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Law On Sales

The document outlines the legal framework for contracts of sale, detailing definitions, types of sales, and the obligations of both sellers and buyers. It includes information on the requisites for a proper object of sale, the stages of a sale, and various warranties and remedies available to sellers and buyers. Additionally, it discusses laws related to installment sales and the conditions under which sales may be extinguished or redeemed.

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Najebah ALIBASIR
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0% found this document useful (0 votes)
10 views6 pages

Law On Sales

The document outlines the legal framework for contracts of sale, detailing definitions, types of sales, and the obligations of both sellers and buyers. It includes information on the requisites for a proper object of sale, the stages of a sale, and various warranties and remedies available to sellers and buyers. Additionally, it discusses laws related to installment sales and the conditions under which sales may be extinguished or redeemed.

Uploaded by

Najebah ALIBASIR
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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a.

Consent
LAW ON SALES b. Determinate subject matter
SALES - is a contract where one party c. Consideration
(seller) obligates himself to transfer the REQUISITES OF A PROPER
ownership of and to deliver a determinate OBJECT OF SALE
thing, while the other party (buyer)
obligates himself to pay for said thing a 1. Determinate or determinable
price certain in money or its equivalent. 2. Lawful (licit)
3. Should not be impossible (commerce
CONTRACT OF SALE - one of the of men)
contracting parties obligates himself to 2. Rights (Must be transmissible)
transfer the ownership of and to deliver a
determinate thing, and the other to pay
therefor a price certain in money or its “GR: No form is required. It is a
equivalent. (Art. 1458, NCC) consensual contract.
XPN: Under Statute of Frauds, the
ABSOLUTE SALE - where the sale is following contracts must be in writing;
not subject to any condition whatsoever otherwise, they shall be unenforceable:”
and where the title passes to the buyer
upon delivery of the thing sold. STAGES:
1. Negotiation/ Policitation
2. Perfection
CONDITIONAL SALE - where the sale
3. Consummation
contemplates a contingency, and in
general, where the contract is subject to
NEGOTIATION - is an unaccepted
certain conditions, usually in the case of
unilateral promise to buy or sell. This
the vendee, the full payment of the agreed
produces no judicial effect and creates no
purchase price and in the case of the
legal bond. This is a mere offer, and has
vendor, the fulfillment of certain
not yet been converted into a contract. It
warranties. (De Leon, p. 15)
covers the period from the time the
prospective contracting parties indicate
CONTRACT TO SELL - is one form of interest in the contract to the time the
conditional sale where ownership or title contract is perfected.
is retained by the seller until the
fulfillment of a positive suspensive PERFECTION - at the moment there is
condition, normally the payment of the meeting of minds upon the thing which is
purchase price by the buyer in the manner the object of the contract and upon the
agreed upon. price.

CONSUMMATION - it takes place by


ELEMENTS: the delivery of the thing together with the
1. Accidental elements – dependent on payment of the price.
parties’ stipulations;
a. Conditions OPTION CONTRACT- a contract
b. Interest granting a privilege in one person, for
c. time & place of payment which he has paid a consideration
d. penalty (OPTION MONEY), which gives him
the right to buy certain merchandise or
2. Natural elements – those that are specified property, from another person, at
inherent even in absence of contrary anytime within the agreed period, at a
provision; Warranties fixed price.

