Satura, Shinji L.

BSA 3

Regulatory Framework and Legal Issues in Business

Contract of Sale

Nature Contract of Sale

It is a contract or agreement wherein one party (seller/vendor) obligates himself to

deliver and transfer something to the other party (buyer/vendee/purchaser), who, on his
part, obligates himself to pay the price. Through this, the ownership is transferred when
the buyer pays and the seller delivers.

Characters of Contract of Sale

 Consensual - They are perfected by mere consent without the need for any
additional acts
 Bilateral - Both parties in the contract are bound to fulfill reciprocal obligations
toward each other.
 Onerous- The good sold is conveyed in consideration of the price, and the price
paid is conveyed in consideration of the good.
 Commutative - The good sold is considered to be the equivalent of the price,
and vice versa.
 Nominate - This type of contract has a special designation (i.e., sale).
 Principal - The validity does not depend upon the existence of other contracts.

Kinds of Contract of Sales

 Absolute – If the contract of sale is not subject to any condition and title or
ownership passes to the buyer upon delivery of the thing sold.
 Conditional – If the contract of sale contemplates to a contingency, and in
general, where the contract is subject to certain conditions. The delivery of the
thing sold does not transfer ownership until the condition is fulfilled.
Essential Requisites of a contract of sales

 Consent (or meeting of minds) – This refers to the consent on the part of the
seller to transfer and deliver, and on the part of the buyer to pay.
 Object or subject matter – This refers to the determinate thing which is the
object of the contract.
 Cause or Consideration (Price) – This refers to the price certain in money or its
equivalent such as check or a promissory note.
 Natural elements - Those which are part of the contract even if the parties do
not provide (stipulate) them, and is presumed by law to exists; such as a
warranty of hidden defects or eviction in contract of sale.
 Accidental elements - Those which are established or stipulated in the contract
by the contracting parties as they may deem convenient; such as stipulations,
clauses, terms and conditions

Forms of Contract of Sale

1. Intent or will - Its psychological existence; only conceptual and cannot have
legal value.
2. Expression of such intent or will - Its physical or logical existence; substantial
and can have legal value.

A contract may be in the form of:

 An oral agreement, or those that are partly oral and partly written, which are oral
contract in legal effect.
 A single written agreement signed by both parties, wherein all its terms are in
writing, regardless if it is hand-written or electronically encoded/printed.
 A written agreement with two copies; one signed by one party, the other signed
by the other party.
 A set of signed written agreements which are related and not contradictory.
 A set of unsigned written agreements identified as part of the signed written
agreements.
 Any formal written agreement/s:
 Private instrument/document - has no acknowledgement from a notary
public or any authorized official.
 Public instrument/document - has acknowledgement from a notary public
or any authorized official.