Law of Sale PDF

Law of Sale 1 Outline  General concept of Sale  Duty and liabilities of Contract buyer  Definition  Classification  Pay the price  Form  Take the...

Law of Sale 1 Outline  General concept of Sale  Duty and liabilities of Contract buyer  Definition  Classification  Pay the price  Form  Take the delivery  Transfer of ownership Particular kind of sale  Duty and liability of Sale with right of redemption Seller Sale by sample Sale by description  Delivery the property sold Sale on approval  Liabilities for defect Sale by auction  Liabilities for eviction 2  Preliminary Knowledge Sale Contract , as a specific contract under Thai Civil and Commercial Code (CCC) , is subject to the principle of Law of Person Capacity of person Law of Property What kind of property can be sold? Law of Juristic Act Declaration of intention, Form Law of Contract Offer and acceptance 3  Validity of Sale Contract 1. The sale contract must be done with the requirement concerning capacity of person # capacitated person (major) # incapacitated person (minor, unsound-mind, incompetent person,quasi-incompetent person) 4  Validity of Sale Contract (cont.) 2. The declaration of intention of the party in sale contract shall not : # fictitious # mistake # duress # hidden 5 Validity of Sale Contract (cont.) 3. The Objective of the contract shall not # prohibited by law ( illegal gun ) # impossible ( sun , moon ) Void! # contrary to public order or good morals 6  Validity of Sale Contract (cont.) 4. The sale contract must be in the form prescribed by law # Writing + register # Written evidence Void!! Valid 7  What is sale? Section 453 : Sale is a contract whereby a person, called the seller, transfers to another person, called the buyer, the ownership of property, and the buyer agrees to pay to the seller a price for it. 8 Characteristic of Sale Contract 1. Sale contract is contract between : seller buyer 9 Characteristic of Sale Contract (cont.) 2. Sale contract is reciprocal contract seller buyer 10 Characteristic of Sale Contract (cont.) 3. The obligation of each party is Seller Transfer the ownership of property Buyer Pay the price Property ? 11 Section 453 Sale is a contract whereby a person, called the seller, transfers to another person, called the buyer, the ownership of property, and the buyer agrees to pay to the seller a price for it. Section 518 Exchange is a contract whereby the parties transfer to one another the ownership of property. 12  Property Section138: Property includes thing as well as incorporeal objects, susceptible of having value and of being appropriated. »Immovable property »Movable Property Except: Things outside of Commerce 13  Must the seller be the owner of the property sold ? Section 453 Sale is a contract whereby a person, called the seller, transfers to another person, called the buyer, the ownership of property, and the buyer agrees to pay to the seller a price for it. 14  If the seller does not have the ownership over property sold. “Nemo Dat Quod Non Habet” “nobody gives what he does not have” 15 Exception of “Nemo Dat Quod Non Habet” Example: Section 1303 Where several persons claim to have acquired the same movable property under different titles, the person who is in possession of the property is preferred provided that he has acquired it for value and has obtained possession in good faith. Section 1329 The right of a person who has acquired property for value and in good faith is not affected even if the act under which his transferor acquired the property was voidable and has been subsequently avoided. 16 Characteristic of Sale Contract 4. Form Immovable and special movable property Movable property 17 Classification of sales contracts Sales contracts can be classified under two main groups : 1. Ordinary sales contracts (section 453 – 490) 2. Particular kinds of sales contracts (section 497 – 517) 18 Ordinary sales contracts Ordinary sales contracts can be subdivided into: 1. Absolute present sales contracts 2. Contract to sell or to buy 3. Promise to sell or promise to buy 4. Sales Contracts with conditions 5. Sales Contracts with time clause 19 Ordinary sales contracts 1. Absolute present sales contracts. An absolute present sales contract is a sale in which the ownership of the property sold is transferred to the buyer immediately and absolutely, the moment the contract is made validity. For example, Manop goes to a piano shop and signs an order to buy a certain piano, agreeing to pay the price on delivery. In this case the ownership of the piano is already transfer to Manop when the contract formed. 20 Characteristic of absolute sale contract The property sold must be an existing goods Specified property The Seller must has an ownership over the property Certain price The contract is concluded , no further process is required 21 Ordinary sales contracts (cont.) 2. Contract to sell or to buy is an agreement that the party agree to do the sale contract in the form prescribed by law in the future. 22 Characteristic of contract to sell or to buy In the agreement , the party must show their clear intention that they will go to do contract in form required by law in future Can made only in Immovable property and special movable property (ships or vessels of six tons, steam launches or motor boats of five tons and over , floating houses , beats of burden) The ownership is not transferred until the form was done. 23 Example : Manee agrees to sell her house to Manop for 2 million baht. Manee agrees to sell her house to Manop for 2 million baht. On the contract date Manop move to live in that house and they agree to register the contract with the department of land next week. 24  Ordinary sales contracts (cont.) 3. Promise to Sell or promise to buy, is unilateral act binding a person who give the promise to do what he promise Section. 