SALES

Concept: Contract between seller and buyer

Characteristics:
 Consensual – perfected by mere consent/ meeting of minds
 Bilateral – both parties are obligated
Seller: to give the thing
Buyer- to pay
 Onerous – there is compensation involved, not donations
 Commutative – thing sold is considered equivalent of the price paid and vice versa
Except: Aleatory Contract. Ex. Sweepstake- sale is still valid even the thing didn’t happen
 Nominate – a special name is given by law, “SALES”
 Principal – can stand on its own

Form
 Writing
 Word of mouth
 Partly writing, partly by word of mouth
 May be inferred from the conduct of the parties

Elements
1. Essential Elements- Requisites
a. CONSENT
- meeting of the minds of both parties
- must accept not just offering
CONSENT= Offer( Certain) + Acceptance(Absolute)

b. Object or Subject matter

- Vendor  right to transfer ownership
- Emptio Rei Speratae
o Sale of future thing
o Must come into potential existence
o Price to be paid is proportionate with the thing produce
- Emptio Spei
o Present thing
o Sale is VALID, even if the hope didn’t come to existence
o Fixed price, same price will be paid regardless of yield
o Sale of vain hope is VOID
- Existing Goods
o On hand from seller
- Future Goods
o Goods to be manufactured, raised or acquired after perfection of contract
- Sole owner of the thing may sell an undivided interest
o Sale Owner
o Co-Owner
- Fungible Goods
o Interchangeable goods
o No distinguishing characteristics from others of the same kind.
o Often delivered in bulk. Example, grains, oils, milk, wine.
Effect of Sale- mass is specific/ potential existence
*Buyer becomes a co-owner
*Must follow the aliquot share
*If the mass of fungible goods is less than what is sold, buyer becomes owner, seller must supply the lacking
goods
Risk of Loss- whole mass is at risk of all parties involved
Subject Matter
o Intangible right
o Ownership passes to buyers by intention of parties
- Subject to resolutory condition
o Can be the object
c. Cause or Consideration- price certain in money or its equivalent
SOLD IN CERTAIN, IF NOT,VOID
- Fixed organized for a definite amount
o MONEY = CURRENCY
 o EQUIVALENT = Promissory notes, checks and other mercantile instruments
- With reference to another thing certain
o Example: Sells B a certain ring, the price of which is the price of20 bags of Island cement being sold at a
certain store
- Left to the judgement of specific person/s
o If acted in bad faith, court may fix the price
o If person/s unwilling to fix the price, contract must be efficacious
o If the 3rd person prevented from fixing the price, party at fault may have such remedies
- Gross Inadequacy of price doesn’t affect the contract of sale, unless consent is vitated
o Example: S sells to B for P180,000 a certain car whose actual value is P300,000
*FACT: Price is inadequate but it doesn’t affect the contract
*If S agrees to sell car at P180,000 because B used insidious words, S may seek the annulment of the sale
on the ground of vitiated consent due to fraud
- Price is stimulated, the sale is VOID
o Unless it is shown as donation or some other form of contract
o If donated, contract must be one of donation, not sale
- Fixing of the price by one of the contracting parties not allowed
o If the other party agrees, contract perfected because there is meeting of minds
2. Natural Elements- existing in certain contracts
a. Warranty against eviction
b. Warranty against hidden defects/encumbrances
3. Accidental Elements- present or absent in contracts
Ex. Condition, interest, time of payment

SALES COMPARED TO OTHER CONTRACTS

CONTRACT OF SALE CONTRACT TO SELL

Perfected: Reciprocal obligations Perfected: Reciprocal suspensive condition
Buyer: Paying Buyer: fully paid before seller deliver the thing
Seller: Giving the thing
Title passes right away after delivery Buyer: Thing
Seller: Ownership and title
Failure to pay purchase price Failure to pay (fulfillment)
*Breach of Obligation *Action to recover of possession of ownership
1. Specific Performance Seller doesn’t have any obligation(to give the title)
2. Recission + Damages
CONTRACT OF SALE AGENCY TO SELL
Title: transferred to the buyer upon delivery of the thing Title: remained to the owner, despite of delivering goods to
the agent
Price: Buyer is required to pay
Price: principal amount of the goods sold by the agent shall
Recipient: Buyer may do anything he wants to the thing when transfer to the owner
delivered
Recipient: Principal / owner remains control w/ property
CONTRACT OF SALE CONTRACT FOR A PIECE OF WORK
Goods o be manufactured and reproduce to general market Goods specifically manufactured for a certain people 
not for general market

