SPECIAL CONTRACTS

A. SALES

1. GENERAL PROVISIONS

i. Definition

- agreement; whereby one obligates himself to transfer ownership and deliver

determinate thing; to other who pays price certain in money or its
equivalent

a. Thing

1. must be Licit

2. Determinate

i. particularly designated or physically segregated from

others of same class

ii. thing is capable of being determined without new or further

agreement at time contract was entered

3. Kinds

i. existing goods owned or possessed by seller

ii. future goods – goods to be manufactured, raised or

acquired by seller after perfection of sale

iii. goods having potential existence

iv. mere hope or expectancy; provided thing will come to

existence

v. goods whose acquisition depends on contingency which

may or may not happen

vi. goods subject to resolutory condition

b. Vendor

- must have right to transfer ownership at time of delivery

c. Price

i. Interpretation if paid Partly Money and Partly Thing

GR – intention of parties prevail

EX – (intention does not appear) deemed a barter; if value of

thing as price exceeds amount of money as price

ex – EX – deemed sale; if value of thing as price is less than

money as price

ii. Certain

GR – sufficient it be so with reference to another thing

certain OR determination thereof is left to a specified
person

EX –
 1. specified person cannot fix OR unable to fix OR
unwilling to fix; contract is inefficacious;
UNLESS – parties subsequently agree upon price

2. third acted in bad faith or by mistake; courts may fix

price

3. third was prevented from fixing price due to fault of

seller or buyer; party not at fault has remedies
against party at fault as allowed to seller or buyer

iii. Gross Inadequacy

GR – not affect validity of sale

EX – constitute a defect in consent OR parties really

intended a donation or some other contract

iv. Simulated

GR – sale is void

EX – act may be shown to be in reality a donation or other

contract

v. Certain: Securities, Grain, Liquids, Etc.

- when price fixed is that which the thing sold would have; on
a definite day or particular exchange OR when amount is
fixed above or below prince on such day or exchange
provided certain

vi. Fixing Price Left to Discretion of One Party

GR – never

EX – if price fixed by one party is accepted by the other; sale

is perfected

vii. Price Not Determined via Rules

GR – sale is inefficacious

EX – if thing or part thereof was delivered and appropriated

by buyer; he must pay reasonable price therefor

viii. Earnest Money

- deemed part of price and proof of perfection of contract

ii. Kinds

a. Absolute

b. Conditional

iii. ART 1463

- what sole owner of thing can sell

GR – undivided interest in thing

 EX – fungible good; sale of undivided share of specific mass though seller
purports to sell and buyer to buy definite number, weight or
measure of goods; though such NWM is undetermined

ex – EX – if mass is less than such NWM; buyer becomes owner of the

whole mass and seller is bound to make good deficiency; UNLESS
contrary intention appears

iv. ART 1467

- sale v. piece of work

a. Sale

- agreement; whereby seller for a price; delivers thing he procures

or manufactures for the general market; WON on hand

b. Piece of Work

- agreement; whereby seller for a price; delivers thing he procures

or manufactures specially for a customer upon special order;
not for general market

v. Perfection

a. General

- at moment of meeting of minds upon thing and price

b. Sale by Auction Rules

1. Sale in Lots

- each lot is subject to a separate contract of sale

2. Perfection

– auctioneer announces perfection by fall of hammer OR other

customary manner

GR – until such announcement; auctioneer may withdraw

goods offered and bidder may withdraw his bid

EX – auction was announced without reserve

3. Right of Seller to Reserve to Bid

GR – may be made expressly by seller or agent

EX – provided otherwise by law or stipulation

i. when notice not given that sale by auction is subject to

right to bid on behalf of seller – it is unlawful for seller
or agent to bid OR for auctioneer or agent to bid on
behalf of seller or agent; OTHERWISE – sale is treated
fraudulently by buyer

vi. Transfer of Ownership

GR – upon actual or constructive delivery of thing to vendee

EX – parties stipulate that ownership shall not pass until purchaser full pays price
 vii. Nature of Promise to Buy and Sell

