goods is
retained by the owner despite the
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delivery of the goods to the agent.

 Contract of Sale vs. Contract to Sell
● In contact of sale, the title to the property
passes to the vendee upon the delivery of the
thing sold.
● In contact of sale, nonpayment of the price is
a negative resolutory condition.
● In contact of sale, the risk of loss is on the
buyer.
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● In a contact to sell, ownership is, by
agreement, reserved to the vendor and is not
to pass to the vendee until full payment of
the purchase price.
● In contact to sell, full payment of the price is
a positive suspensive condition.
● In contact to sell, the risk of loss is on the
seller.
 Contract for a Piece-of-work

By the contract for a piece of work the contractor binds himself to

execute a piece of work for the employer, in consideration of a
certain price or compensation. The contractor may either employ
his labor or skill, or also furnish the material.
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 Contract of Sale vs. Contract for a Piece of Work
● A contract for a piece of work, labor and materials may be distinguished
from a contract of sale by the inquiry as to whether the thing transferred is
one not in existence and which would never have existed but for the order of
the person desiring it.

● Contract one for a piece of work, not a sale.

● The contract is one of sale if the thing subject of the contract would have
existed and been the subject of a sale to some other person even if the order
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had not been given .

 How it is perfected?
Perfected by mere consent, at the moment there
is a meeting of the minds upon the thing which
is the object of the contract and upon the price.
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 What is earnest money?
Earnest money is something of value given by the
buyer to the seller to show that the buyer is really
in earnest, and to bind the bargain. It is actually
a partial payment of the purchase price and is
considered as proof of the perfection of the
contract.
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 What is Option money?
● Money given as distinct consideration for an
option contract.

● Applies to a sale not yet perfected.

● When the would-be buyer gives option

money, he is not required to buy.
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 Contract of Sale vs. Option of Sale
● In contact of sale, the title to the property
passes to the vendee upon the delivery of the
thing sold.
● In contact of sale, nonpayment of the price is
a negative resolutory condition.
● In contact of sale, the risk of loss is on the
buyer.
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● In a contact to sell, ownership is, by
agreement, reserved to the vendor and is not
to pass to the vendee until full payment of
the purchase price.
● In contact to sell, full payment of the price is
a positive suspensive condition.
● In contact to sell, the risk of loss is on the
seller.
 MEMBERS:
Abecia, Robert Jay
Altubar, Cyrill
Castorico, John
Evangelista, Honey
Ladaga, Princess
Llagas, Lendon
Pelenio, Erwin John
Quisil, Jasper
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 Thank You
for listening
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