CONTRACT OF SALE BARTER

Cause: Money Cause: Another thing
If the consideration is partly in money, or partly in thing, the ff: must observed
1. The intention of the parties
2. BARTER= equivalent of the thing > money, if not SALE
CONTRACT OF SALE DATION IN PAYMENT
Pre-existing debt: None Pre-existing Debt: Yes
Obligation: creates Obligation: Extinguished
Fixing the price: greater freedom Fixing the Price: less freedom, because parties seeks to
extinguished obligation

Stages of a contract of sale

 Negotiation
- Where offer and counter-offer happens
 Perfected (When is the sale perfected?)
 -Meeting of the minds of parties
-In case of auction; upon fall of the hammer as announce by auctioneer
-Ownership of the thing is transferred upon the actual or constructive delivery
 Consummation
- Parties doing their respective obligations to extinguishment
Sale through an AGENT
- Must be in writing, if not VOID
- In private OR public instrument:
o Entered orally- UNENFORCEABLE
o Private or Public instrument- VALID

Sale by Auction
1. Sale by auction in lots
- Each lot is the subject of a separate contract
2. Perfected
a. Upon fall of the hammer as announce by auctioneer
b. In any other manner
3. Rights
a. Any bidder may retract his bid
b. Auctioneer may withdraw the goods on sale unless it is an action without reserve
- Auction without reserve can be only withdrawn if there were not bid at period of time
4. Right of seller to bid
- Reserved expressly
- Not prohibited by law
- Notice must be given that the sale is for bidding
Contract of Sale under Statute of Fraud. Must be in writing.
 Applicable only to executory contracts
 Personal Property at a price not less than P500
 Sale of Real Property or any interest therein regardless of price
 Sale of Property delivery is in more than 1 year

Promise to Buy and Sell

1. Bilateral Promise- both parties agreed at the price of a determinate thing
- Proper form(Writing) is required with the price atleast P500
2. Unilateral Promise
- Made only by one of the parties
- Policitacion- does not produce legal effect
- Accepted by promise:
o Supported by consideration distinct, promise is bidding
o Not Supported- Promisor can withdraw to promisee by inforrming

Sale of Personal Property in Installments

Remedies of Vendor should the Vendee fails to pay
1. Exact fulfillment of the obligation
2. Cancel the sale, if the failure covers two or more installments
3. Foreclose the Chattel Mortgage, if any, if failure covers two or more installments. ( Recto Law)
- Vendor cannot anymore recover any unpaid balance of the price, if foreclosure is exercised.
- Any agreement to the contrary is void.

Earnest Money
- Partial payment in a contract of sale.
- Proof of the perfection of the contract.

Earnest Money Option Money

Part of the purchase price. Not Part of the purchase price , but as option to buy.
Contract of Sale is perfected Contract of sale is not perfected yet, but an option contract or other contract may
already exist

Sale by Description- Seller sells a thing of a particular kind. If the bulk of goods is not the same or equivalent with the description, the
contract can be rescinded.
Sale by Sample- The sample must be exhibited by the seller to the buyer, to induce the buyer to buy the thing. The vendor warrants
that the thing to be delivered is the same with the sample in kind and quality.

Sale by Description and Simple- it must qualify in both the sample and description.

Rescission by buyer
- Seller doesn’t do any actions to extinguished the obligation
- Remedies:
o

EXTINGUISHMENT OF SALES

1. Payment or Performance: Debt shall not considered paid unless thing is completely delivered
2. Loss of the thing due: Extinguished if lost without the fault of the debtor because of the fortuitous events unless it is stipulated must
responsible for damages
3. Condonation or Remission of Debt- gratuitous offer and acceptance by the obligor
4. Confusion or Merger of Rights- characters of creditor and debtor are merged into one person
5. Compensation- Two persons are both creditors of each other
6. Novation- Partial or total extinction of the obligation by creating one that substitutes it
7. Redemption
A. Conventional Redemption
B. Legal Redemption

CONVENTIONAL REDEMPTION

 Vendor reserve the right to repurchase the thing

 To exercise the right, the vendor must return to the vendee
- The price thing sold
- Expenses of the contract and other legitimate payments for the sale
- Necessary and useful expenses made on the thing sold
- Other requirements included in stipulation
 Fruits existed during redemption: pro-rated between vendor and vendee
- No redemption if no indemnity was paid by purchaser at the time of sale
- Vendee paid reimbursed at the time of redemption
- Fruits existed during redemption: prorated between vendor and vendee