- reciprocally demandable

- accepted unilateral promise to buy or sell determinate thing for a price – is

binding on promissor if promise is supported by consideration other than
price

viii. Right to Rescind Sale by Description OR by Sample

a. Sale by Description OR by Sample

- may be made; if bulk of goods delivered do not correspond with

description or sample

b. Sale by Sample AND by Description

- may be made; if bulk of the goods delivered do not correspond with

description and sample

ix. Form

GR – in writing OR oral OR partly in writing and partly oral OR inferred from

conduct of parties

EX – sale in accord with Statute of Frauds

x. Remedy of Vendor in: Sale of Personal prop in Installments OR Lease of Personal

prop with Option to Buy

a. exact fulfilment; if vendee fails to pay OR lessor deprives lessee with

possession or enjoyment of thing

b. cancel sale; if vendee fails to pay 2 or more intallments OR lessor deprives

lessee with possession or enjoyment of thing

c. foreclose chattel mortgage if there is one; if vendee fails to pay 2 or more

intallments OR lessor deprives lessee with possession or enjoyment of
thing; with oblig to waive right to recover unpaid balance from purchaser;
agreement to contrary is void

*STIPULATION OF FORFEIT OF INSTALLMENT OR RENT PAID

- valid insofar as not unconscionable

xi. Expenses for Execution and Registration of Sale

GR – borne by vendor

EX – contrary stipulation

2. PARTIES

GR – all persons authorized to obligate themselves

EX –

i. necessaries sold and delivered to a minor or person without capacity to act;

latter has oblig to pay price

ii. husband and wife cannot sell to each other; EXCEPT –

a. if separation of property was agreed in MS

 b. if there is judicial separation of property ART 191

iii. those who cannot acquire by purchase; even at public or judicial auction; in
person or agent: (PAGE OJ)
a. guardian; to property under his guardianship

b. agent; to property whose administration was intrusted to him; ULESS –

if with consent of principal

c. executors and administrators; to property of the estate under

administration

d. public officers and employees; to property of the state whose

administration was intrusted to them OR judges and government
experts who take part in sale

e. justices, officers and employees connected with administration of

justice; to property and rights in litigation before court they exercise
their functions OR lawyers; to property and rights object of any litigation
they take part due to profession

f. others specially disqualified by law

iv. PAGE OJ in legal redemption, compromises and renunciations

3. OBLIGS OF VENDOR

i. Transfer Ownership

ii. Deliver Object

GR –

a. Delivery; General

- object is placed in control and possession of vendee

b. Delivery; Sale via Public Doc

- execution of doc is equivalent to delivery; if from doc the contrary

does not appear or cannot be inferred

c. Delivery; Sale of Movable

1. by delivery of keys of place where object is stored and kept

2. by mere consent of parties; if object cannot be transferred to

possession of vendee at time of sale OR if vendee already
had possession due to any reason

d. Tradition Constitutum Possessorium

e. Delivery; Sale of Incorporeal

GR – execution of doc is equivalent to delivery; if from doc the

contrary does not appear or cannot be inferred

EX – (GR not applicable) by placing titles of ownership in

possession of vendee OR by use of vendee of his right with
consent of vendor

f. Delivery; Seller Delivers Goods to Carrier Named by Buyer or Not

 GR – delivery to carrier is deemed delivery to buyer if purpose is to
transfer; seller is oblig to contract with carrier on behalf of
buyer; OTHERWISE – and goods are lost or damaged in
course of transit – buyer can decline to treat delivery to carrier
as delivery to himself OR hold seller liable for damages

EX – ART 1503, PAR 1, 2, 3 OR contrary intention appears

g. What to Deliver

EX – (no oblig to deliver) if vendee has not paid price OR no period for payment
is fixed in contract

iii. Warrant of Object

1. Express

- affirmation of fact or promise by seller relating to object; if natural

tendency is to induce buyer to purchase and buyer purchases
object relying thereon

2. Warranty as to Value of Object OR Seller’s Opinion

- deemed a warranty only if made by seller as an expert and buyer relied

thereon

3. Implied

GR –

a. seller has right to sell at time ownership is to pass and buyer

shall from that time have and enjoy legal and peaceful
possession

b. thing is free from any hidden defects or encumbrance not

declared or known to buyer

EX –

a. contrary intention appears

b. this rule is not applicable or render liable a sheriff, auctioneer,

mortgagee, pledge, or others professing to sell by authority
of fact or law; for sale of thing a third has legal or equitable
interest

iv. ART 1503

- right of vendor to reserve ownership or possession of object – may be made if

expressly provided in contract upon fulfilment of certain conditions; even if
delivery is already made

