NOTES ON CHARACTERISTICS AND ESSENTIAL REQUISITES OF A CONTRACT OF SALE
Definition of a Contract of Sale
 A party obligates himself to transfer
ownership and to deliver a determinate
thing to another who will pay a price
certain in money or its equivalent
Characteristics of a Contract of Sale:
1. Consensual – a contract of sale is
perfected by mere consent as to the
object of the contract and upon the
price
2. Onerous – Price is the valuable
consideration for the delivery and
transfer of ownership of the thing sold
3. Reciprocal – Both the buyer and the
seller have corresponding obligations
to give under a contract of sale
4. Nominate – The law itself gives the
name of a contract of sale
5. Principal – A contract of sale can stand
by itself and is not dependent upon
another contract
Requisites for a valid contract of sale:
1. Consent
2. Object
3. Price
Consent
 Refers to the agreement of the parties
as to the object and the price
 Relates to the legal capacity and
soundness of the mind of the parties to
the sale
 Contract of sale is perfected by mere
consent
 A contract of sale may be made in
writing, by word of mouth, or partly in
writing and partly by word of mouth
Cognition Theory
 In a contract of sale, the seller offers
the thing at a certain price to the buyer
who may or may not accept the offer
 Under the cognition theory,
acceptance is effective only when the
offeror learns about the acceptance
Instances when offer is ineffective:
1. When a counter-offer is made;
2. When a period is fixed for acceptance
and the period expired without the
party signifying his acceptance;
3. When the offer is revoked before
acceptance is made; or
4. When the offer is rejected
Defects in Consent
1. Minority
2. Insanity
3. Intoxication
4. Fraud
5. Violence or force
6. Intimidation or threat
Minority
 Minors are persons below 18 years of
age
 If one of the parties to the contract of
sale is a minor, the contract is voidable
 If both of the parties to the contract of
sale are minors, the contract of sale is
unenforceable
General Rule
 A contract entered into by a minor may
either be voidable or unenforceable
Exceptions
 Instances when a contract of sale
entered into by a minor is valid:
1. When the minor deliberately
misrepresented his age; and
2. When the minor is a buyer of
necessaries
Spouses
 Sale between spouses is void
 Properties between spouses are
treated as conjugal
 The same rule applies to common law
spouses
Page 1 of 3
NOTES ON CHARACTERISTICS AND ESSENTIAL REQUISITES OF A CONTRACT OF SALE
Sanity/Senility
 If one of the parties is insane at the
time the contract was entered into, the
contract is void
 Lunacy is not tantamount to insanity
except if it is grave enough that the
lunatic person is deprived of reason
 A contract of sale entered into by an
insane person during a state of lucid
interval is valid
 Lucid interval is a period when the
insane person is able to think normally
 A contract of sale entered into by a
person who is senile is valid
 Simple senility refers to simple
forgetfulness but the person still knows
what he or she is doing
 A contract of sale entered into by a
person who has senile dementia is
void
 Senile dementia is considered as
second childhood and such person is
already deprived of reason
Stages of Drunkenness:
1. Jucose Stage/Merry Stage
2. Bellicose Stage/Combative Stage
3. Lacrimose Stage/Crying Stage
4. Comatose Stage/Dead-drunk
Intoxication
 A contract of sale entered into under a
state of intoxication is voidable
 Contract is already voidable at the
jucose or merry stage as the person is
already considered intoxicated
Fraud
 Willfully deceiving another person
 Failure to disclose material information
 Misrepresentation of a material fact
Violence or Force
 Actual physical harm is being applied
 Considered a defect in consent
 Renders the contract of sale voidable
Intimidation or Threat
 Harm is being applied mentally
 Considered a defect in consent
 Renders the contract of sale voidable
Price
 The sum to be paid for the property to
be sold
 The price should be certain
 The fixing of the price cannot be left to
the discretion of one of the contracting
parties
 If the price fixed by one of the
contracting parties is accepted by the
other, the sale is considered perfected
 If the price cannot be fixed, the
contract is without any effect
 A disagreement on the manner of
payment is tantamount to failure to
agree on the price
 Inadequacy of the price does not, by
itself, affect the validity of the sale but
may indicate a defect in consent
Earnest Money
 Considered as downpayment
 Forms part of the purchase price
 Contract of sale is already perfected
Option Money
 Merely preliminary, to consider
whether or not to buy or sell the
property
 Does not form part of the purchase
price
 No contract of sale yet
Object
 The object must be existing or with
potential existence
 The object must be determinate or
determinable
 A thing is determinable if it is capable
of being determined without the
necessity of entering into a new
agreement
 The object must be lawful
Thing with Potential Existence
 Contract of sale involving a thing with
potential existence is considered valid
 Subject to the condition that the thing
will come into existence
 If the object does not materialize, the
sale becomes ineffective
Page 2 of 3
NOTES ON CHARACTERISTICS AND ESSENTIAL REQUISITES OF A CONTRACT OF SALE
Sale of Hope
 Sale of a hope is considered valid
 Sale of a vain hope is void
 Sale of a used or fake raffle ticket is an
example of sale of a vain hope
Rules as to loss of the object of a contract
of sale:
1. If the loss of the thing occurs before
perfection of the contract of sale, the
seller bears the loss
2. If the loss occurs after perfection of the
contract of sale but before delivery,
seller bears the loss
3. If the thing is already delivered to the
buyer, the buyer bears the loss
Delivery
 Delivery transfers ownership
 Delivery may be actual or constructive
 Constructive delivery creates only a
presumption of delivery
 Constructive delivery should always be
coupled with placing the thing in the
control and possession of the buyer
Kinds of Constructive Delivery:
1. Symbolic Delivery
2. Long Hand Delivery
3. Short Hand Delivery
Symbolic Delivery
 Delivery of a thing symbolizing
ownership
 Should be coupled with transfer of the
actual thing to the control and
possession of the buyer
Long Hand Delivery
 By mere pointing
 Delivery by mere consent
 Should be coupled with transfer of the
actual thing to the control and
possession of the buyer
Short Hand Delivery
 The buyer is already in possession of
the thing but in some other capacity
 Should be coupled with transfer of the
actual thing to the control and
possession of the buyer
Contract of Sale
 Perfected by mere consent of the
parties as to the object and price
 Transfer of ownership may already be
demanded after the contract is
perfected
 Ownership is transferred to the buyer
upon delivery of the thing
Contract to Sell
 Transfer of ownership is subject to a
condition
 Seller retains ownership over the thing
even if there was prior delivery
 Requires the execution of a
subsequent document for the contract
of sale
Sale or Return
 Buyer is given the option to return the
goods instead of paying the price
 Ownership passes to the buyer upon
delivery but he may revest ownership
to the seller by returning the goods
Sale on Approval
 Ownership is reserved by the seller
 Ownership passes to the buyer if he
signifies his acceptance to the seller or
if he retains the goods without giving a
notice of rejection to the seller
Absolute Simulation
 The parties do not intend to be bound
 Absolute simulation renders the
contract void
Relative Simulation
 The parties merely conceal their true
agreement
 Considered valid as long as it does not
prejudice a third person and is not
contrary to law or public policy
 The parties are bound by their real
agreement
Page 3 of 3