CONTRACT OF SALE

CONTRACT OF SALE – One of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. A contract of sale may be absolute or conditional.

SALES

1. Contract of sale (absolute)

• real obligation – obligation to give

• remedies available:

a. specific performance

b. rescission

c. damages

2. Contract to sell (conditional)

• personal obligation – obligation to do

• remedies available:

a. resolution

b. damages

ESSENTIAL REQUISITES OF A CONTRACT OF SALE

1. consent

2. subject matter

3. price

CHARACTERISTICS OF CONTRACT OF SALE:

1. Nominate - law gave it a name

2. Principal - can stand on its own; unlike accessory contract

3. Bilateral - imposes obligation on both parties

a. obligation of seller – transfer ownership & deliver

b. obligation of buyer – pay price

Consequence: power to rescind is implied in bilateral contracts

4. Onerous – with valuable consideration

• Consequence: all doubts in construing contract to be resolved in greater reciprocity of interest

5. Commutative – equal value is exchanged for equal value

• Test: subjective – as long as parties believe in all honesty that he is receiving equal value then it complies with the test & would not be deemed a donation; but must not be absurd.
• Inadequacy of price or aleatory character not sufficient ground to cancel contract of sale;

• inadequacy can show vitiation of consent & sale may be annulled based on vice but not on inadequacy

6. Consensual – meeting of minds makes a perfect contract of sale but needs delivery to consummate.

7. Title & not a mode – title gives rise to an obligation to transfer; it is a mode w/c actually transfers ownership

STAGES IN LIFE OF CONTRACT OF SALE:

1. negotiation

2. perfection – by mere consent; performance may be demanded (specific performance)

3. consummation

DISTINGUISHED FROM OTHER CONTRACTS:

1. Donation

• donation is gratuitous; sale is onerous

• donation is formal contract; sale is consensual

• donation is governed by law on donation; sale is governed by law on sales

2. Barter

• in barter, the consideration is the giving of a thing; in sale, it is giving of money as payment

• both are governed by law on sales; both are species of the genus sales

• if consideration consists party in money & partly by thing – look at manifest intention;

if intention is not clear (1468):

a. value of thing is equal or less than amount of money – sale

b. value of thing is more than amount of money – barter

3. Contract for piece of work

• test in article 1467:

a. contract for delivery of an article which the vendor in the ordinary course of business manufactures or procures for general market (whether on hand or not) – sale

b. goods are to be manufactured specially for a customer and upon special order and not for the general market – contract for piece of work.

• jurisprudence:

a. Timing test – under art 1467; Inchausti; whether the thing transferred would have never existed but for the order – contract for piece of work (abandoned)
b. Habituality test – enunciated in Celestino v CIR; contract of sale if manufacturer engages in activity without need to employ extraordinary skills and equipment; contract for piece of work is sale of service; contract of sale is sale of things.

c. Nature of the object test – enunciated in EEI v CIR; each product’s nature of execution differs from the others; products are not ordinary products of manufacturer.

• main factor in decision of the SC: essence of why parties enter into it:

a. essence is object – contract of sale

b. essence is service – contract for piece of work

4. Agency to sell

• in sale, buyer pays for price of object; in agency to sell, agent not obliged to pay for price, merely obliged to deliver price received from buyer.

• in sale, buyer becomes owner of thing; in agency; principal remains owner even if object delivered to agent

• in sale, seller warrants; in agency, agent assumes no risk/liability as long as within the authority given

• in sale, not unilaterally revocable; in agency, may be revoked unilaterally because fiduciary & even if revoked w/o ground

• in sale, seller receives profit; in agency, agent not allowed to profit

• TEST: essential clauses of whole instrument (art 1466 – motherhood statement, not good law)

• Agency is a personal contract; sale is a real contract (to give) – rescission is not available in agency

5. Dacion en pago

• dacion: contract where property is alienated to satisfy/extinguish obligation to pay debt

• in dacion: novates creditor-debtor relationship into seller-buyer

• in dacion: delivery is required (real contract)

6. Lease

• in sale: obligation to absolutely transfer ownership of thing; in lease: use of thing is for a specified period only with an obligation to return

• in sale: consideration is price; in lease: consideration is rent

• in sale: seller needs to be owner of thing to transfer ownership;
in lease: lessor need not be owner

• lease with option to buy: really a contract of sale but designated as lease in name only; it is a sale by installments

civil wrote:
ESSENTIAL REQUISITES OF A CONTRACT OF SALE

1. consent

2. subject matter

3. price

Dude, it should be determinate or at least determinable. See Art 1460 and 1458.

thanks sir b_9904 for giving emphasis on the matter. For the sake of other students like me, allow me to add this.

A thing is

i. determinate: particularly designated or physically segregated from all others of the same class

ii. determinable:
1. thing is capable of being made determinate
2. without the necessity of a new further contract

i'm still a an MBA student. fresh. i just need who could give me an idea on the civil code art 1458- 1554.
thanks