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1|Page LAWYERS IN THE MAKING FROM ST.

THOMAS MORE SCHOOL OF LAW AND BUSINESS

SALES  Spanish Civil Code calls it a “Contract of


Purchase and Sale”. (considered redundant)
Governing Law:
 Before: Code of Commerce
Characteristics of a Contract of Sale: (CBO-CNP)
 After: Civil Code (repealed by Art*2270[2])
1. Consensual – perfected by mere consent.
2. Bilateral – parties are bound to fulfil
*General Rule: The provisions of the Civil Code on
correlative obligations towards each other.
Obligations and Contracts are applicable to the
3. Onerous – Thing sold is conveyed in
Contract of Sale (C.O.S.).
consideration of a price and vice versa.
*Exemption: Articles 1458 to 1637 are special rules
4. Commutative – Thing sold is considered the
which are peculiar to sales alone.
equivalent of the price paid and vice versa.
5. Nominate – It is given a special name or
Sources of Law on Sales:
designation in the Civil Code.
1. Civil Law
6. Principal – It does not depend for its
2. Common Law
existence and validity upon another
contract.
*The Uniform Sales Law (USL) of America is adopted
by our Civil Law on the Law on Sales for the
Essential Requisites of a Contract of Sale: (COC)
following reasons:
1. Consent or Meeting of the minds
 The old Code does not solve questions
2. Object or Subject Matter
arising from certain present-day business
3. Cause or Consideration
practices.
 The old Code fails to regulate many Natural and Accidental Elements:
incidents and aspects of delivery and
1. Natural Elements or those which are
acceptance of goods of warranty of title and
deemed to exist in certain contracts, in the
against hidden defects, and of payment of
absence of any contrary stipulations, like
the price.
warranty against eviction (Art. 1548) or
 In order to lessen misunderstanding hidden defects (Art. 1561)
between the merchants on both sides of 2. Accidental Elements or those which may be
the Pacific, their transactions should be present or absent depending on the
governed by the same rules. It is but a stipulations of the parties, like conditions,
truism to say that fair and mutually interest, penalty, time or place of payment,
beneficial trade incalculably enhances etc.
international friendship.
Effect of Absence of Price/Non-Payment of Price
Chapter 1 1. There can be no sale without a price.
NATURE AND FORM OF THE CONTRACT 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
ARTICLE 1458: delivered to and appropriated by the buyer he must pay a
reasonable price therefor. What is a reasonable price is a question
(1) By the contract of sale one of the of fact dependent on the circumstances of each particular case.
contracting parties obligates himself to
transfer the ownership of and to deliver a 2. Non-payment of the purchase price is a
determinate thing, and the other to pay Resolutory condition for which the remedy
therefore a price certain in money or its is either rescission or specific performance
equivalent. under Article 1191 of the Civil Code. But the
(2) A contact of sale may be absolute or failure to pay the price in full within a fixed
conditional. period does not, by itself, dissolve a
contract of sale in the absence of any
NOTE: agreement that payment on time is
 A Contract of Sale is an agreement where essential, or make it null and void for lack of
one of the parties obligates himself to consideration, but results at most in default
deliver something to the other who, on his on the part of the vendee for which the
part, binds himself to pay therefor a sum of vendor may exercise his legal remedies.
money or its equivalent.
Kinds of Contract of Sale:
 Parties:
1) As to presence or absence of conditions –
o Buyer/Purchaser/Vendee
a) Absolute – where the sale is not subject
o Seller/Vendor
to any condition whatsoever and where
 Sum of money or equivalent is also known
title passes to the buyer upon delivery
as “price”.
of the thing sold.
2|Page LAWYERS IN THE MAKING FROM ST. THOMAS MORE SCHOOL OF LAW AND BUSINESS

b) Conditional – where the sale of the price is a positive


contemplates a contingency, and in suspensive condition, failure of
which is not a breach but an
general, where the contract is subject event that prevents the
to certain conditions, usually, in the obligation of the vendor to
case of the vendee, the full payment of convey title from becoming
the agreed purchase price, and in the effective.
case of the vendor, the fulfillment of
certain warranties.

2) Other kinds –
a) As to the nature of the subject matter
(real or personal, tangible or
intangible);
b) As to manner of payment of the price
(cash or installment);
c) As to its validity (valid, Rescissible,
unenforceable, and void.)

Contract of sale (COS) and contract to sell (CTS)


with reserved title distinguished:

COS CTS
Transfer of Title passes to the Where it is stipulated that
title buyer upon delivery ownership in the thing
of the thing sold. shall not pass to the
purchaser until he has
fully paid the price,
ownership is reserved in
the seller and is not to
pass until the full
payment of the purchase
price.
Payment Non-payment of Full payment is a positive
of price the price is a Suspensive condition, the
negative Resolutory failure of which is not a
condition, and the breach, casual or serious,
remedy of the seller of the contract but
is to exact simply an event that
fulfillment or to prevents the obligation of
rescind the the vendor to convey title
contract. from acquiring binding
force.
Ownership The vendor has lost The title remains in the
of vendor and cannot recover vendor if the vendee does
the ownership of not comply with the
the thing sold and condition precedent of
delivered, actually making payment at the
or constructively, time specified in the
until and unless the contract.
contract of sale
itself is resolved
and set aside.

Contract of sale (COS) and contract to sell (CTS)


distinguished:

COS CTS
The title to the property passes Ownership is, by agreement,
to the vendee upon the reserved in the vendor and is
delivery of the thing sold. not to pass to the vendee until
full payment of the purchase
price.
The vendor loses ownership Title is retained by the vendor
over the property and cannot until full payment of the price.
recover it until and unless the
contract is resolved or
rescinded.
In the latter contract, payment