454 A previous promise of sale made by one party has the effect of a sale only when the other party has give notice of his intention to complete the sale and such notice has reached the person who made the promise Example : Manop tells Manee that if Manee want his car, he will sell for 1 million baht. Manee tells Manop that if Manop want to sell his car, she will buy for 1 million baht 25  Section. 459 if a contract of sale is subject to a condition or to a time clause the owner ship of the property is not transferred until the condition is fulfilled, or the time has arrived 26  4. Sales Contracts with conditions. If a contract of sale is subject to a condition, the ownership of the property is not transferred until the condition is fulfilled. The parties concerned may have made offer and acceptance already, but the ownership is not transferred until the condition is fulfilled For example, Mana makes an agreement with Manop to sell a car to Manop, if Manop gets 80% in the final examination. If Manop really gets 80%, the condition is fulfilled, so Mana has to sell his car to Manop. Manee agrees to sell her car to Manop. Manee reserve that the ownership will transfer only when they register with the department of transportation. 27  5. Sales contracts with time clause. If a contract of sale is subject to a time clause, the ownership of the property is not transferred until the time clause is fulfilled. For example, Manop makes an agreement to sell a car to Mana on August 16,2005. August 16,2005 is a time clause, when that day arrives Manop will has to transfer the ownership of a car to Mana. 28  Special movable Form of Sale Contract property Section 456 A sale of immovable property is void unless it is made in writing and registered by the competent official. The same rule applies to ships or vessels of five tons and over, to floating houses and to beasts of burden. An agreement to sell or to buy any of the aforesaid property ,or a promise of sale of such property is not enforceable by action unless there be some written evidence signed by the party liable or unless earnests is given, or there is part performance. The provisions of the foregoing paragraph shall apply to a contract of sale of movable property where the agreed price is twenty thousand baht or upwards. 29 1. Writing and registered with competent official 1.1 Immovable Property , i.e. land , things fixed permanently to land or forming a body with land 30 1.2 Special movable property - ships or vessels of five tons and over - floating house - beasts of burden 31  beast of burden? NO!!! According to Thai Law, beast of burden are elephant, horse, buffalo and ox 32 2. Written evidence 2.1 Contract to sell or to buy immovable or special movable property 2.2 Promise to sell or to buy immovable property or special movable property 2.3 Sale of movable property where price is 20,000 baht or upwards. 33  A sale agreements in 2.1 , 2.2 or 2.3 can not enforceable by action unless : – Has a written evidence signed by the party liable. – Earnest is given. – There is part performance. 34  Example : 2. 1.Mr.Mr. Manop Manopagrees agreesto sell to sell hishis Thai land house to Ms. to Ms. Manee Maneefor 1for billion 1 million baht. They baht.agree Manee to make agreescontract that shetowill sellremove in writing thebut house and signed re-build by Ms. it on Manee her landonly.atBoth Bangkok. agreeBoth to register agreesthe the sell contract contractby with word. competent If Manop official breaches withinthe 1 month. contract. After one month passed Mr. Manop breaches the contract Q. What kind of this contract? What is the consequence of this contract ? Can Ms. Manee take the action against Mr. Manop and why? 35 Transfer of ownership peril Res perit domino Thing owner 36  Transfer of ownership. a. The ownership of the property sold is transferred to the buyer from the moment when the contract of sale is entered into. (Absolute Sale Contract) (section 458) b. If a contract of sale is subject to a condition or to a time clause, the ownership of the property is not transferred until the condition is fulfilled, or the time has arrived. (section 459) 37 Transfer of ownership. c. In case of sale of unascertained property, the ownership is not transferred until the property has been numbered, counted, weighed, measured or selected, or its identity has been otherwise rendered certain. (section 460) d. In case of sale of specific property, if the seller is bound to count, weigh, measure or do some other act or thing with reference to the property for the purpose of ascertaining the price, the ownership is not transferred to the buyer until such act or thing be done. (section 460) 38 Duty and liabilities of Seller Delivery Liabilities for defect Liabilities for eviction 39 Delivery a. The seller is bound to deliver to the buyer the property sold. (Section 461) b. Delivery may be made by doing anything which has the effect of putting the property at the disposal of the buyer. (Section 462) 40  The deficiency or excess of the delivery. 1. In a sale of movable property. (section 465) a. Where the seller delivers the property less than he contracted for, i. The buyer may reject it. ii. If the buyer accepts it, but he must pay the proportionate price. 41  b. Where the seller delivers the property more than he contracted for i. The buyer may accept the property according to the contract and reject the rest. ii. The buyer may reject the whole. iii. The buyer may accepts the whole of the property so delivered, but he must pay the proportionate price. c. Where the seller delivers the property he contracted for mixed with the property of different description not included in the contract, i. The buyer may accept the property according to the contract and reject the rest or, ii. The buyer may reject the whole. 