2011 - Sales Mid-Term Exam

ATENEO LAW SCHOOL
SALES, 2-B
Mid-Term Examination
.
INSTRUCTIONS
This Examination consists of SEVENTEEN (17) Multiple Choice Questions on
SEVEN (7) PAGES. The Questions are based on a set of Common Facts, but there are
SEPARATE facts for each Question. Apart from the Common Facts, there is NO
CARRYOVER of facts from one Question to another. The Questions do not involve
issues on form of sales or the Statute of Frauds. Read each Question and Item VERY
CAREFULLY. Choose the BEST Answer for each Question and write down the Letter
corresponding to your choice. No explanations are necessary and none will be given
credit. Answer this Examination sequentially. Good luck! (6 points each)
Common Facts:
1. Rosie H.W. Cruz, a well-to-do sixteen (16)-year old Filipina supermodel, is the
daughter of Christian R. Cruz, a collector of rare occult books, among which a rare
original manuscript of The Chemical Wedding of Christian Rosenkreutz published
in the year 1616.
2. On 25 July 2011, Rosie had the following message posted on her social network
site, sent via electronic mail to all her contacts, and sent via mass text to all the
persons in her phone directory
To all my friends: I am dying to watch my two favorite rock bands who
are playing in the Philippines in the next few days, so I need the following
tickets: (a) Two (2) patron class tickets for the Incubus concert on 28 July
2011 at the Araneta Coliseum; and (b) Two (2) tickets of any class for the 30
Seconds to Mars concert on 29 July 2011 at Trinoma Mall. I hereby offer to
pay up to double the face value for each of the said tickets, so send me a
private message ASAP so we can finalize the sale.
3. On the same day, Sasha Grade, a brilliant half-Filipina, half-German second-year
Ateneo Law School student, who moonlights as an indie actress, and became
friends with Rosie when they appeared in the same issue (October 2010) of a local
mens magazine, responded.
Questions:
1.
Sashas private message to Rosie via their social network site is Hey, Rosie! I
have all the tickets you need and hereby accept all your terms and conditions for
the sale. Is there a perfected contract of sale?
a.
No, because Rosies post, being a mere business advertisement, is just

an invitation to make an offer.
b.
Yes, because a certain offer was met with an unqualified acceptance, and
the rule on business advertisements under Article 1325 of the Civil Code
only applies to things for sale, not to things to be purchased.
c.
Yes, but only upon Rosie coming to know of the acceptance, since the rule
under Article 1319 of the Civil Code that acceptance made by letter or
telegram does not bind the offeror except from the time it came to her
knowledge.
d.
No, because while the rule on business advertisements under Article 1325
of the Civil Code does not apply, the subject matter and price contained in
the offer are not certain.
2
2.
3.
4.
5.
Rosie checks her e-mail and reads the following message from Sasha, Hey,
Rosie! I hereby accept your offer with respect to the Incubus tickets and hereby
sell you two (2) Incubus patron class tickets with a face value of P6,800.00
each. Is there a perfected contract of sale?
a.
Yes, because a certain offer was met with an unqualified acceptance.
b.
No, because there is yet no consent on the part of Rosie.
c.
No, because the subject matter is not determinate or determinable, as the