VENDEE IS SUBROGATED TO THE VENDOR’S RIGHTS AND ACTIONS

NATURE OF RIGHT TO REPURCHASE

1. Reserved by the seller at the point of perfection

2. Validity is tied to the validity of the contract of sale on which it pertains to
3. When Sale is Covered by Deed, Right a retro may be proved by parol evidence.- must be in writing or some other proof

RIGHT A RETRO VS OPTION CONTRACT

RIGHT A RETRO OPTION CONTRACT

1. Must be part of main Contract of Sale 1. Generally principal contract, but may be
appended in another contract valid
2. Right to Redeem does not need separate 2. Option requires consideration separate and
consideration distinct of the price in order to be valid
3. Maximum Period for exercise of Right of 3. Period of Option may be beyond 10 years
redemption cannot exceed 10 years
4. Right of repurchase requires in addition the tender 4. Option may be exercised by mere notice to
of the amount mandated, including consignation Offeror
when tender
not possible
FEATURES ON RIGHT OF REDEMPTION lol

1. Period of Redemption
 No period agreed: 4 years
 Agreed: 10 years max; above 10 years void
 Non Payment of Price: doesn’t affect the running of redemption period
 Final judgement was rendered: the vendor may still exercise the right to repurchase w/in 30 days

Equitable Mortgage

1. Price is unsu

Contract of Agency
 Binds himself to render goods and services in behalf or representation
 Must have consent of the owner

Characteristics
 Consensual- perfected by mere consent
 Principal- can sand on itself
 Nominate- own name
 Unilateral- gratuitous because it creates obligation for only one of the parties
 Preparatory- start/beginning; creating an other contract

Elements
 Consent of both parties
 Object
 Agent

Kinds of Agency
1. Manner of creation
a. Express
b. Implied- “Principal know that another person is acting on behalf of the agent”
*Acts, silence, lack of action and failure to refuse the act of another person

2. Character
a. Gratuitous
b. Onerous / compensated
3. Coverage
a. General- perform all transactions needed to benefit the principal
b. Special- agent’s authority is limited
4. Authority of the Agent
a. Couched in general terms- only acts of administration; agent may execute acts that he think it is
appropriate
b. Specific Terms- only authorized in specific performance
5. Nature and Effect
a. Ostensible- agent acts in the name of the principal
b. Simple/ Commission- agent acts in his own name but for the account of principal
- Principal has NO RIGHT OF ACTION between the transaction of the agent and 3rd party
except when it involves PRINCIPAL’S BELONGINGS

Acceptance by Agency
1. Express Acceptance
2. Implied Acceptance
 - Principal delivers the power of attorney to agent and agent must:
*Receive w/o objection
*By the acts of agent
*Silence or inaction
- NOT IMPLIED WHEN;
*Principal and agent are both or one of them absent
*When principal sends a letter but agent didn’t reply back

Special Powers of Attorney (SPA)

1. Make Payments- payments that are not usually considered
2. Novations
3. Compromise
4. Waiver
5. Convey/ Acquire immovables
6. Gifts/ Donations
7. Loan/ Borrow Money
8. Lease Real Property for more than 1 year
9. Bind the Principal to render services for Free
10. Bind the principal in Partnership
11. Bind the Principal as Guarantor/ Surety
12. Convey Real Rights
13. Accept or Repudiate Inheritance
14. Ratify obligations prior to Agency
15. Other act of strict dominion

Other Rules on Agency

1. Special power to sell excludes the power to mortgage and vice versa
- Absence of SPA: Unenforceable Contract
2. Special power to compromise does not authorize submission to arbitration
- Compromise; between the two person; Arbitration, having 3rd party
3. Agent must act w/in scope of authority
- GR: If the agent didn’t know what to do, he must act beneficial for the principal
4. Acts of Agent shall not advantageous to him
5. Agent may keep the object of the agency seller will not give his commission
6. Authority of the principal must be in writing when selling a piece of land through an agent
7. Agency is presumed compensated

Obligations of the Agent

1. Be Bound by his Acceptance
2. Preserve the Goods
3. Advance the necessary funds
4. Act in accordance with the instructions of the Principal
5. Acts should not result in loss or damage to Principal
6. Liability for Damages
7. Borrow money with the consent of Principal
8. Render an account to his principal
9. Pay Interest
10. Not personally liable to whom he Contracts
11. He may appoint a substitute