3. Essential elements – for validity:


EARNEST MONEY (ARRAS) - is the
money given to the seller by the THE PRICE IS SIMULATED
prospective buyer to show that the latter is
truly interested in buying the property, - Contract of sale is void.
and its aim is to bind the bargain. XPN: The act may be shown to have been
in reality a donation or some other act or
contract.
RIGHT OF FIRST REFUSAL - is a
right of first priority, all things and
conditions being equal; identity of the SALE ON TRIAL, APPROVAL OR
terms and conditions offered to the SATISFACTION - is a contract in the
optionee and all other prospective buyers, nature of an option to purchase if the
with optionee to enjoy the right of first goods prove to be satisfactory, the
priority. It creates a promise to enter into a approval of the buyer being a condition
contract of sale and it has no separate precedent.
consideration. SALE OR RETURN - the ownership
passes to the buyer on delivery. The
subsequent return of the goods reverts
CHARACTERISTICS: ownership in the seller.
1. Consensual - perfected by mere consent.
KINDS OF DELIVERY:
2. Bilateral 1. Actual – thing sold is placed under the
3. Onerous control and possession of buyer/agent;
4. Commutative 2. Constructive – does not confer
physical possession of the thing, but by
5. Nominate construction of law, is equivalent to
6. Principal acts of real delivery.
 Tradicio Symbolica – delivery of
certain symbols representing the thing
OBLIGATIONS OF THE SELLER  . Tradicion Instrumental – delivery
1. Deliver the thing; of the instrument of conveyance.
 . Traditio Longa Manu – Delivery
2. Deliver fruits & accessions/accessories
of thing by mere agreement; when seller
accruing from perfection of sale;
points to the property without need of
3. Transfer ownership of the thing sold; actually delivering
4. Warranties;  Tradicio Brevi Manu – Before
contract of sale, the would‐be buyer was
5. Take care of the thing, pending delivery,
already in possession of the would‐be
with proper diligence;
subject matter of sale
6. Pay for the expenses of the deed of sale  Tradicio Constitutum Possessorium
unless there is a stipulation to the contrary. - at the time of perfection of contract,
seller continues to have possession merely
as a holder
OBLIGATION OF THE BUYER 3. Quasi‐tradition – delivery of rights,
1. Payment of the price; credits or incorporeal property, made
2. Accept delivery of thing sold; by:
a. Placing titles of ownership in the
3. Pay for expenses of delivery. hands of the buyer;
b. b. Allowing buyer to make use of
GROSS INADEQUACY OF PRICE rights.
- It does not affect the validity of the sale DOCUMENT OF TITLE:
if it is fixed in good faith and without 1. Bill Lading
fraud. (XPN: CoRDS) 2. Dock Warrant
3. Warehouse Receipt 1. Possessory Lien – Seller not bound to
deliver if buyer has not paid him the
 Negotiable Document of Title - is a price. It is exercisable only in
document of title which states that the following circumstances:
goods referred therein will be delivered to a. goods sold without stipulation as to
the bearer, or to the order of any person credit
named in such document. b. goods sold on credit but term of credit
 Non Negotiable Document of Title - has expired
they are delivered only to a specified c. buyer becomes insolvent
person
Note: When part of goods delivered,
BAILEE - someone who receives may still exercise right on goods
personal property from another, and has undelivered
possession of but not title to the property.
He/She is responsible for keeping the 2. Stoppage in Transitu
property safe until it is returned to the Requisites: I‐SENT‐U
owner.
a. Insolvent buyer
DOUBLE SALE b. Seller must Surrender the negotiable
1. Movable – Owner who is first to document of title, if any
possess in good faith c. Seller must bear the Expenses of
2. Immovable – delivery of the goods after the exercise
 First to register in good faith of the right.
 First to possess in good faith d. Seller must either actually take
 Person who presents oldest title in possession of the goods sold or give
good faith Notice of his claim to the carrier or
other person in possession
REMEDIES OF AN UNPAID SELLER e. Goods must be in Transit
Unpaid seller - seller of goods is deemed f. Unpaid seller
to be an unpaid seller either:
1. when the whole of the price has not 1. Special Right to Resell the Goods
been paid or tendered; or
2. when a bill of exchange or other Exercised when:
negotiable instrument has been
received as conditional payment, and a. Goods are perishable,
the condition on which it was received b. Stipulated the right of resale in case
has been broken by reason of the of default, or
dishonor of the instrument, the c. Buyer in default for unreasonable
insolvency of the buyer, or otherwise. time

4. Special Right to Rescind


I. Ordinary Requisites:
1. Action for Price a. Expressly stipulated OR buyer is in
Exercised when: default for unreasonable time
a. ownership has passed to buyer; b. Notice needed to be given by seller
b. price is payable on a day certain to buyer
c. goods cannot readily be resold for Note: Ownership of goods already with
reasonable price and Art. 1596 is buyer but seller may still rescind;
inapplicable. ownership is destroyed even without court
2. Action for Damages – In case of intervention but in ordinary sale, need to
wrongful neglect or refusal by the buyer go to court.
to accept or pay for the thing sold.

