Law on Sales

Article 1458. By the 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.

Essential Characteristics of the Contract of Sale

1. Consensual
2. Bilateral reciprocal
3. Onerous
4. Commutative
5. Principal
6. Nominate
Elements of the Contract of Sale

1. Consent or meeting of the minds

2. Determinate subject matter
3. Price certain in money or its equivalent
Natural elements

1. Warranty against eviction

2. Warranty against hidden defects

Accidental elements
Sale vs. Dation in payment

Sales Dation in payment

- There is no pre-existing credit - There is a pre-existing credit
- Gives rise to obligations - Extinguishes the obligation
- The cause or consid eration here is - The cause or consideration here,
the price, from the viewpoint of the from the viewpoint of the person
seller; or the obtaining of the offering the dation in payment, is
object, from the viewpoint of the the extinguishing of his debt; from
buyer. the viewpoint of the creditor, it is
- There is greater freedom in the the acquisi tion of the object
determination of the price. offered in lieu of the original credit.
- The giving of the price may - There is less freedom in
generally end the obligation of the determining the price.
buyer. - The giving of the object in lieu of
the credit may ex tinguish
completely or par tially the credit
(depending on the agreement).
Contract of Sale vs. Contract to Sell

Contract of Sale Contract to Sell

- The non-payment of price - The payment in full of the
is a resolutory condition price is a positive
- Title over the property suspensive condition
generally passes to the - Ownership is retained by
buyer upon delivery the seller, regardless of
delivery and is not to pass
until full payment of the
price.
Sale vs. Lease

Sale Lease
- The seller transfers - The lessor or landlord
ownership transfers merely the
temporary possession and
use of the property
Art. 1459. The thing must be licit and the vendor must
have a right to transfer the ownership thereof at the time it
is delivered.
Two rules:

1. The object must be LICIT

2. The vendor must have the right to transfer ownership at
the time the object is delivered.
What is the effect if the object of sale is illicit?
Transfer of Ownership
- It is essential for a seller to transfer ownership, and
therefore, the seller must be the owner of the subject
sold.
- Nemo dat quad non habet
Should the seller be the owner of the determinate thing at
the time of the perfection of the contract?
Art. 1460. A thing is determinate when it is particularly
designated or physically segregated from all others of the
same class.

The requisite that a thing be determinate is satisfied if at

the time the contract is entered into, the thing is capable of
being made determinate without the necessity of a new or
further agreement between the parties.
Art. 1461. Things having a potential existence may be
the object of the contract of sale.

The efficacy of the sale of a mere hope or expectancy is

deemed subject to the condition that the thing will come
into existence.

The sale of a vain hope or expectancy is void.

Things with a potential existence
- future thing that may be sold.
Emptio Rei Sperati
- The sale of an expected thing

Emptio Spei
- The sale of the hope itself
If the hope or expectancy itself is vain, the sale is itself
void.
Art. 1462. The goods which form the subject of a contract
of sale may be either existing goods, owned or possessed
by the seller, or goods to be manufactured, raised, or
acquired by the seller after the perfection of the contract of
sale, in this Title called “future goods.”

There may be a contract of sale of goods, whose

acquisition by the seller depends upon a contingency
which may or may not happen.
Art. 1463. The sole owner of a thing may sell an undivided
interest therein.
For a thing to be a valid subject matter, it has to be:

A. Determinate or determinable, illicit and possible

B. Determinate or determinable, illicit and impossible
C. Determinate or determinable, licit and possible
D. Indeterminate, licit and not impossible
Correct Answer: C
Dacion en pago as distinguished from a contract of sale
a. There is a greater freedom in fixing the price
b. Obligations are created
c. Ownership of the object is transferred to the other party
d. A pre-existing credit is extinguished
Correct Answer: D
One of the following is not correct.
a. Things subject to a resolutory condition may be the
object of the contract of sale
b. A thing is generic when it is particularly designated or
physically segregated from all others of the same class
c. Things having potential existence may be the object of
the contract of sale
d. The sole owner of a thing may sell an undivided interest
therein
Correct Answer: B
A contract of sale is not a(an)
a. Onerous contract
b. Accessory contract
c. Commutative contract
d. Bilateral contract
Correct Answer: B
 Emptio spei as distinguished from emptio rei speratae
a. Sale of a future thing
b. Should come into existence
c. Its quantity and quality are unknown
d. Sale of a present thing
Correct Answer: D
The sale of an expected thing
a. Dacion en pago
b. Payment by cession
c. Emptio spei
d. Emptio rei-speratae
Correct Answer: D
This is not an essential element of a contract of sale
a. Subject matter which should be determinate
b. Consent of the contracting parties
c. Warranty against eviction
d. Consideration which is certain in money or its equivalent
Correct Answer: C
A contract of sale is not
a. A consensual contract
b. A real contract
c. A reciprocal contract
d. An onerous and commutative contract
Correct Answer: B
Which of the following cannot be an object of a contract of
sale?
a. Sale of credit
b. Young of animal not yet conceived at the time of
perfection
c. Land which the seller expects to buy
d. Future inheritance
Correct Answer: D
A sold to B her sales law book. It was agreed that A would
fix the price a week later. At the agreed time, A named the
price P2,000. B agreed. Was the sale perfected?
a. No, because the price was left to the discretion of one of
the contracting parties
b. No, because at the time of sale the price was not fixed
c. Yes, because the price fixed by one of the parties was
accepted by the other
d. Yes, because there was agreement that A would fix the
price
Correct Answer: C
A contract of sale is in the stage of conception when
a. There is meeting of the minds
b. Negotiations are in progress
c. The parties come to an agreement
d. The contract is perfected
Correct Answer: B
The following are only considered accidental elements in
the contract of sale, except
a. Place of delivery and payment
b. Time of delivery and payment
c. Terms or conditions of payment
d. Price certain in money or its equivalent
Correct Answer: D
Which of the following is necessary for the perfection and
validity of contract of sale?
a. Essential elements
b. Natural elements
c. Accidental elements
d. All of the above
Correct Answer: A
The following are the requisites of the object of a contract
of sale, except
a. It must be within the commerce of men.
b. It must be not contrary to law, morals, good customs,
public order or public policy.
c. It must be determinate.
d. It must be owned by the vendor at the time of perfection
of contract of sale.
Correct Answer: D
In case of doubt whether the contract of sale is one of
emptio rei speratae or one of emptio spei, how shall the
court generally interpret the type of the contract of sale?
a. Emptio rei speratae
b. Emptio spei
c. Both A and B
d. Neither A nor B
Correct Answer: A
The following goods may become the subject of a contract of sale,
except
a. Existing goods owned or possessed by the seller.
b. Goods to be manufactured, raised or acquired by the seller after
the perfection of the contract of sale or “future goods”.
c. Goods whose acquisition by the seller depends upon the
contingency which may or may not happen.
d. Vain hope /expectancy or future inheritance.
e. Things subject to resolutory condition or resolutory period.
Correct Answer: D