CONTRACT OF SALE

CONTRACT OF SALE

A contract where one party obliges

himself to transfer ownership and to
deliver a determinate thing and the
another party to pay a price certain in
money or its equivalent.
Elements of a Contract of Sale
1. Essential Elements
a. Consent
b. Determinate object
c. Price certain in money

2. Natural Elements
a. Warranty against eviction
b. Warranty against hidden defects and encumbrances

3. Accidental Elements- refer to the stipulations of the contracting parties

Characteristics of a Contract of Sale

1. Consensual- perfected by mere consent

2. Principal- capable of standing alone without the need of another
contract
3. Bilateral- there is a reciprocal obligation between the parties
4. Onerous- valuable consideration is given by both parties
5. Commutative- the consideration exchange are of equivalent values
6. Nominate- has a name given by law
Stages of a Contract of Sale

1. Preparation/Conception- the time the contracting parties

shows interest in the contract.

2. Perfection/birth- concurrence of the essential elements of

the sale

3. Consummation/death- begins when the parties perform

their respective undertakings, resulting in the
extinguishment thereof.
Nature of Obligation Created

For the SELLER: To transfer ownership

and to deliver possession of the subject
matter

For the BUYER: to pay the price

Sale as a Title

Contract of sale DOES NOT transfer the ownership

of the subject matter. It is merely a title that creates
the obligation to transfer ownership and a mode
thereof.

The contract of sale transfers no real rights.

Ownership and position is transferred through
delivery or tradition.
 Contract of sale
Contract to sell
Ownership is transferred upon Ownership is transferred upon full
delivery payment

Non-payment is a Full payment is a

resolutory condition positive suspensive condition

Sale is already No perfected sale yet

perfected

Subsequent buyer is presumed to be in Subsequent buyer is presumed to be in

bad faith good faith

Vendor loses and cannot recover

ownership of the thing sold until contract Title remains in the vendor if the vendee
of sale is resolved and set aside does not comply with the conditions of the
contract
Contract to sell cannot be considered as a contract of sale
because the first element (consent) is lacking.

The prospective seller does not consent until the

happening of an event.

The seller only agrees is to fulfill his promise to sell the

subject when full payment is made.
Kinds of Contract of Sale
Absolute- sale is not subjected to any condition and the
title immediately passes to the purchaser upon delivery

Conditional- ownership of the object remains with

vendor until fulfillment of condition/s.
Goods which may be Object of Sale
a. Existing Goods- goods owned or possessed by the seller
b. Future Goods- goods to be manufactures, raised or acquired by the seller after the perfection
of the contract. These are things which are expected

Objects must be within the commerce of men. If the subject is illicit, contract is VOID and cannot
be ratified.

Instances of sale of things not actually or already owned by seller at time of sale
1. Sale of thing having potential existence
2. Sale of future goods
3. Contract for the delivery at a certain price of a thing the vendor produces in the ordinary course
of the business or for the general market.
LICIT

The thing is licit when:

1) It is within the commerce of man

2) When right is transmissible
3) It does not contemplate a future inheritance, unless expressly
authorized by law
 Example of properties not within the commerce of man:-
a)Public property
a.Property for public use
b.Intended for public service
c.Intended for development of national wealth
b)Church
•
c)Narcotics or drugs
Kinds of Illicit Things

Per Se- of its nature

Per Accidens- due to provisions of law

declaring it illegal
Examples of illicit sale
a. Sale of Future inheritance
b. Sale of animals suffering from contagious disease
c. Sale of animal to be used for a service stated in a contract, and they
have found to be unfit therefor.
d. Sale or transfer of land to aliens
EXISTING, FUTURE, CONTINGENT

Goods which form the subject may either be:

1) Existing
2) Goods to be manufactures, raise or acquired by the seller
3) Things having potential existence
4) Sale of specific things
5) Fungible goods
6) Undivided interest
EARNEST MONEY

• Partial payment of the purchase price &

considered proof of the perfection of the
contract.
OFFER
General Rule: Offer may be withdrawn at any time without
even communicating such withdrawal to the interested buyer

Exception: When the offeror has allowed the offeree a certain

period to accept, may be withdrawn at any time before
acceptance by communicating such withdrawal.

Exception to the exception: Cannot be withdrawn within a

certain period if found under a consideration.
ACCEPTANCE

The acceptance referred to which determines consent is the

acceptance of the offer, and not of the goods delivered.

Requisites
1. It must be absolute
2. Must be plain and unconditional
3. To bind the offeror, the offeree must comply with the
conditions of the offer
PERFECTION

Contract of sale is perfected at the moment of

the meeting of the minds of the parties.

From the moment of perfection, parties may

reciprocally demand performance.
Requirements for Perfection
1. When parties are face to face, when an offer is accepted without
conditions and without qualifications. If negotiation is made
through a phone, it is as if the parties are face to face.

2. When contract is through a correspondence or thru telegram,

there is perfection when the offeror receives or has knowledge
of the acceptance by the offeree.

3. When sale is made subject to a suspensive condition, perfection

is when from the moment the condition is fulfilled.