LOSS, DETERIORATION, FRUITS & OTHER BENEFITS

CIVIL LAW

To have a valid contract, subject matter must be determinate or specific (law on loss, deterioration, fruits, applies only to determine subject matter) and sale is unconditional (perfection)

Delivery of subject matter is the mode which transfers ownership to the buyer
Not a title but a mode; tradition transfers ownership (needs delivery)

Risk of loss passes at perfection (even if ownership has not yet been transferred)

COMMON LAW

Perfection of unconditional contract of sale covers goods that are determinable
Perfection with availability of subject matter for delivery is the mode which transfers ownership to buyer;

Tradition is merely a means to perform obligation

Res perit domino; owner bears risk of loss

*Legal consequences from point of perfection are the same in both legal systems: upon perfection of an unconditional contract of sale involving specific or determinate subject matter, the risk of loss deterioration and the benefits of fruits and improvements, were fro the account of the buyer.

WHO BEARS RISK OF LOSS/DETERIORATION/FRUITS

1. Before perfection

• Res perit domino

• Owner is seller so seller bears risk of loss

2. At Perfection

• Res perit domino

• Contract is merely inefficacious because loss of the subject matter does not affect the validity of the sale

• Seller cannot anymore comply with obligation so buyer cannot anymore be compelled

3. After Perfection but before delivery

a. Loss – confused state
2 views:
Paras: BUYER
Tolentino: SELLER

b. Deterioration & fruits - Buyer bears loss;

4. After delivery

• Res perit domino

• Owner is buyer so buyer bears risk of loss

• Delivery extinguishes ownership vis-a-vis the seller & creates a new one in favor of the buyer