SALE OF PERSONAL PROPERTY


II. Special
RECTO LAW (Installment Sales Law) c. Basis of eviction is a right Prior to sale
- is a law covers contracts of sale of or act imputable to seller
personal property by installments (Act No. d. Seller has been Summoned in the suit
4122). It is also applied to contracts for eviction at the instance of buyer; or
purporting to be leases of personal made 3rd party defendant through 3rd
property with option to buy, when the party complaint brought by buyer
lessor has deprived the lessee of the e. No waiver on the part of the buyer
possession or enjoyment of the thing.  Warranty against encumbrances
(non‐ apparent)
SALE OF REAL PROPERTY Requisites:
A. immovable sold is encumbered with
MACEDA LAW (Realty Installment non‐apparent burden or servitude not
Buyer Act) - embodied in R.A. 6552 mentioned in the agreement.
which provides for certain protection to B. nature of non‐apparent servitude or
particular buyers of real estate payable on burden is such that it must be presumed
installments. The law declares as "public that the buyer would not have acquired it
policy to protect buyers of real estate on had he been aware thereof.
installment payments against onerous and  Warranty against Hidden Defects
oppressive conditions. Requisites: HENNAS
a. Defect is important or Serious
WARRANTIES - a statement or The thing sold is unfit for the use
representation made by the seller of goods, which it is intended. Diminishes its fitness
as part of the contract of sale, having for such use or to such an extent that the
reference to the character, quality, or title, buyer would not have acquired it had he
of the goods, and by which he promises or been aware thereof
undertakes to insure that certain facts are b. Defect is Hidden
or shall be as he then represents. c. Defect Exists at the time of the sale
d. Buyer gives Notice of the defect to the
 Express warranties - any affirmation seller within reasonable time
of fact or any promise by the seller e. Action for rescission or reduction of the
relating to the thing if the natural price is brought within the proper period
tendency of such affirmation or . 6 months – from delivery of the
promise is to induce the buyer to thing sold
purchase the same, and if the buyer . Within 40 days – from the delivery
purchases the thing relying thereon. in case of animals
 Implied warranties - warranties f. There must be No waiver of warranty
deemed included in all contracts of on the part of the buyer.
sale by operation of law.
 Warranty that seller has right to
sell – refers to consummation Accion Redhibitoria - Action to
stage. withdraw from the contract.
 Warranty against eviction - in a Accion Quati Minoris - Reduction of the
contract of sale, unless a contrary price with damages.
intention appears, there is an Servitude - An encumbrance imposed
implied warranty on the part of upon an immovable for the benefit of
the seller that when the another immovable belonging to a
ownership is to pass, and that the different owner.
buyer shall from that time have
and enjoy the legal and peaceful Waiver Consciente - The waiver is made
possession of the thing. by the vendee without the knowledge of
Requisites: JPENS the risk of eviction.
Waiver Intencionada - The waiver is
a. Buyer is Evicted in whole or in part
made by the vendee with the knowledge
from the subject matter of sale
b. Final Judgment
of the risk of eviction and assumed its or words or other requisites prescribed by
consequences. law for a mortgage, but shows the
intention of the parties to make the
property subject of the contract as security
EXTINGUISHMENT OF SALE for a debt and contains nothing impossible
Sales are extinguished by the same causes or contrary to law.
as all other obligations, and by Essential Requisites:
conventional or legal redemption.
1.Parties entered into a contract of sale
2.Their intention was to secure an existing
CONVENTIONAL REDEMPTION - debt by way of a mortgage.
Seller reserved the right to repurchase The rule on the presumption:
thing sold coupled with obligation to
return price of the sale, expenses of A sale with conventional redemption is
contract & other legitimate payments and deemed to be an equitable mortgage in
the necessary & useful expenses made on any of the following cases: (Art. 1602)
the thing sold. AIR‐STAR
1.Price of the sale with right to
Note: Right to repurchase must be repurchase is unusually Inadequate
reserved at the time of perfection of sale. 2.Seller Remains in possession as
lessee or otherwise
LEGAL REDEMPTION - Also referred 3.Upon or after the expiration of the
to as “retracto legal”, it is the right to be right to repurchase Another instrument
subrogated upon the same terms and extending the period of redemption or
conditions stipulated in the contract, in the granting a new period is executed
place of one who acquires the thing by 4.Purchaser Retains for himself a part
purchase or by dation in payment or by of the purchase price
other transaction whereby ownership is 5.Seller binds himself to pay the Taxes
transmitted by onerous title. on the thing sold
6.In any other case where the real
Instances: intention of the parties is that the
1. Sale of a co‐owner of his share to a transaction shall Secure the payment of
stranger (Art. 1620) a debt or the performance of any other
2.When a credit or other incorporeal obligation.
right in litigation is sold (Art. 1634) 7.Art. 1602 shall also apply to a
3.Sale of an heir of his hereditary rights contract purporting to be an Absolute
to a stranger (Art. 1088) sale. (Art. 1604)
4.Sale of adjacent rural lands not Note: In case of doubt in determining
exceeding 1 hectare (Art. 1621) whether it is equitable mortgage or sale
5.Sale of adjacent small urban lands a retro (with right of repurchase); it
bought merely for speculation (Art. shall be construed as equitable
1622) mortgage.
The right of legal redemption shall not be
exercised except within 30 days from the Remedy is reformation.
notice in writing by the prospective seller, An equitable mortgage is one which
or seller, as the case may be. The deed of although lacking in some formality, or
sale shall not be recorded in the Registry form or words, or other requisites
of Property unless accompanied by an demanded by a statute, nevertheless
affidavit of the seller that he has given reveals the intention of the parties to
written notice thereof to all possible charge real property as security for a
redemptioners. debt, and contains nothing impossible
or contrary to law.
EQUITABLE MORTGAGE - One
which lacks the proper formalities, form

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