TOPIC: LAW ON SALES

AE 311/MA 311 – LEGAL ISSUES IN BUSINESS

LECTURE MATERIAL
Day 4 (September 7)
Prepared by: Ahavah R. Devanadera, CPA
DISCUSSION OUTLINE
OBLIGATIONS OF
VENDOR

WARRANTIES
 OBLIGATIONS OF
VENDOR
1. To deliver to the buyer the thing sold (CC Art.
1495) cannot be waived
2. To transfer ownership to the buyer (Ibid.)
cannot be waived
3. To warrant the thing sold (Ibid.)
4. To take care of thing sold pending delivery with
proper diligence (CC. Art. 1163)
5. To pay the expenses of deed of sale unless
otherwise stipulated (CC Art 1487)
6. To place the goods deliverable state and bear
the expense unless otherwise agreed
(Packaging)(CC Art 1521)
7. To allow the buyer reasonable time to examine
the goods sold
TO WARRANT THE THING SOLD
CC ART 1545 -1581

WARRANTY
a statement or representation made by the seller of goods, contemporaneously and as a part of the contract of sale, having
reference to the character, quality, or title of the goods, and by which he promises or undertakes to insure that certain facts are or
shall be as he then represents.

KINDS OF WARRANTY
1. EXPRESS – any affirmation of fact or any promise by the seller relating to the thing if the natural tendency of such
affirmation or promise is to induce the buyer to purchase the same and if the buyer purchases the thing relying thereon.
NOTE: A mere expression of opinion, no matter how positively asserted, does not import a warranty unless the seller is an expert and his opinion was
relied upon by the buyer.

2. IMPLIED (Natural Elements COS) - that which the law derives by implication or inference from the
nature of the transaction or the relative situation or circumstances of the parties, irrespective of any
intention of the seller to create it.
a. Warranty against eviction
b. Warranty against hidden defects
c. Warranty as to Fitness and Merchantability
NOTE: An implied warranty is a natural, not an essential element of a contract, and is deemed incorporated in the contract of sale. It may however, be waived or modified by express stipulation. (De
Leon) There is no implied warranty as to the condition, adaptation, fitness or suitability or the quality of an article sold as a second-hand article. But such articles might be sold under such
circumstances as to raise an implied warranty. * A certification issued by a vendor that a second-hand machine was in A-1 condition is an express warranty binding on the vendor. (Moles vs. IAC
[1989])
TO WARRANT THE THING SOLD
CC ART 1545 -1581

WARRANTY AGAINST EVICTION

• Warranty in which the seller guarantees that he has the right to sell the thing sold and to transfer ownership to the buyer who
shall not be disturbed in his legal and peaceful possession thereof.
• Elements:
1. vendee is deprived, in whole or in part, of the thing purchased;
2. the deprivation is by virtue of a final judgment;
3. the judgment is based on a prior right to the sale or an act imputable to the vendor;
4. the vendor was summoned in the suit for eviction at the instance of the vendee; AND
5. no waiver of warranty by the vendee.

Vendor's liability shall consist of:

1. Total eviction:
a. Value of the thing at the time of eviction;
b. Income or fruits if he has been ordered to deliver them to the party who won the suit;
c. Costs of the suit;
d. Expenses of the contract; AND
e. Damages and interests if the sale was in bad faith.
2. Partial eviction:
a. to enforce vendor’s liability for eviction (as above); OR
b. to demand rescission of contract.