BUSINESS LAW & REGULATION

2nd Retake (summer class)

Lim, Charmaine L.
LAW ON SALES:CHAPTER 1

ART. 1458

~seller & Buyer or vendor & Vendee

~3 essential elements: This article talks about how the contractofsales work whereby the

1. Consent contracting parties which are know as the vender & vendor or seller & buyer.

c.
subject (determinate)/object Bound by reciprocal obligation where the seller obligates himself to transfer ownership/
3. Price certain in money or its equivalent/cause or deliver a determinate thing to the buyer while the
buyer obligates himself to
pay it's price or

seller:
Price it's equivalent there of

Buyer -

thing
/c natural elements:(inherent, absence of a stipulation)

7.
Warranty againsteviction service cannotbe the
A objectof sale

2.
Warranty against hidden defects
~ Accidental elements

depending
*
on the stipulations ofthe party

xterms, place, time of payment

I kinds ofcontract of sale

1. Absolute subjectto any condition &

not title immediately passes to the buyer upon delivery.
2. Conditional delivery oft he thing does not transfer ownership until condition is fulfilled.

~characteristics

1. consensual consent

2. Bilateral Reciprocal

B 3. Onerous The
thing is
conveyed in consideration (PRICE)

4. Commutative is considered equivalent to price

* the thing paid.

*
5. Nominate Given a special name

6. Principal does notdepend up on another

~
stages of a contractof sale

*
1. Preparation/conception/negotiatio both parties show interest

2. Perfection/birth essential elements of the sale is all present

3. consummation/death Both parties perform their obligation, resultto extinguishment.

ART. 1459

~
Requisites concerning object
1. Things
>If so then VD
determinate
*

xlicitor lawful (notcontrary to law, morals, good customs, public order or public policy)
*possible

2. Rights
Atransmissible

licit
*
services not an object of sale

~kinds of ilicitthings

1. illicit per se ofit's nature (decayed food unfit for consumption)

2. illicit per accidens law deems it illegal drugs, Land sold to an alien)

~Right ofvendor to transfer owner

hip
7. Mustbe owner

2. sufficientif right exist atthe TIME

OF DELIVERY, does NOT require that
right exists atperfection of contract.
 >ex:Freshia's white horse named
ART. 1460 only Chena.

~ mustb e determinate
subjectmatter

1. When a
thing is determinate particularly designated /physically segregated from all other the same class.

2. Sufficient if subjectmatter capable of being determinate wortthe necessity of a new or further agreement between the parties to ascertain its

identity, quantity or quality.

ART. 1461

~
Things w/ potential existence maybe the objectof contractof sale

1.
Existing goods goods owned/possessed by the seller.

c. Future goods goods to be manufactured, raised I acquired by the seller after the perfection of the contract(expected)

~ Expected & Hope

ticket
1.
Emptio rei speratae sale of thing expected, failure of the condition ineffective
Lotto
-

2. Emptic Spei sale of the hope itself, agreed thatt he buyer will PAY the price even if the thing will not exist.

~ The purpose:
dering
To
* nothave restrictions, cons'how complex & dynamic business transactions are in an economic perspective itwill notbe flourishable

and economic
activity because of the limitation / restriction. Thus, the law allows things w/ potential existence to be the objectof contractof sale.

refers to which is notyetin existence.

sale
A an expected thing
vain
* hope / expectancy VOID
=

The goods which form the subject of contract of sale may be either existing goods owned
ART. 1462
or possessed by the seller or goods to be manufactured, raised or acquired by the seller after
the perfection of the contract of sale, which this Title called “future goods”
~Notto have restrictions in the economic activity
~ Whatmatters is when the time of delivery comes the seller mustbe able to transfer ownership to the buyer I have right to the
thing.

ART. 1463 The sole owner of a thing may sell an undivided interesttherein.

~By sole owner aliquot part, becomes co-owner

~By co-owner can dispose his undividedshare / interestwort the consent ofother co-owners.