1. Ownership

GR – goods shipped and bill of lading (BOL) deliverable to seller or

agent OR order of seller or agent – seller reserves
ownership

EX – if other than for form of BOL; ownership would have passed to

buyer upon shipment – seller’s property on goods deemed only for
purpose of securing performance by buyer of his oblig
 2. Possession

- goods shipped and BOL deliverable to buyer or agent; BUT

possession of BOL is retained by seller or agent – seller
reserves possession

3. Seller Draws on Buyer Price and Transmits Bill of Exchange (BOE) and
BOL to Buyer to Secure Acceptance ir Payment of BOE

GR – buyer bound to return BOL; if he does not honor BOE and if

he wrongfully retains BOL he acquires no added right

EX – BOL provides that goods are deliverable to buyer or to his

order OR is indorsed in blank OR to buyer by consignee;
one who purchases in GF for value the BOL or goods from
buyer obtains ownership in goods though BOE was not
honored; if purchaser received delivery of BOL or goods
without notice of facts making transfer wrongful

v. ART 1524

- seller is deemed an unpaid seller:

a. whole price is not paid or tendered

b. BOE or negotiable doc is received as conditional payment and such

condition is broken due to dishonor of the doc OR insolvency of
buyer OR otherwise

v. Rights of Unpaid Seller

a. Ownership Passed to Buyer

1. right of lien on goods OR right to retain such for price; while in

possession of goods regardless as agent or bailee for buyer

GR –

i. goods sold without stipulation to credit

ii. goods sold on credit but term credit has expired

EX – (unpaid seller loses right to lien)

i. he delivers to carrier or bailee for purpose of transmission

to buyer without reserving ownership or possession

ii. buyer or agent lawfully obtains possession

iii. waiver

*unpaid seller does not lose right to lien due to a

judgment obtained for price of goods

*PARTIAL RIGHT TO LIEN

GR – unpaid seller made part delivery – he can still exercise

right to lien on remainder

EX – part delivery made to show intent to waive lien or

retention

*ART 1535
 - seller’s exercise of his right of lien or stoppage is not
affected by sale or disposition made by buyer;
UNLESS seller assented OR if a negotiable doc is
issued for goods; negotiated prior or subsequent to
notification to carrier or baliee issuing such doc of seller’s
claim of lien or stoppage; to a purchaser in GF for value

2. right of stoppage in transitu if buyer is insolvent; after he parted with

possession

- seller can resume possession of goods; at any time while in

transit; he is entitled to rights as if he never parted with
possession

i. by obtaining actual possession of goods

ii. by giving notice of his claim to carrier or bailee

- notice must be given to person in actual possession

OR principal at time that principal can prevent
delivery to buyer; WITH – oblig of carrier or bailee to
redeliver goods to or in accord to directions and
borne by seller EXCEPT – if negotiable doc
representing goods issued by carrier or bailee –
redelivery is deemed made only upon first
surrender of doc for cancellation

*TRANSIT

GR –

i. FROM time delivered to carrier by land, water or air

OR bailee for purpose of transmission to buyer;
UNTIL buyer or agent takes delivery

ii. if goods rejected by buyer and carrier or bailee

continues in possession even if seller refused
to receive back

EX – (no longer in transit)

i. buyer or agent obtains delivery before arrival at

destination

ii. after arrival at destination; carrier or bailee

acknowledges to buyer or agent he holds
goods on his behalf and continues in possession
for buyer or agent; it is immaterial further destination
is indicated by buyer

iii. carrier or bailee wrongfully refuses to deliver to

buyer or agent

*PARTIAL STOPPAGE

GR – unpaid seller made part delivery – he can still exercise

right to stoppage on remainder

EX – such part delivery show an agreement with buyer to

give up possession of whole
 *ART 1535

- seller’s exercise of his right of lien or stoppage is not

affected by sale or disposition made by buyer;
UNLESS seller assented OR if a negotiable doc is
issued for goods; negotiated prior or subsequent to
notification to carrier or baliee issuing such doc of seller’s
claim of lien or stoppage; to a purchaser in GF for value

