Special Contracts by Lason

8/13/2019 Special Contracts by Lason

1/9

1 |P U P L e g a l A n n o t a t i o n s o n S t a t u t o r y P r o v i s i o n s O f f e r e d b y N o n s e n s i c a l s

( L A S O N N O T E S )

SALES

NATURE AND FORM OF THE CONTRACT

Art. 1458. By the contract of sale one of the contracting parties obligates himself to

transfer the ownership 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. (1445a)

Essential Characteristics of the Contract of Sale

1. Consensual: because the contract is perfected by consent.Note: real contract on the other hand is perfected by delivery

(e.g. contract of deposit or commodatum)

2. Bilateral reciprocal: because both parties are bound by obligations dependentupon each other.

3. Onerous: because to acquire the right, valuable consideration should be given4. Commutative: the values exchanged are almost equivalent

(sometimes aleatory like the sale of genuine sweepstakes ticket)

5. Principal: (not accessory contract e.g. pledge or mortgage) not dependentupon other contract to validly exist.

6. Nominate: with special designationEssential ELEMENTS of the Contract of Sale (without which the contract cannot be valid)

1. Consent: meeting of the minds2. Determinate subject: generally no sale of generic things (affects the meetingof the minds)

3. Price certain in money or equivalent (cause or consideration)

Natural Elements

1. Inherent in the contract; deemed to existe.g. warranty against eviction, warranty against hidden defects

Accidental Elements

1. Maybe present or absente.g. place and time of payment

Stages in the Contract of Sale

Negotiationperfection (meeting of the minds)consummation (payment and delivery)

Polytechnic University

of the Philippines

College of Law

Special Contracts

Atty. Gerardo Lara

Generally based on the

Civil Code Annotated by:

Justice Edgardo L. Paras


2/9



Kinds of Sale

1. Nature of Subject MatterA. Sale of real propertyB. Sale of personal property

2. Value of the thing exchangedA. CommutativeB. Aleatory

3. TangibilityA. Sale of property (chose in possession)B. Sale of right (chose in action)

4. Validity and DefectA. ValidB. RescissibleC. VoidableD. Void

5. Legality of the objectA. LicitB. Illicit

6. Presence of ConditionsA. AbsoluteB. Conditional e.g. sale with pacto de

retro

7. Wholesale or RetailA. Wholesale: goods are resold

unaltered, also in large quantities

B. Retail:altered8. Proximate inducement for the sale

A. Sale by descriptionB. Sale by sampleC. Sale by description and sample

9. When the price is tenderedA. CashB. Installment

Loan: the amount is substantially smaller than the security given

Lease: transfer of temporary possession and use of the property

Extrajudicial Foreclosure Sale

1. Ordinary execution2. Judicial foreclosure sale3. Extrajudicial foreclosure sale

SALE Dation in Payment

1. no pre-existing credit 1. there is a pre-existing credit

2. gives rise to obligation 2. extinguishes the obligation

3. cause and consideration is price 3. extinguishment of debt

4. freedom in price determination 4. less freedom

5. giving the price ends the

obligation

5. extinguishment maybe

partial or complete

Contract of SALE Contract to SELL

1. non payment of price is a

resolutory condition

1. non payment results to as if

the obligation to transfer

ownership is not binding

2. the title is passed upon delivery 2. the title is passed upon full

payment

3. delivery results to lost of

ownership that can only be

regained through rescinded

contract

3. enforcement or specific

performance


3/9


4/9



1. Undivided interest: aliquot part or usufructArt. 1464. In the case of fungible goods, there may be a sale of an undivided share of a specific mass, though the seller

purports to sell and the buyer to buy a definite number, weight or measure of the goods in the mass, and though the

number, weight or measure of the goods in the mass is undetermined. By such a sale the buyer becomes owner in

common of such a share of the mass as the number, weight or measure bought bears to the number, weight or

measure of the mass. If the mass contains less than the number, weight or measure bought, the buyer becomes the

owner of the whole mass and the seller is bound to make good the deficiency from goods of the same kind and quality,

unless a contrary intent appears. (n)

Note: This is a sale of a specific object because the mass is specific.