EX:4 siblings, 1 - thateach

parcel ofland, parents died, agreed byhand has a share of Y ofthe land.
Any siblings can sell his part

m/ out the consent of his other

one to be

ART. 1464 ~Allow repla siblings.

~ Talks about specific
the sale of undivided share ofa mass in the case of fungible goods.
EX:Sandra sells to be 200 sacks of
yellow corn from a mass stored in the warehouse of

Sandra. The mass, however, actually consists of soo sacks of corn. Thus, Sandra & Bea

will become co-owners ofthe whole mass to the extent of2/5 for Bea having 200

sacks & 1/3 for sandra for having 100 sacks in the whole mass.

Butif the mass contains only 180 sacks of corn. Be will be the whole owner of the

Sandra will have the obligation of

mass while to delivery the
remaining deficiency
~
20 sacks of corn.

ART. 1465 things subjectto a resolutory condition may be the objectofsale.

~The
objectthathave resolutory condition can be the objectofa contractof sale.

(the happening ofthe condition extinguishes the obligation

already existing (uncertain event)
Ex:If someone promises to pay for a

phone repair, the failure to repair the

phone would relieve the person of

the promise to pay.
ART. 1466 in construing a contract containing provisions characteristic of both the contractof sale and of the contract

of agency to sell, the essential clauses of the whole instrument shall be considered.

contractof SALE Agency to sell

ownership upon delivery to buyer ownership retained by the owner despite delivery of the goods the
to
agent
condition
non-paymentResolutory principal retains control ofthe property
perfection v
Already
subsequentbuyer Bad faith

Buyer needs to the PRICE

pay Agentsimply needs to account for the proceeds of sale he may make on the principal's behalf
seller warrants the thing sold the makes
agent no for
warranty which he assumes personal liability
as long as he acts within

his authority
do whatever to the instructions of his
buyer can actin accordance to the
must principal.
thing sold

ART. 1467

contractof sale for

contract a piece ofwork
invitation cards,
of the business
~wedding
Ordinary course on hand or not special order
size ofshoes,

General Public specially for the customer

Applicable for statue offrauds ot

↓
applied

ART. 1468 If the consideration of the contract consists partly in money, and
partly in another thing, the transaction shall be characterized by the manifest
intention of the parties. If such intention does not clearly appear, it shall be
considered a barter if the value of the thing given as a part of the consideration
exceeds the amount of the money or its equivalent; otherwise, it is a sale
SALE BARTER
consideration money Another
thing
example S, seller
hereby transfers his ring worths, hereby transfers his ring worth 201

2OK to B, buyer for B's iphone ll to B, for B's cellphone worth 12K

worth 12K & cash of 8,000. & cash 8K

explination I intentions were referred as seller & Buyer

~ Intentions unclear

~This is true even if the ~ No

stating of seller
monetary
I value of the
consideration ishigher or lower. thing is 12K while the
monetary consideration,
ART. 1469 is
only 8,000.

~ Price mustb e certain otherwise, VOID (no meeting of minds)

1. Fixed by the agreementof the parties The seller can quote an unreasonable price

thing
2. certain reference to another certain.
↳ if the buyer agrees
3. To be fixed by a 3rd person thatwill give value to the thing.
Exception:
a. 3rd person acted in bad faith / by mistake;The COURT shall fixthe price.

b. 3rd person did not follow instructions.

ex:Sandra sold to Bea a diamond ring. The determination of the price is leftto a 3rd person named Adam

whom the parties thoughtwas a Jeweler. IfAdam acted by mistake, or in bad faith in giving the

Price there of (incompetent) the shall

court fix the price.
Effectwhen the price is NOTfixed 3rd person:
by
a. contractbecomes ineffective, unless the has
party subsequently paid the price.
b. 3rd person is prevented in fixing the price by the fault of the buyer/seller.
Party in
not faultcan ask for:
~ Recession or,
~ fulfillmentof
damages
13.

ART. 1470

~Talks abouts the general rule of gross inadequacy ofprice will notaffect

the contractof sale with it's exception that when there is a

1. Defectof consent like fraud, mistake or undue influence is present so the buyer

may qnull the contract because the consent is vitiated.

