Contract of Sale Overview

Contract of Sale

• A contract of sale is a type of contract where one party (the seller) agrees to sell a thing to another party (the buyer) for a price.
• The price must be in money or its equivalent.
• The parties must intend to create a contract of sale.
• The law specifies that the determination of the price cannot be left to one of the contracting parties unless the other party agrees to the price fixed.

Identifying the Contract of Sale

• In the case at hand, the Supreme Court (SC) found that a valid contract of sale existed based on the intent and actions of the parties involved.
• The SC reasoned that the parties intended to effect the sale and not simply make it appear like a sale.
• In deciding between a contract of sale and agency to sell, consider the following factors:
  • Intent of the parties
  • If intent is not clear, consider the value of the thing being exchanged. If the thing is more valuable, it's likely barter. If the thing is less valuable, it's likely a sale.
  • If the value of the thing and the amount of money are equal, it's likely a contract of sale.
• Agency to sell doesn't require a written contract to be valid and enforceable.

Contract of Sale: Key Elements and Terms

• The value of the thing sold must exceed the amount of money given as payment for it to be considered a sale.
• If the value of the object is less than the price paid, it's a contract of sale.
• The parties have full freedom to enter terms and conditions in the contract.
• Ownership Test: Ownership is transferred to the buyer under a contract of sale.
• Relationship Test: If the relationship between the parties is that of a creditor and debtor, then it's likely a contract of sale.
• In a sale, the seller is obliged to pay for the thing. In agency to sell, the agent is not obliged to pay, but rather to account for the proceeds.
• If the agent assumes risk, the relationship becomes that of a buyer-seller.

Stages of a Contract of Sale

• The stages of the contract of sale are:
  • Negotiation
  • Perfection
  • Consummation

Kinds of Goods

• Based on Possession:
  • Goods possessed by the seller
  • Future goods with the potential to exist, such as those to be manufactured, raised, or acquired after the contract's perfection
  • Acquisition depends upon a contingency that may or may not happen
• Based on Intention:
  • Fungible goods are those replaceable with others of the same kind by the parties' intentions.

Price

• The price is the sum agreed upon as the equivalent of the thing sold.
• Requisites of a valid price:
  • Real and not fictitious
  • Certain
  • In money or its equivalent
  • Not grossly inferior to the value of the thing exchanged

Determining Price

• The determination of the price cannot be left to one of the contracting parties unless the other party agrees to the price fixed.
• If the contracting parties decide a third party should fix the price, they must both consent to the price fixed.
• They may also choose to fix the price themselves.

Inadequate Price

• Inadequate price refers to a price that is insufficient to satisfy the real or actual price of the object of the contract of sale. Inadequacy could either be negligible or gross.

Delivery

• Different methods of delivery include:
  • Tradition Brevi Manu: The grantee has continuous possession of the thing delivered but not under a title of ownership.
  • Tradicion Longa Manu: The grantor points out the thing within sight of the grantee; at the time of the transaction, the thing cannot be placed in the buyer’s hands.
  • Tradicion Constitutum Possessorium: The owner continues to possess the property after selling it. His possession is no longer as an owner but as a lessee, pledgee, or depository.
  • By Operation of Law: Delivery happens by legal means such as inheritance.
  • Quasi-Tradition: The delivery of incorporeal property like rights and credits.

Incorporeal Property

• Incorporeal property can be delivered symbolically, for example, when the owner gives the buyer the document representing the right.

Payment of Price

• Payment of the price does not nullify a contract of sale. It gives rise to the obligation for the other party to demand specific performance or damages for failure to pay the price.

Fraud

• If a sale is nullified due to fraud, there may be another auction if the object remains available. The party responsible for the fraud will be liable for damages.
• The auctioneer can withdraw the object at any time before the acceptance of the winning bid, unless the public has been notified that there is no such reservation.
• If an auctioneer has no reservation to withdraw an object, the object cannot be withdrawn after the auction begins.

This quiz covers the essentials of a contract of sale, including its definition, requirements, and the intent necessary for its validity. It also touches on the distinctions between a contract of sale and agency to sell, as determined by legal standards. Test your understanding of these concepts and their applications in law.