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AE34 Jonathan Activity #03

This document provides definitions and discusses concepts relating to business law and regulations regarding contracts of sale under the Civil Code of the Philippines. It addresses topics such as: 1. Definitions of key terms including specific goods, divisible contract, unpaid seller of goods, and modes of delivery. 2. Discussions of valid sales when the seller is not the owner, different ways of effecting delivery, requisites for an unpaid seller's right of stoppage in transitu, and implied warranties in a contract of sale. 3. Distinctions between sale or return and sale on trial, determining the place of delivery if not stipulated, principal obligations of the vendor, and who bears the loss if the thing

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211 views4 pages

AE34 Jonathan Activity #03

This document provides definitions and discusses concepts relating to business law and regulations regarding contracts of sale under the Civil Code of the Philippines. It addresses topics such as: 1. Definitions of key terms including specific goods, divisible contract, unpaid seller of goods, and modes of delivery. 2. Discussions of valid sales when the seller is not the owner, different ways of effecting delivery, requisites for an unpaid seller's right of stoppage in transitu, and implied warranties in a contract of sale. 3. Distinctions between sale or return and sale on trial, determining the place of delivery if not stipulated, principal obligations of the vendor, and who bears the loss if the thing

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AE34 (BUSINESS LAW & REGULATIONS)

Jonathan C. Balansag La Consolacion College


BSMA III

Coverage: Article 1493-1581 of the New Civil Code


Chapter 3 & 4 Effects of the Contract When the Things Sold has been Lost &
Obligations of the Vendor
Activity No.3 Coverage: Article 1493-1581 of the New Civil Code
I. Definitions
Define or give the meaning of the following:
1. Specific Goods – goods identified and agreed upon at the time a contract of sale is
made. Specific goods are individually and specifically identified and agreed to items
bought and sold under a contract of sale.
2. Divisible Contract - a contract is divisible when its consideration is made up of several
parts. It is a contract in which the parties’ performances are divided into matching pairs
of duties to perform that the parties consider equal.
3. Unpaid seller of goods – an unpaid seller is one who has not been paid or tendered the
whole price or who has received a bill of exchange or other negotiable instrument as
conditional payment and condition on which it was received has been broken by reason
of the dishonor of the instrument.
4. Traditio brevi manu – this mode of legal delivery happens when the vendee has already
the possession of the thing sold by virtue of another title as when the lessor sells the
thing leased to the lessee. Instead of the vendee turning over the thing to the vendor so
that the latter may, in turn, deliver it back to him, all these are considered done by
fiction of law.
5. Tradition – derivative mode of acquiring ownership by virtue of which one that has the
right and intention to alienate a corporeal thing, transmits it by virtue of a just title to
one who accepts the same.
6. Redhibitory defect – a defect in the article sold against which defect the seller is bound
to warrant. To be considered redhibitory, the defect must not only be hidden. It must be
of such nature that expert knowledge is not sufficient to discover it.
7. Implied warranty of fitness – warranty in which the seller guarantees that the thing sold
is reasonably fit for the known particular purpose for which it was acquired by the
buyer.
8. Eviction – the judicial process whereby the vendee is deprived of the whole or part of
thing purchased by virtue of a final judgment based on a right prior to the sale or an act
imputable to the vendor.
9. Caveat venditor – the vendor is liable to the vendee for any hidden defects in the thing
sold, even though he was not aware thereof.
10. Warranty – 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.
II. Discussions
1. Give the cases when a sale of property is valid although the seller is not the owner thereof.
When goods are sold by person who is not the owner, the buyer acquires no better title,
except:
1. When the sale is made under the authority of the owner.
2. When the owner precluded by his conduct from denying the seller’s authority to sell.
3. When the sale is made under the provision of any factor’s act or recording laws
4. When the sale is made under a statutory power of sale or under the order of court
5. When the purchase is made in a merchant’s store or fairs

2. What are the different ways of effecting delivery to the buyer of the thing sold?
Kinds of Delivery are:

1. Actual or real delivery – this is delivery by physically placing the thing sold in the hands of the
buyer or placing it in his possession or control.

2. Constructive or legal delivery


By legal formalities – when the sale is made through a public instrument.
Symbolic delivery (traditio symbolica) – delivering the key of the place
Traditio longa manu (delivery by the long hand) – by mere consent of parties if the thing cannot
be transferred at the time of sale.
Traditio brevi manu (delivery by the short hand) – the vendee is already in the possession of the
thing sold (Lease).
Traditio constitutum possessorium – the vendor continues in possession of the thing sold (Sale
and Lease Back).

3. Delivery of incorporeal things (quasi-traditio)


Constructive tradition – delivery by execution of public document
Placing the title of ownership in the possession of the vendee
Use by the vendee of his rights (voting rights), with the consent of the vendor.

3. Give the requisites for the exercise by an unpaid seller of his right of stoppage in transitu.
The following are the requisites for the existence of the right:
 The seller must be unpaid
 The buyer must be insolvent
 The goods must be in transit
 The seller must either actually take possession of the goods sold or give notice of his
claim to the carrier or other person in possession
 The seller must surrender the negotiable document of title, if any, issued by the carrier
or bailee
 The seller must bear the expenses of delivery of the goods after the exercise of the
right.
4. What are the implied warranties in a contract of sale?
The implied warranties in a contract of sale were:
 An implied warranty on the part of the seller that he has a right to sell the thing at the
time when the ownership is to pass, and that the buyer shall from that time have and
enjoy the legal and peaceful possession of the thing.
 An implied warranty that the thing shall be free from any hidden faults or defects, or
any charge or encumbrance not declared or known to the buyer.
5. Distinguish “sale or return” from “sale on trial”.
1. Sale or return – the ownership of the goods is transferred to the buyer on delivery, but the
buyer has the option in revert their ownership on the seller by returning on time fixed or if no
time fixed, within reasonable time.
2. Sale on trial or on approval - ownership of the goods remains with the seller despite delivery
but ownership shall transfer to the buyer in the following cases:
 When he signifies approval
 When he does an act ( if he starts consuming or using the thing)
 If he doesn’t signify approval but retains the goods without notice within the time fixed
6. Suppose the parties failed to stipulate the place of delivery of the thing sold, where is the
place of delivery?
The rules in determining the place of delivery is in priority of:
 Where there is an agreement, place of delivery is that agreed upon
 Where there is no agreement, place of delivery determined by usage of trade
 Where there is no agreement and no prevalent usage, place of delivery is the seller’s
place
 In any other case, place of delivery is the seller’s residence
 In case of specific goods, which to the knowledge of the parties at the time the contract
was made were in some other place, that place is the place of delivery, in the absence of
agreement or usage of trade to the contrary
7. What are the principal obligations of the vendor?
The principal obligations of the vendor are:
 To transfer the ownership of the thing sold.
 To deliver the thing sold
 To warrant the thing sold against eviction and hidden defects
 To take care of the thing sold with the diligence of a good father of a family
 To pay for the expenses for the execution and registration of the deed of sale, unless
there is stipulation to the contrary
8. Suppose the thing sold is lost after perfection of the sale but before its delivery to the buyer,
who shall bear the loss by a fortuitous event? Explain.
The buyer will bear the loss. If the thing is lost after perfection of the contract but before its
delivery, that is even before the ownership is transferred to the buyer, the risk of loss by a
fortuitous event without the seller’s fault is borne by the buyer as an exception to the rule of
res perit domino.

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