Art. 1465. Things subject to a resolutory condition may be the object of the contract of sale. (n)

1. Property subject to reserve troncal may be sold2. The usufruct that may end when the naked owner becomes a lawyer can be sold3. Selling of a land a retro

Art. 1466. In construing a contract containing provisions characteristic of both the contract of sale and of the contract

of agency to sell, the essential clauses of the whole instrument shall be considered. (n)

Sale Agency to Sell

1. the buyer pays the price 1. the agent delivers the price he got from the buyer

2. the buyer becomes the owner after delivery 2. the agent does not becomes the owner

3. the seller warrants 3. the agent assumes no personal liability as far as he

acts in his authority and in the name of his principal

Art. 1467. A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his

business manufactures or procures for the general market, whether the same is on hand at the time or not, is a

contract of sale, but if the goods are to be manufactured specially for the customer and upon his special order, and not

for the general market, it is a contract for a piece of work. (n)

Rules:

1. Ordered in the ordinary course of business: SALE2. Manufactured specially and not for the market: PIECE OF WORKMASSACHUSETTS RULE: if specially done at the order of another, this is a contract of piece of work.

Art. 1468. If the consideration of the contract consists partly in money, and partly in another thing, the transaction

shall be characterized by the manifest intention of the parties. If such intention does not clearly appear, it shall be

considered a barter if the value of the thing given as a part of the consideration exceeds the amount of the money or

its equivalent; otherwise, it is a sale. (1446a)

Rules:

1. Intent2. If the thing is more valuable than money: barter


5/9



3. If 50/50: sale4. If thing is less valuable: saleArt. 1469. In order that the price may be considered certain, it shall be sufficient that it be so with reference to another

thing certain, or that the determination thereof be left to the judgment of a special person or persons.

Should such person or persons be unable or unwilling to fix it, the contract shall be inefficacious, unless the parties

subsequently agree upon the price.

If the third person or persons acted in bad faith or by mistake, the courts may fix the price.

Where such third person or persons are prevented from fixing the price or terms by fault of the seller or the buyer, the

party not in fault may have such remedies against the party in fault as are allowed the seller or the buyer, as the case

may be. (1447a)

1. If the price is not certain: there can be no true meeting of the minds (MANRESA)2. It is okay if the price is later on discounted.3. Failure to pay the price does not cancel the SALE.4. If the payment is made by counterfeit money, the SALE is still valid, because there is still the consideration is the

PRICE or the VALUE of the thing being sold.

NB: if no specific amount has been agreed upon, the price is still considered certain:

1. If it be certain with reference to another thing which is certain2. If the price is left in the determination to the judgment of the specified person3. Art 1472: if the price can be determined later on by things like stock exchangeArt. 1470. Gross inadequacy of price does not affect a contract of sale, except as it may indicate a defect in the

consent, or that the parties really intended a donation or some other act or contract. (n)

1. In ordinary sale, the very low price does not invalidate the sale, even it shocks the conscience of man.2. In judicial sale, if it shocks the conscience of the court, it can set it aside.

e.g.: 10% of the value of the property

3. It may also appear, that the contract is one of loan, the remedy is reformation of the contractArt. 1471. If the price is simulated, the sale is void, but the act may be shown to have been in reality a donation, or

some other act or contract. (n)

NB: the contract is absolutely void, an action for annulment is not essential.

Art. 1472. The price of securities, grain, liquids, and other things shall also be considered certain, when the price fixed

is that which the thing sold would have on a definite day, or in a particular exchange or market, or when an amount is

fixed above or below the price on such day, or in such exchange or market, provided said amount be certain. (1448)

NB.: if the price failed to be ascertained, the sale is inefficacious.

Art. 1473. The fixing of the price can never be left to the discretion of one of the contracting parties. However, if theprice fixed by one of the parties is accepted by the other, the sale is perfected. (1449a)

Wisdom of the law: the other party cannot give consent to what he does not know. (Manresa)

Art. 1474. Where the price cannot be determined in accordance with the preceding articles, or in any other manner,

the contract is inefficacious. However, if the thing or any part thereof has been delivered to and appropriated by the


6/9



buyer he must pay a reasonable price therefor. What is a reasonable price is a question of fact dependent on the

circumstances of each particular case. (n)

NB: if the price cannot really be determined, the sale is void.

Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the

object of the contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing

the form of contracts. (1450a)

1. Requirement of perfectiona. face to face : when the offer is accepted without any condition.

b. Phone negotiations are considered face to face.

c. Conditional acceptance is a counter offer

d. correspondence: is when the offeror receives or has knowledge of such acceptance

e. if the sale is subject to a suspensive condition, perfection is from the moment of the fulfillment of the condition

2. Formalities of perfection (statutes of frauds)a. real property

b. real property if the value exceeds 500 pesos must be in writing in order to be enforceable

provided that it should not be completely or partially executed or the defense of the Statute of Frauds is waived

c. sale that should be executed after 1 year or more should be in writing

3. Wholesale vs Retaila. quantity should not be considered but the character of purchase

b. if the buyer consumed the item its retail

c. if the buyer resale the item its wholesale

Art. 1476. In the case of a sale by auction:

(1) Where goods are put up for sale by auction in lots, each lot is the subject of a separate contract of sale.