3. right of resale

i. seller avails either of (1) or (2)

ii. grounds:

a. goods are perishable by nature

b. seller reserves right of resale in case buyer defaults for

unreasonable time

iii. not required to notify original buyer of intention to resell;

EXCEPT – if right to resell not based on iia or iib; the giving
or failure to give such notice is deemed relevant in any issue
WON buyer was in default for unreasonable length of time before
resale

iv. mode:

- via public or private sale; EXCEPT – he cannot directly or

indirectly buy the goods

*EFFECT OF RESALE

i. seller –

is not liable to original buyer upon sale or profit of

resale; BUT may recover from buyer damages
caused by breach

ii. purchaser

- acquires better title than original buyer

4. right to rescind

i. seller avails either of (1) or (2)

ii. grounds:

a. seller reserves right of resale in case buyer defaults

b. buyer is in default for an unreasonable length of time

iii. notice is required to be sent OR by overt act; indicative of

intention to rescind

*EFFECT OF RESCISSION

- seller is not liable to original buyer upon sale or profit of

resale; BUT may recover from buyer damages
caused by breach

b. Ownership Not Passed to Buyer

 - in addition to other remedies; right to withhold delivery similar to (a- 1
and 2)

4. OBLIGS OF VENDEE

5. TRANSFER OF OWNERSHIP

i. General

- from moment object is delivered to vendee OR other manner via agreement

that possession be transferred from vendor to vendee

ii. Delivery on Sale or Return

- from moment object is delivered; BUT – buyer may revest it in seller by

returning OR tendering it within time fixed in contract OR within a
reasonable time

iii. Delivery on Approval or Trial or On Satisfaction or Other Similar

a. vendee signifies approval or acceptance to seller OR does an act adopting

transaction

b. if he does not signify; BUT retains goods without rejection; until expiration of
time, if a time is fixed for return OR until expiration of reasonable time

*ART 1505

- goods sold by person not owner OR sold without authority or consent from
owner

GR – buyer has no better title to goods than the seller had

EX – owner is by his conduct precluded from denying seller’s authority to

sell

ex – EX – nothing in this rule shall affect

i. law enabling apparent owner to dispose as if he was true owner

ii. validity of contract of sale under statutory power of sale or court

order

iii. purchases in merchant’s store in accord with Code of Commerce

and special laws

*ART 1506

- seller has voidable title; BUT his title is not avoided at time of sale – buyer
acquires good title; if he buys in GF for value without notice of seller’s
defect

*ART 1544

- same thing sold to different vendees

a. Movable

- owned by person first taking possession in GF

b. Immovable

1. owned by person acquiring in GF and first recording it

 2. owned by person first in possession in GF

3. owned by person presenting oldest title in GF

6. RISK OF LOSS

i. General

GR – goods remain at seller’s risk until ownership is transferred to buyer; BUT –

once ownership is transferred to buyer; WON via by actual delivery; it
becomes at buyer’s risk

EX –

i. delivery is made but ownership is retained by seller merely to secure

performance by buyer of his oblig ; at buyer’s risk from time of
delivery

ii. actual delivery delayed via fault of either seller or buyer; at risk of party
at fault

ii. Seller Delivers Knowing or Ought to Insure Goods

GR – seller has oblig to notify buyer of such; OTHERWISE – goods are deemed
at seller’s risk during transit

EX – agreed otherwise

7. DOCUMENTS OF TITLE

8. WARRANTIES

i. Warranty in case of Eviction

a. Eviction

GR –

1. when by final j based on right prior to sale or act imputable to

vendor

2. vendee is deprived of object whole or part

3. vendor is liable for eviction even if not contracted; WITHOUT

PREJ – to stipulation of parties to increase, decrease or
suppress such liability

4. no appeal is necessary from vendee to make vendor liable for

eviction

EX – (vendor not liable) adverse possession commenced before sale but

prescriptive period is completed after transfer

9. BREACH OF CONTRACT

10. PERFORMANCE OF CONTRACT

i. Place of Delivery

GR – seller’s place of business OR his residence

EX – sale of specific goods which to knowledge of parties when sale was made
was in some other place; that place is place of delivery
ii. Time of Delivery

