PARTIES TO A CONTRACT OF SALE

GENERAL RULE: All parties with capacity to contract can enter into a valid contract of sale

1. Natural Persons

2. Juridical Persons- Corporation/Partnership/Associations/Cooperatives

• Status of contract: valid

• Remedies available therefore are:

a. specific performance

b. rescission

c. damages

EXCEPTION TO GENERAL RULE:

1. Minors

• status of contract: VOIDABLE only, therefore ratifiable

• remedy is action for annulment (with partial restitution in so far as the minor is benefited)

2. SALE BY & BETWEEN SPOUSES

a. Contract with 3rd parties

• status of contract is VALID

b. Sale between parties

• Status not provided for by law but VOID according to case law

• Reason:

i. prevent defraudation of creditors

ii. avoid situation where dominant spouse takes advantage of the other

iii. avoid circumvention on prohibition of donation between spouses

• Exception

i. separation of property agreed (marriage settlement)

ii. judicial separation of property

c. Common Law Spouses (Paramours)

• Status of contract: VOID (per case law)

• Rationale: evil sought to be avoided is present

3. OTHERS PER SPECIFIC PROVISIONS OF LAW

a. Guardian with regard to property of ward during period of guardianship

b. Agent with regard to property of principal
c. Executor/administrator with regard to the estate of the deceased

d. Public officers with regard to the property of the State

e. Officer of court & employee – with regard to the property in litigation

LEGAL STATUS OF CONTRACT:

1. VOID (PER CASE LAW) – guardian/ executor/public officers / officers of the court

2. VOIDABLE (PER CIVIL CODE) – agent; VALID if with consent

TWO GROUPS OF PARTIES PROHIBITED FROM ENGAGING IN CONTRACT OF SALE:

1. Guardian / Agent / Executors – ratifiable in the sense that only private wrong is involved

2. Public Officials / Officers of Court – not ratifiable in the sense that public wrong is concerned

GUARDIAN/AGENT/ADMINISTRATOR

1. Legal status of contract: VOID (case law)

2. Direct or indirect

3. If mediator – no need to prove collusion; inutile

4. Even if court approved sale

5. Reason: fiduciary relationship is based on trust

ATTORNEYS

REQUISITES:

1. Lawyer-client relationship exists

2. Subject matter – property in litigation (all types)

3. Duration – while in litigation (from filing of complaint to final judgment); may be future litigation

• Reason: due to public policy; ground for malpractice

a. Client is at the mercy of the lawyer

b. Law is a noble profession

c. 2 Masters – 2 interest; one cannot serve 2 masters at the same time

• Exception: CONTINGENT FEE ARRANGEMENT

a. Amount of legal fees is based on a value of property involved in litigation

• Not a sale but service contract

• I give that you may do (innominate contract) so has to be governed by law on sales but because of public policy, considered VALID

• Reason why contingent fee is followed:

i. constitutional prohibition v. impairment of contract
ii. subject to control of courts (may be reduced if unconscionable or nullified)

iii. canons of legal ethics

iv. higher public policy litigants