Ex: Sandra sold her gold rolexwatch worth 100,000 to bea for 50,000. However if itis shown thatbe induced

watch through fraud, mistake, the contract declared INVALID.

Sandra to sell thatRolex
may be
2. Price low as to be to the moral conscience
so
shocking
3. In the of
event a resale a better
price can be obtained.

ART. 1471 If the price is simulated, the sale is void, but the act may be shown to have been in reality a
donation, or some other act or contract.

/If the price is simulated or false such as when the vendor really intended
to transfer the thing gratuitously, then the sale is void but the contract
shall be valid as a donation.
-
~ If the contract is not shown to be a donation or any other act or contract
transferring ownership because the parties do not intend to be bound at
all, the ownership of the thing is not transferred. The contract is void an
inexistent

ART. 1472 The price of securities, grain, liquids, and other things shall also be considered certain, when the price
fixed is that which the thing sold would have on a definite day, or in a particular exchange or market, or
when an amount is fixed above or below the price on such day, or in such exchange or market,
provided said amount be certain

weWhen an amount is fixed above or below the price on a given day or in a

particular exchange or market, the said amount must be certain,
otherwise, the sale is invalid because the price cannot be ascertained.I known.

ART. 1473 The fixing of the price can never be left to the discretion of one of the contracting parties.
however, if the price fixed by one of the parties is accepted by the other, the sale is perfected.

w Consent is essential to a contract of sale, it cannot be said that the other consented to a price he did
not and could not previously know.
WThe validity or compliance of contract cannot be made to depend upon the will of one party.

ART. 1474 where the price cannot be determined in accordance with the preceding articles, or in any other manner,
the contract is inefficacious. however, if the thing or any part thereof has been delivered to and
appropriated by the buyer he must pay a reasonable price therefor. what is a reasonable price is a
question of fact dependent on the circumstances of each particular case

~Effectoffailure to determine the price:

2. Where contractexecutory Invalid

-

2. where the thing has been delivered to and appropriated by the buyer

A The buyer must pay a reasonable price therefore.

X The reasonable price or value of goods is generally the market value at the time and place 4xed
by the contract or by law for the delivery of the goods.

ART. 1475
~Meeting of minds -
contractof sale PERFECTED.

~determinate
thing (object)
~certain price (consideration) I even ifneither is delivered

~NOTE:Sale is a consensual contract;Hence, delivery & paymentare not essential for its perfection.
Lobased on consent, no need Formal procedure.

~ The
parties may reciprocally demand performance
19.

ART. 1476
~Talks aboutthe rules
governining Auction sales

1. Sales separate lots by auction are separate contracts of sale.

* where separate lots are subject of separate bidding, there is a separate contract in regard to each lot but the parties
may consolidate all the purchases in one transaction
↳to
join together into one whole

2. Sale is perfected by the fall of the hammer or by any other manner

3. Seller has the rightto bid in auctions provided:

rightwas reserved
⑤
such

any [ notice was given thatthe

2)Rightis not prohibited by law/stipulation.
sale was subjectto bid on behalf ofthe seller.

ART. 1477
The ownership of the thing sold shall be transferred to the vender upon actual or

constructive delivery.
rIt is only after the delivery of the thing sold that the buyer acquires real right or ownership over it
~kinds:
1. Actual or Real Placing the thing under the control & possession of the buyer.
2. Legal or Constructive Represented by other sign or acts.

ART. 1478 The parties may stipulate that ownership in the thing shall not pass to the purchaser until
he has fully paid the price.
weIf the thing has been delivered it prevents the transfer of ownership until the price has been fully paid
↳ even though the the posession of
thing has been delivered to the Buyer the transfer of
ownership is be acknowledge after the Buyer has payed
yetto
the full amountas agreed
upon.
2. If the thing is lostafter perfection butbefore
delivery, Risk of Loss is shifted to the BUYER. CTRVE)

2. Executory contract
v sale of future good is valid

3. Not all fungible goods are perishable.