GR – time fixed in contract

EX – (no time fixed) within a reasonable time

iii. Delivery; Goods at time of Sale in Possession of Third

- third acknowledges to buyer that he holds goods on buyer’s behalf

iv. Effective Demand or Tender of Delivery

- made at a reasonable hour; a question of fact

v. Expenses of Putting Goods at a Deliverable State

GR – borne by seller

EX – agreed otherwise

vi. ART 1522

a. seller delivers quantity of goods less than that contracted

GR – buyer can reject

EX –

1. if buyer accepts; knowing that seller is not going to perform

contract in full; he is oblig to pay at contract rate

2. buyer used; before he knows seller is not going to perform

contract in full; he is not liable for more than fair value

b. seller delivers quantity of goods larger than that contracted

GR – buyer may accept goods contracted and reject rest

EX – buyer accepts whole; he is oblig to pay at contract rate

ex – EX – if object is indivisible; buyer may reject whole

c. seller delivers goods contracted mixed with goods not contracted

GR – buyer may accept goods contracted and reject rest

EX – if object is indivisible; buyer may reject whole

vii. Seller Delivers Knowing or Ought to Insure Goods

GR – seller has oblig to notify buyer of such; OTHERWISE – goods are deemed
at seller’s risk during transit

EX – agreed otherwise

viii. What to Deliver

- vendor bound to deliver: thing sold AND its accessions and accessories in
condition they were at time of perfection

a. sale of real estate with statement of area at certain price for unit of
measure or number

GR – vendor bound to deliver to vendee all contracted; if latter

demands
 EX – if not possible, vendee may choose

1. proportional reduction of price

2. rescission provided lack in area is not less than 1/10 of

that stated OR even if area is same but part of
immovable is not quality specified in contract at will of
vendee if inferior value of thing exceeds 1/10 of price

3. rescind if vendee would not have bought immovable had

he known smaller or inferior quality

- brought within 6mos from delivery

b. sale of real estate; delivery of greater area than that contracted

GR – vendee may accept area contracted and reject rest

EX – if vendee accepts whole; he is oblig to pay at contract rate

c. judicial sales

- (a) and (b) shall apply

d. sale of real estate for lump sum; NOT for (a)

- there can be no increase or decrease of price; though there be

greater or lesser area than that contracted; brought within
6mos from delivery

e. sale of 2 or more immovables for single price

GR – there can be no increase or decrease of price; though there

be greater or lesser area than that contracted

EX – if besides mentioning boundaries which is indispensable in

sale of real estate; its area or number is contracted – vendor
is bound to deliver all included in boundary even if it exceeds
area contracted; OTHERWISE – he shall suffer a reduction in
price in proportion to what is lacking; UNLESS – contract is
rescinded because vendee did not accede to failure to deliver
what was stipulated

- brought within 6mos from delivery

11. EXTINGUISHMENT

i. by same causes as all other obligations

ii. by conventional redemption

- vendor reserves right to repurchase thing sold, w/ oblig to comply w/ ART 1616

GR – last for 4 years from the date of the contract

EX – contrary agreement, but shall not exceed 10 years

ex – EX – vendor may still exercise right to repurchase w/in 30days from

final j in a civil action on the basis that contract was a true sale w/
right to repurchase

*1616
 - vendor cannot avail right of repurchase w/out returning to vendee price of sale
and:

i. expenses of contract

ii. necessary and useful expenses

*EFFECT OF RECOVERY

- vendor who recovers thing, receives it free from all charges by vendee, w/ oblig
to respect leases vendee executed in good faith

*EQUITABLE MORTGAGE

- contract of sale presumed EM:

i. price unusually inadequate

ii. vendor remains in possession

iii. upon or after expiration of right to repurchase, another instrument

extending redemption is executed

iv. purchaser retains part of purchase price

v. vendor binds himself to pay taxes

vi. other case, inferred that real intention of parties is for transaction to
secure payment of debt or performance of oblig

*PRESUMPTION OF EM

- in case of doubt, a contract of sale w/ right to repurchase shall be construed as

EM

iii. by legal redemption

- right to be subrogated in place of one who acquires thing by purchase, by

dation in payment or by transaction which transfers ownership by onerous
title

- exercised w/in 30days from notice in writing by prospective vendor or vendor