Installment Sales Quiz: Test Your Knowledge of Laws

Study Notes

Assignment of Credits and Other Incorporeal Rights

Installment sales are governed by Recto Law and Mecedo Law.
Recto Law specifies remedies for sellers if the buyer defaults in payment:
- Demanding payment or fulfillment of the obligation
- Canceling the sale
- Foreclosing the chattel mortgage (if one has been constituted)
Mecedo Law provides rights and benefits to buyers, including:
- A grace period of up to 60 days if the buyer has paid less than 2 years of installments
- A notarial notice of cancellation or rescission if the buyer fails to pay within the grace period
- A 30-day observation period from the notarial receipt of cancellation or rescission before the contract is terminated

Stages of a Contract of Sale

Negotiation: the period from when the parties indicate interest in the contract to when the contract is perfected
Perfection: takes place when the essential elements of the sale are met (meeting of the minds of the parties as to the object and price)
Consummation: begins when the parties perform their respective undertakings under the contract, culminating in its extinguishment

Form of Contract of Sale

General rule: a contract of sale may be in writing, word of mouth, or partly in writing and partly by word of mouth
Exceptions:
- If the law requires a document or special form, contracting parties may compel each other to observe that form
- Certain contracts must be in writing under the Statute of Frauds, otherwise, they are unenforceable
- Sale of large cattle requires recording with the city/municipal treasurer and a certificate of transfer

Dation in Payment and Cession

Dation in payment: a creditor receives something else in exchange for payment of an existing debt in money
Cession by payment: the assignment or abandonment of all the debtor's assets for the benefit of creditors, so they can sell them and apply the proceeds to their debt
Key differences between dation in payment and cession:
- Number of creditors (one vs. several)
- Financial situation of the debtor (insolvency or not)
- Extent of property involved (one thing vs. all assets)
- Ownership and novation implications

Sale Distinguished from Other Transactions

Barter or exchange: characterized by the manifest intention of the parties, and the consideration consists partly in money and partly in another thing

Description

Test your knowledge on laws concerning installment sales, including Sec. 261 of RA 7160, the Recto Law, and the Maceda Law. Explore topics such as assignment of credits, installment payments, and obligations related to installment sales.