(2) A sale by auction is perfected when the auctioneer announces its perfection by the fall of the hammer, or in othercustomary manner. Until such announcement is made, any bidder may retract his bid; and the auctioneer may

withdraw the goods from the sale unless the auction has been announced to be without reserve.

(3) A right to bid may be reserved expressly by or on behalf of the seller, unless otherwise provided by law or by

stipulation.

(4) Where notice has not been given that a sale by auction is subject to a right to bid on behalf of the seller, it shall not

be lawful for the seller to bid himself or to employ or induce any person to bid at such sale on his behalf or for the

auctioneer, to employ or induce any person to bid at such sale on behalf of the seller or knowingly to take any bid from

the seller or any person employed by him. Any sale contravening this rule may be treated as fraudulent by the buyer.

(n)

Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery

thereof. (n)

Delivery is placing the thing sold to the control and possession of the vendee

Kinds of Delivery

1. Actual or real delivery2. Legal or constructive3. Quasi-tradition


7/9



Art. 1478. The parties may stipulate that ownership in the thing shall not pass to the purchaser until he has fully paid

the price. (n)

1. Pactum reservati dominiiArt. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.

An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if

the promise is supported by a consideration distinct from the price. (1451a)

1. Option without consideration is void2. The option must be distinct from the price3. Policitacion: a unilateral promise to buy or to sell which is not accepted4. Unilateral promise to sell must be plain, clear, and unconditional, qualified acceptance is no acceptance

Art. 1480. Any injury to or benefit from the thing sold, after the contract has been perfected, from the moment of theperfection of the contract to the time of delivery, shall be governed by Articles 1163 to 1165, and 1262.

This rule shall apply to the sale of fungible things, made independently and for a single price, or without consideration

of their weight, number, or measure.

Should fungible things be sold for a price fixed according to weight, number, or measure, the risk shall not be imputed

to the vendee until they have been weighed, counted, or measured and delivered, unless the latter has incurred in

delay. (1452a)

Art. 1481. In the contract of sale of goods by description or by sample, the contract may be rescinded if the bulk of the

goods delivered do not correspond with the description or the sample, and if the contract be by sample as well as

description, it is not sufficient that the bulk of goods correspond with the sample if they do not also correspond with

the description.

The buyer shall have a reasonable opportunity of comparing the bulk with the description or the sample. (n)

Art. 1482. Whenever earnest money is given in a contract of sale, it shall be considered as part of the price and as

proof of the perfection of the contract. (1454a)

1. Arras: is something of value to show that the buyer was really earnest and given to the seller to bind the bargain.2. Part of the purchase price3. Proof of the perfection of contract

Art. 1483. Subject to the provisions of the Statute of Frauds and of any other applicable statute, a contract of sale maybe made in writing, or by word of mouth, or partly in writing and partly by word of mouth, or may be inferred from the

conduct of the parties. (n)

Art. 1484. In a contract of sale of personal property the price of which is payable in installments, the vendor may

exercise any of the following remedies:

(1) Exact fulfillment of the obligation, should the vendee fail to pay;


8/9


9/9



Section 6. The buyer shall have the right to pay in advance any installment or the full unpaid balance of the

purchase price any time without interest and to have such full payment of the purchase price annotated in

the certificate of title covering the property.

Section 7. Any stipulation in any contract hereafter entered into contrary to the provisions of Sections 3, 4,

5 and 6, shall be null and void.

Section 8. If any provision of this Act is held invalid or unconstitutional, no other provision shall be affected

thereby.lawphi1

Section 9. This Act shall take effect upon its approval.

Approved: August 26, 1972.

Art. 1485. The preceding article shall be applied to contracts purporting to be leases of personal property with option

to buy, when the lessor has deprived the lessee of the possession or enjoyment of the thing. (1454-A-a)

Art. 1486. In the case referred to in two preceding articles, a stipulation that the installments or rents paid shall not bereturned to the vendee or lessee shall be valid insofar as the same may not be unconscionable under the

circumstances. (n)

Art. 1487. The expenses for the execution and registration of the sale shall be borne by the vendor, unless there is a

stipulation to the contrary. (1455a)

Art. 1488. The expropriation of property for public use is governed by special laws. (1456)

Special Contracts by Lason

Documents

Transcript of Special Contracts by Lason