ticket/seat numbers are not specified.
d.
No, because the price is not certain or ascertainable, and the manner of
payment not specified.
Rosie! Remember when we did our photo shoot? As my favorite poet wrote,
Some things are meant to be casual but never forgotten. Anyway, Ive been
wanting to return the favor ever since. I happen to be an organizer of the
Incubus concert and I can get you two (2) Incubus patron class tickets with a face
value of P6,800.00 each, right smack center of the stage on front row. And no
need to double the face value, face value is enough. Rosie e-mails Sasha,
Great! Ill take the tickets. So when do I pay you? Sasha responds, Anytime
convenient for you is fine. Is there a perfected contract of sale?
a.
No, because Sasha cannot sell something she does not own.
b.
No, because the price is simulated, since there is clearly no intent on the
part of Sasha to get paid, and the consideration is the repayment of a
favor.
c.
No, because there is no agreement as to manner of payment.
d.
Yes, because all the elements of a valid contract of sale are present.
Rosie! My husband, whos into all these theater production stuff, happens to be
an organizer of the Incubus concert and I can get two (2) Incubus tickets from
him at cost, since Ive been helping him sell tickets. And Im sure he wont mind if
I sell you two (2) Incubus patron class tickets with a face value of P6,800.00
each, right smack center of the stage on front row. And no need to double the
face value, face value is enough. Rosie sends an instant message to Sasha via
Yahoo Messenger, Great! Will you be at the concert? Sasha messages back,
Of course! Wifely duties, you know. Rosie responds, Great! Will pay you
then. Bye. Is the sale to Rosie valid?
a.
No, because Sasha cannot sell something she does not own.
b.
No, because Sasha cannot sell something she will never own, since she
can neither acquire the Incubus tickets from her husband, whether via sale
or donation.
c.
No, because while Sasha can get the tickets from her husband, without
his consent for her to sell the same to Rosie, the sale to Rosie is void.
d.
Rosie! I happen to be an organizer of the Incubus concert and I can get you two
(2) Incubus patron class tickets with a face value of P6,800.00 each, right smack
center of the stage on front row. And no need to double the face value, face
value is enough. Rosie e-mails Sasha, Great! Ill take the tickets, but can you
get me backstage? Im such a fan of Brandon whats-his-face, the lead singer of
Incubus, you know? Anyway, Ill pay you backstage at the concert. Sasha
responds, Okay, Ill see what I can do.
3
However, Rosie was never allowed backstage, and was forced to watch the
concert from the audience. When Sasha tries to collect payment, Rosie refuses
to pay. Is the refusal to pay justified?
6.
a.
No, because all the elements of a valid contract of sale are present, and
there was no material or substantial breach on the part of Sasha.
b.
Yes, because Sasha sold a vain hope, which renders the sale void.
c.
Yes, because the sale was subject to a suspensive condition (i.e., Rosie
getting backstage) which was not fulfilled, hence, it was never perfected.
d.
Yes, because the subject was subject to a resolutory condition (i.e., Rosie
not getting backstage), so while the sale was perfected, not getting
backstage effectively resolved or rescinded the sale.
Rosie! I happen to be an organizer of the Incubus concert and I can get you two
(2) Incubus patron class tickets with a face value of P6,800.00 each, right smack
center of the stage on front row. And no need to double the face value, face
value is enough. Rosie e-mails Sasha, Great! Im doing a report in class on
Incubus, so Ill take the tickets, but do you think Brandon whats-his-face, the
lead singer of Incubus, will take off his shirt as he usually does? Anyway, Ill pay
you at the concert. Sasha responds, Okay, and Im sure Brandon will do as he
usually does, thats why the producers put a stamp on the ticket: NOT FOR SALE
TO MINORS.
While Rosie was stoked to watch the concert from front row, Brandon never took
off his shirt, so Rosie, being the girl that she was, was disappointed and refused
to pay Sasha. Is the refusal to pay justified?
7.
a.
Yes, because the subject matter is illicit (i.e., the tickets are stamped,
NOT FOR SALE TO MINORS); hence, Sasha cannot collect payment.
b.
Yes, because while the subject matter s not illicit, a contract of sale is
voidable at the option of the minor when the subject matter (i.e., concert
tickets) does not fall within the definition of necessaries.
c.
No, because the subject matter (i.e., concert tickets) are not illicit and may
be considered as necessaries (for educational purposes), and since the
sale has been perfected and they have been delivered to Rosie, then the
sale is valid. In any case, since Rosie used the tickets, she is already
estopped.
d.
Yes, because while the minority of Rosie is immaterial and the subject
matter is not illicit, the contract is voidable due to vice in consent
(misrepresentation on the part of Sasha).
Sasha, texts Rosie: Okay, I accept your offer and hereby sell you two (2)
Incubus patron class tickets with a face value of P6,800.00 each, right smack
center of the stage on front row, but since you paid for my Nine Inch Nails tickets
last time (05 August 2009), and I can get the Incubus tickets for free, just pay me
whatever you think the tickets are worth. Rosie texts back, Great! Ill take the
two (2) tickets for P1,000.00. Is there a perfected contract of sale at this point?
a.
No, because the price is clearly simulated, since Sasha never intended to
get paid for the tickets.
b.
No, because the fixing of the price cannot be left to one of the parties.
c.
No, because while the price is not simulated as there was a price agreed
upon by the parties (i.e., P1,000.00), it is so grossly inadequate as to
show that the transaction is in fact a donation.
d.
8.
Sasha texts Rosie, Okay, I accept your offer and hereby sell you two (2) Incubus
patron class tickets with a face value of P6,800.00 each, but I dont know where
the exact seats will be. Rosie texts back, Thanks, Sasha! Am sure youll get
me good seats! As I stated in my text, Ill take the two (2) tickets for double the
face value. Ill pay you in full at the concert. See you.
When Rosie met Sasha outside Araneta Coliseum, Sasha handed Rosie tickets
that, while they are patron class, were not exactly great seats (not bad, either, but
just average), so Rosie refused to take the tickets. Is Rosies refusal legally
justified?
9.
a.
Yes, because there is no perfected contract of sale yet since the subject
matter was not determinate or determinable at the time they were texting.
b.
Yes, because while the subject matter was determinable at the time they
were texting, the perfection of the contract of sale only happens once the
subject matter becomes determinate.
c.
Yes, because the perfection of the contract of sale was subject to the
condition of getting good seats, which condition was not fulfilled.
d.
No, because there is already a perfected contract of sale, and there is no

