Law on Sales: Contract of Sale Characteristics

Concept of Contract of Sale

• A contract of sale is a contract where one party (seller) obligates themselves to transfer ownership and deliver a determinate thing, and the other party (buyer) obligates themselves to pay a sum of money or its equivalent (price).

Characteristics of a Contract of Sale

• Consensual: it is perfected by mere consent of the parties.
• Bilateral: the parties are bound by reciprocal obligations.
• Seller's obligations: to deliver and transfer ownership of the thing sold.
• Buyer's obligations: to pay the price.

Elements of a Contract of Sale

• The parties must have legal capacity to give consent and to obligate themselves.
• There must be an offer and acceptance.
• Object or subject matter: a determinate thing which is the object of the contract.
• Cause or consideration: the price certain in money or its equivalent.

Kinds of Contract of Sale

• Absolute: the sale is not subject to any conditions, and title or ownership passes to the buyer upon delivery of the thing sold.

Requisites Concerning Object

• All rights which are not intransmissible or personal may be the object of sale, e.g., the right of usufruct, the right of conventional redemption.
• Services may be the object of a contract, but cannot be the object of a contract of sale.

Kinds of Illicit Things

• Illicit per se (of its nature): e.g., decayed food unfit for consumption.
• Illicit per accidens (because of some provisions of law declaring it illegal): e.g., prohibited lottery tickets and prohibited drugs.

Right of Vendor to Transfer Ownership

• One can sell only what he owns.
• It is essential for a sale to be valid that the seller must be the owner or at least authorized by the owner of the thing sold.
• If the right exists at the time of delivery, it is sufficient.

Sale of Future Goods

• Even though the contract is in the form of a present sale, it is valid only as an executory contract to be fulfilled by the acquisition and delivery of the goods specified.

Sale of Undivided Interest in a Thing

• The owner of a mass of goods may sell only an undivided share thereof, provided the mass is specific or capable of being made determinate.
• If the quantity of the mass is more than the quantity sold, the parties shall become co-owners of the mass.
• If the quantity of the mass is less than the quantity sold, the buyer becomes the owner of the whole mass.

Effect of Sale

• The risk of loss is shared by all parties interested in the mass.
• If the buyer becomes co-owner with the seller or other owners of the remainder of the mass, the whole mass is at risk of all the parties interested in it.

Sale of Thing Subject to a Resolutory Condition

• A resolutory condition is an uncertain event upon the happening of which the obligation (or right) subject to it is extinguished.
• If the resolutory condition attaching to the object of the contract happens, the vendor cannot transfer the ownership of what he sold since there is no object.

Sale Distinguished from Agency to Sell

• A contract of agency is a person binds himself to render some service or to do something in representation or on behalf of another, with the consent of the principal.