Action for Breach of Contract of Sale

A. Seller

1. Action for the price –

• When ownership of the goods has passed to the buyer,
and he wrongfully neglects or refuses to pay the price.

• When the price is payable on a certain day,

irrespective of delivery or transfer of title, and the
buyer wrongfully neglects or refuses to pay the price.
 • When, although ownership has not passed to the
buyer, the goods cannot be resold for a
reasonable price and the seller has incurred labor
or expense of material amount to enable him to
fulfill his obligations under the contract.

B . Action for damages for non-acceptance-

Measure of damages:
• Estimated loss directly and naturally resulting in
the ordinary course of events from the buyers
breach;
• Difference between the contract price and the
market or current price at the time when the
goods should have been accepted if there is an
available market for the goods;
• The necessary labor or expense incurred by the
seller to fulfill his obligation under the contract.
3. Rescind the contract of sale when –

• The buyer repudiated the contract of sale;

• The buyer manifested his inability to perform
his obligations under the contract;
• When the buyer committed breach of contract.
B. Buyer

1. Specific performance for refusal of the seller to

deliver the goods;

2. When there is breach of warranty:

• Accept of keep the goods, and set up against

the seller the breach of warranty by way of
dimunition or extinction of the price.
• Accept the goods and maintain an action against the
seller for damages for the breach of warranty;

• Refuse to accept the goods, and maintain an action

against the seller for damages for the breach of
warranty;

• Rescind the contract of sale and refuse to receive

goods, or if the goods have already been received,
return them and offer to return them to the seller and
recover the price.
Recission is not available to the vendee –

• If he knew of the breach of warranty when he accepted

the goods without protest;

• If he fails to notify the seller within a reasonable time

of the election to rescind;

• If he fails to return or to offer to return the goods to the

seller in substantially as good condition as they were in
at the time of ownership was transferred to him.
Sales are extinguished by:

1. Article 1231
2. Conventional and Legal Redemption
3. Other causes, such as:
• Cancellation of sale of personal property the price of
which is payable in installments;
• Return of goods in “sale or return”;
• Stoppage of delivery of goods by unpaid seller;
• Resale of goods by unpaid seller;
• Rescission of the sale by an unpaid seller
• Rescission by the buyer of the sale of real estate for
unit of measure or number where the real estate is
delivered lacking in area, or a part thereof is inferior
quality;

• Rescission by the buyer of the sale of real estate for a

lump sum where the seller is unable to deliver the
whole area;

• Rescission by the buyer in case of partial eviction;

• Other cases of rescission.

Conventional redemption – takes place when the
vendor reserved the right to repurchase the thing sold
with the obligation to return to the vendee:

• The price of sale;

• The expenses or the contract, and other
legitimate payments;
• The necessary and useful expense made on the
thing sold.
Equitable mortgage – one which, although lacking some
formality, or form or words, or other requisites demanded by
statute, nevertheless reveals the intention of the parties to
charge real property as security for the a debt.

Contracts are presumed to be an equitable mortgage

when:

• The price of a sale with a right to repurchase is

unusually inadequate;
• The vendor remains in possession as lessee or
otherwise;
• The period for the exercise of the right to repurchase is
extended;
• The purchaser retains for himself a part of the purchase
price;
• The vendor binds himself to pay the taxes on the thing
sold;
• The intention of the parties is that the transaction shall
secure the payment of debtor the performance of any
other obligation.
Period of redemption:

1. Verbal agreement – 4 years

2. Written agreement – 10 years

Effect of failure to repurchase/redeem-

Ownership shall be consolidated to the vendee.

Who may exercise redemption?

• Vendor a retro
• Creditors of the vendor a retro
Legal Redemption – the right to be subrogated upon the
same terms and conditions stipulated in the contract, in the
place of one who acquires a thing by purchase or dation in
payment, or by any other transaction whereby the
ownership is transmitted by onerous title.

Basis – Law

Property covered movable and immovable.

Who may exercise?
• Co-owner of the thing

I. Co-ownership of the property;

II. Shares of all the co-owner or any of them
must have been sold;

III. Sale must have been sold to a third person.

• Adjoining owner of rural land not exceeding
one hectare;

• Adjoining owner of urban land:

I. Piece of land is so small that it cannot be

used for any practical purpose;

II. Land was bought merely for speculation;

 Right of Redemption v. Right of Pre-emption
Redemption Pre-emption
 Right to buy the property back  Right of the adjoining owner of
after the sale and within the small urban land to buy the
period agreed upon; property before it is offered to
the public;
 Right arises after the sale;
 Right arises before the sale;
 Redemption Pre-emption
 Rescission is made of a  Rescission not possible as
consummated sale; no sale exists;

 Action is directed against  Action is directed against

the buyer. supposed seller.