material breach.
patron class tickets with a face value of P6,800.00 each, but I dont know where
the exact seats will be. Rosie texts back, Thanks, Sasha! It really doesnt
matter how far the seats are from the stage or the aisle, so long as Im with my
boyfriend to watch the concert, so the seats have to be together. The only
reason Im buying the tickets is that they are a treat for his birthday, and so we
can rock out to our theme song Nice To Know You together! As I stated in my
text, Ill take the two (2) tickets for double the face value. Ill pay you in full at the
concert. See you.
When Rosie met Sasha outside Araneta Coliseum, Sasha handed Rosie tickets
that, while they are patron class, were on opposite sides of the stage, so Rosie
refused to take the tickets. Sasha explained that while people usually stay in
there seats when they arrive, they invariably end up rushing the stage once the
lights go out and the concert begins, so there should be no problem in rocking
out together, but to no avail. Is Rosies refusal to take the tickets legally justified?
10.
a.
Yes, because there is no perfected contract of sale yet since the subject
matter was not determinate or determinable at the time they were texting.
b.
Yes, because while the subject matter was determinable at the time they
were texting, the perfection of the contract of sale only happens once the
subject matter becomes determinate.
c.
Yes, because the perfection of the contract of sale was subject to the
condition of getting seats which are together, which condition was not
fulfilled.
d.
No, because there is already a perfected contract of sale, and there is no

material breach, since Rosie and her boyfriend can still rock out together.
patron class tickets with a face value of P6,800.00 each, right smack center
stage on front row. As for the price, Ive always maintained that Jared Leto (the
lead singer of 30 Seconds to Mars) is a much better singer-songwriter than
Brandon whats-his-face from Incubus. So why dont we peg the price for each of
the Incubus tickets at the same price at which the organizers are officially selling
the highest priced ticket for the 30 Seconds to Mars concert on the day of that
concert? Deal, texts Rosie. Is there a perfected contract of sale at this point?
11.
a.
Yes, for the price may be fixed by reference to another thing certain (i.e.,
the official price at which the highest priced tickets of the 30 Seconds to
Mars concert are sold on concert day).
b.
No, for while the price may be fixed by reference to another thing certain,
this can only include prices of securities, grains, liquids on a definite day,
or in a particular exchange or market, and not concert tickets.
c.
No, for while the price may be fixed by reference to another thing certain
(even concert tickets), the price of such thing used as reference must
already be certain at the perfection of the contract of sale (i.e., on 25 July
2011), and not after (i.e., 29 July 2011), as in this case.
d.
No, for while the price may be fixed by either a third person (i.e., the
organizers of the 30 Seconds to Mars concert), or by reference to another
thing certain (i.e., the official price at which the highest priced tickets of the
30 Seconds to Mars concert are sold on concert day), the price cannot be
fixed by both a third person and by reference to another thing certain, as
in this case.
Brandon whats-his-face from Incubus. So why dont we peg the price for each of
the Incubus tickets at the same price at which the organizers are officially selling
the highest priced ticket for the 30 Seconds to Mars concert on the day of that
concert? Deal, texts Rosie.
Later that day (25 July 2011), the organizers of the 30 Seconds to Mars concert
announced that Jared Leto wouldnt be there as he quit the band to reunite with
Claire Danes for a TV series which serves as a sequel to their cult classic TV
series from the 1990s called My So Called Life. Thus, organizers announced
that Rico Blanco will take over Jared Leto and front the band for the concert, but
that they were selling the highest selling tickets at only P500.00. In view thereof,
Sasha texted Rosie, No deal. Can Sasha be legally compelled to sell Rosie the
Incubus tickets at P500.00 each?
12.
a.
No, because there was no perfected contract of sale to begin with.
b.
No, because the price was clearly beyond what was contemplated by the
parties at the time the sale was perfected.
c.
Not yet, for while the sale has been perfected, the price has yet to be
fixed.
d.
Yes, because all the elements of a valid sales contract are present.
Brandon whats-his-face from Incubus, but I know youre an Incubus fan. So why
dont we just let our friend Karen, who is a die-hard fan girl of both bands, decide
on the price and when the price will be paid? Agreed, texts Rosie. Is there a
perfected contract of sale at this point?
a.
Yes, because parties are free to delegate to a third party the fixing of price
and the period within which such price is to be paid.
b.
No, for while the price may be fixed by a third party, the manner of
payment cannot.
13.
14.
15.
c.
Not yet, for while the price and manner of payment may be fixed by a third
party, perfection only happens when such third party consents to fix the
price and manner of payment.
d.
Not yet, for while the price and manner of payment may be fixed by a third
party, perfection only happens when such third party actually fixes the
price and manner of payment.
Sasha e-mails Rosie, Hey, I dont have any of the tickets you want, but I
remember that your dad has this rare manuscript, a rare original manuscript of
The Chemical Wedding of Christian Rosenkreutz published in the year 1616.
Can I buy it? Rosie, without the knowledge of her dad, steals the book from his
library, and e-mails Sasha, Sure, but it will cost you P100,000.00. Sasha
replies, Great! Then we have a deal. Rosie replies, Great! Is there a
perfected sale at this point?
a.
b.
No, because a person cannot sell something she does not own.
c.
No, because the subject matter, having been stolen, is illicit.
d.
No, because the manner of payment has not been agreed upon.
Can I buy it? Rosie, who was asked by her dad to find potential buyers for the
book, e-mails Sasha, Sure, but it will cost you around P100,000.00. Sasha,
knowing that the actual value of the book (which contains the wisdom of the
universe) is at least US$10,000,000.00, replies, Great! Then we have a deal.
Send me your account number so I can deposit the money in full. Rosie replies,
Great! Here is my account [account number]. Is there a perfected sale at this
point?
a.
b.
No, because an agent without authority from the principal cannot enter
into a valid contract of sale.
c.
No, because the price is not certain.
d.
No, because the price is grossly inadequate, such that the requirement of
a contract of sale being onerous and commutative is not met.
book and to negotiate and enter into whatever agreements she deems fit to carry
out the sale, e-mails Sasha, Sure, but it will cost you P1,000,000.00. Sasha,
not having the money, e-mails back, Can you give me a week to decide? Just
reserve it for me in the meantime. Ill get the tickets you want in return for the
reservation. Is there a valid option contract at this point?
a.
Yes, because all the elements of a valid option contract of sale are
present.
b.
No, because an agent cannot enter into an option contract since she does
not own the property.
c.
No, because the element of consent is absent.
d.
No, because the element of a separate valuable consideration is absent.
7
16.
out the sale, e-mails Sasha, Sure, but it will cost you P1,000,000.00. Sasha, emails back, I dont have that kind of money, but just the same, can you give me
a right of first refusal in case you decide to sell it in the future? Rosie replies,
Okay, deal.
A year later, Rosies dad sells the book to a client for P1,000,000.00. When
Sasha, who had since made more money by doing mainstream projects, finds
out about the sale. Sasha sues for rescission of the sale between Rosies dad
and the client, and for specific performance to acquire the book, on the basis of
her right of first refusal. Will the case prosper?
17.
a.
No, because a right of first refusal cannot exist independent of a main

