I.

NATURE AND FORM OF THE CONTRACT Sources of the Law on Sales Sales are governed by the provisions of the Civil Code: 1. Book IV, Title VI, Articles 1458-1637 (Sales) 2. Title I, Arts. 1156-1422 (Obligations and Contracts) 3. Opinions of Commentators 4. Jurisprudence

Concept of Contract of Sale The contract of sales is an agreement whereby one of the parties (called the seller or vendor) obligates himself to deliver something to the other (called the buyer or purchaser or vendee) who, on his part, binds himself to pay therefore a sum of money or its equivalent (known as the price).The transfer of title to property or the agreement to transfer title for a price paid or promised, not mere physical transfer of the property, is the essence of sale.

Characteristics of a Contract of Sale 1. Consensual - perfected by mere consent of the parties without further acts.2. Bilateral - both the contracting parties are bound to fulfill correlative obligations towards each other (the seller to deliver and transfer ownership of the thing sold, and the buyer to pay the price).3. Onerous - the thing sold is conveyed in consideration of the price and viceversa.4. Commutative - the thing sold is considered the equivalent of the price paid and viceversa.5. Aleatory - in the case of sale of hope, one of the parties or both reciprocally bind themselves to give or to do something in consideration of what the other shall give or do upon the happening of an event which is uncertain, or which is to occur at an indeterminate time.6. Nominate - the contract is given a special name or designation in the Civil Code.7. Principal - the contract does not depend for its existence and validity upon another contract.

Essential Requisites of a Contract of Sale 1. Consent or meeting of the minds refers to the conformity of the parties to the terms of the contract, the acceptance by one of the offer made by the other. As a bilateral contract, the acceptance of payment by a party is an indication of his consent to a contract of sale, thereby precluding him from rejecting its binding effect [Clarin vs. Rulova, 127 SCRA 512]

There may be a sale against the will of the owner in case of expropriation and the three different kinds of sale under the law ordinary execution sale, judicial foreclosure sale, and extra-judicial foreclosure sale. 2. Object or subject matterrefers to the determinate thing which is the object of the contract; Even a future thing not existing at the time the contract is entered into may be the object of sale, provided it has a potential or possible existence, that is, it is reasonably certain to come into existence as the natural increment or usual incident of something in existence already belonging to the seller, and the tile will vest the buyer the moment the thing comes into existence (Art. 1461).

Emptio rei speratae (sale of thing expected)

Rei spetae - the sale of a thing not yet in existence ,subject to the condition that the thing will exist and on failure of the condition, the contract becomes ineffective and hence, the buyer has not obligation to pay the price;- the sale of hope itself that the thing will come into existence, where it is agreed that the buyer will pay the price even if the thing does not eventually exist; - the future thing is certain as to itself but uncertain as to its quantity and quality;- like the sale of a sweepstake ticket, it is not certain that the thing itself (winning a prize) will exist, much less it quantity and quality; - contract deals with a future thing;- contract relates to a thing which exists or is present the hope or expectancy; - sale is subject to the condition that the thing should exist, so that if it does not, there will be no contract by reason of the absence of an essential element.-produces effect even though the thing does not come into existence because the object of the contract is the hope itself, unless it is a vain hope or expectancy (like the sale of a falsified sweepstakes ticket which can never win). 3. Cause or consideration refers to the price certain in money or its equivalent.

Natural Elements those which are deemed to exist in certain contracts, in the absence of any contrary stipulations, like warranty against eviction; Accidental Elements those which may be present or absent depending on the stipulations of the parties ,like conditions, interest, penalty, time or place of payment.

Kinds of a Contract of Sale 1. As to presence or absence of conditions Absolute where the sale is not subject to any condition whatsoever and where the title passes to the buyer upon delivery of the thing sold. Conditional where the sale contemplates a contingency and where the contract is subject to certain conditions, usually in the case of the vendee, for the full payment of the agreed purchase price. 2. Other kinds As to the nature of the subject matter real or personal, tangible or intangible As to the manner of payment cash or installment As to its validity valid, rescissible, unenforceable, void

Contract of Sale Distinguished from Contract to Sell Contract of Sale Contract to Sell Transfer of title:- passes to the buyer upon delivery of the thing sold. remains with the seller until full payment of the agreed price. Payment of price:- non-payment of the price is a negative resolutory condition ,and the remedy is to exact fulfillment or to rescind the contract. -full payment is a positive suspensive condition, the failure of which is not a breach, casual or serious, of the contract but simply an event that prevents the obligation of the vendor to convey title from acquiring binding force. Ownership of vendor:- vendor loses and cannot recover ownership of the thing sold and delivered, actually or constructively until and unless the contract of sale itself is resolved and set aside. - title remains in the vendor until full payment of price.

Sale Distinguished from Dation in Payment Sale Dation in Payment - no pre-existing credit- there is pre-existing credit - gives rise to obligation - extinguishes obligationcause or consideration is the price, or the acquisition of title to the property- cause of consideration is extinguishment of the debt (from the point of view of the offeror), and the acquisition of the object offered (from the point of view of the creditor) in lieu of the original credit - there is greater freedom in

the determination of the price- less freedom - giving of the price may generally end the obligation of the buyer- the giving of the object in lieu of the credit may extinguish completely or partially the credit(depending on the agreement)

Sale of goods by description Sale of goods by sample - occurs where the purchaser has not seen the article sold and relies on the description given him by the vendor, or has seen the goods but the want of identity is not apparent on inspection.- - the parties contracted solely with reference to the sample, with the understanding that the bulk was like it.- the vendor warrants that the thing