contract.
b.
No, because a right of first refusal, if it is granted through a separate,

independent agreement, must be supported by a separate consideration.
c.
No, because an agent, not being the owner of the property, cannot grant a
right of first refusal.
d.
Yes, because even though Sasha had no money when the offer for sale
was made, she should nevertheless been offered the book on the same
terms as that given to the client, given the sufficient lapse of time between
the first offer and the eventual sale to the client.
out the sale, e-mails Sasha, Sure, but it will cost you at least P1,000,000.00.
Sasha, e-mails back, I dont have that kind of money, but just the same, Im
giving an earnest money of P100,000.00, which is to be applied to the purchase
price, so you can hold the book for me, and allow me a first option to buy it if
there are other offers. Is there a perfected sale at this point?
a.
There is a perfected contract of sale, as evidenced by the earnest money.
b.
There is only an option contract, since the earnest money is actually just
option money.
c.
There is only a right of first refusal, as shown by the first option to buy the
book.
d.
There is no contract at all between the parties.

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ATENEO LAW SCHOOL

No, because Rosies post, being a mere business advertisement, is just

Yes, because a certain offer was met with an unqualified acceptance.

No, because there is yet no consent on the part of Rosie.

No, because the subject matter is not determinate or determinable, as the

No, because there is no agreement as to manner of payment.

No, because there is already a perfected contract of sale, and there is no

No, because there is already a perfected contract of sale, and there is no

No, because there was no perfected contract of sale to begin with.

No, because the subject matter, having been stolen, is illicit.

No, because the price is not certain.

No, because the element of consent is absent.

No, because the element of a separate valuable consideration is absent.

No, because a right of first refusal cannot exist independent of a main

No, because a right of first refusal, if it is granted through a separate,

There is a perfected contract of sale, as evidenced by the earnest money.

There is no contract at all between the parties.

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