42 2. In a sale of immovable property. (section 466) a. Where the total area is specified and the seller delivers the property less or more than he contracted for, the buyer has the option either to reject or accept it and pay the proportionate price. b. If the deficiency or excess does not exceed five percent of the total area so specified the buyer is bound to accept it and pay the proportionate price, provided that the buyer can rescind the contract if the deficiency or excess is such that had he known of it he would not have entered into the contract. 43 Liability for defect (section 472) It is assumed that when a sale is made the buyer has the rights to get the property in good order. So if there is any defect, the buyer may demand the seller to be liable. The defect must be to the extent that: a. It impairs the value of the property. For example, Kennedy sells a picture to Jose. Upon delivery Jose finds that the picture has some stains on it. This is a defect for which the seller must be liable. b. It impairs the fitness for ordinary purposes. For example, Kennedy buys a horse from Jose for the purpose of making a movie. Upon delivery Kennedy finds that the hair of the said horse is burnt and it becomes an ugly horse. 44 When there are defect, what are the rights of buyer? The buyer has the following rights: a. The buyer has the right to ask repayment from the seller, if the buyer chooses to return that defective property. b. If the buyer retains that defective property, he has the rights to claim compensation for the defect. c. In some cases, the buyer can return the defective property and also claim compensation. For example, Chuvit buys some raw materials from Chalerm to produce some goods. Upon delivery Chuvit finds that the raw materials are defective. Besides rejecting the raw materials, Chuvit may claim a certain amount for damage, because the shortage of raw materials causes disruption to the factory of Chuvit. 45 Cases when the seller is not liable for defect. (section 473) a. If the buyer knew of the defect at the of sale, or would have known of it, if he had exercised such care as might be expected from a person of ordinary prudence. b. If the defect was apparent at the time of the delivery, and the buyer accepts the property without reservation. c. If the property was sold by public auction. 46 Liability for eviction section 475 The seller is liable for the consequences of any disturbance caused to the peaceful possession of the buyer by any person having over the property sold a right existing at the time of sale or by the fault of the seller After the buyer has bought a property from the seller, if any person comes to claim some rights on that property, or disturb the peaceful possession of such property, the seller must be liable for such eviction. For example, Chales buys a piece of land from Diana, later Elizabeth claims that she is the co-owner of that piece of land. This is eviction, Chales may demand that Diana must be liable for it. For example, Chales buys a motor car from a car dealer. Later Diana claims that the car is her, and she wants to take it back. This is eviction. The car dealer must be liable. 47 Cases when the seller is not liable for eviction. a. If an action was entered, and the seller proves that the rights of the buyer were lost on account of some mistakes on the part of the buyer. b. If an action was entered, and the buyer did not summon the seller to appear in the action as joint plaintiffs or joint defendants, and the seller proves that he would have won the case if summoned to appear. c. If an action was entered, and the seller appeared in the action, but the claim of the buyer was dismissed on account of the fault of the buyer. d. The seller is not liable for a disturbance caused by a person whose rights were known to the buyer at48 the time of sale. Duty and liabilities of Buyer 1. Duty to pay the price - must be paid by money only 2. Duty to take the delivery Section 486 The buyer is bound to take delivery of the property sold and to pay the price in accordance with the terms of the contract of sale. 49  Particular kinds of sale. Which can be divided into: 1. Sale with the rights of redemption. Sale with the rights of redemption is a contract of sale whereby the ownership of the property sold passes to the buyer, subject to an agreement that the seller can redeem that property. The period for redemption will be as agreed between the parties concerned, but it must not be more than: a. 10 years after the time of sale in case of immovable property. b. 3 years after the time of sale in case of movable property. 50 Sale with the rights of redemption (cont.) The rights of redemptions may be exercised by: a. the original seller or his heirs. b. the transferee of the rights. c. any person expressly allowed to redeem by the contract. 51  2. Sale by sample. A sale by sample means the seller offers goods according to samples, and the buyer places an order on sample. In such case, the seller is bound to deliver property corresponding to the sample, otherwise the buyer may reject the property delivered. 3. Sale by description. The seller describes about the quality of the property by words or by catalogues or by sales letter and the buyer places an order expecting the property to be of such quality. In such case, the seller is bound to deliver property corresponding to the description, otherwise the buyer may reject the property delivered. 52  4. Sales on approval. A sale on approval is a sale made on condition that the buyer shall have the opportunity to examine the property and decide whether to take it or reject it. The period of time for examination will be fixed by the seller. In sale on approval, it is assumed that the buyer has to buy in following cases: a. if the buyer does not notify his refusal within the time fixed by the contract, or notice, or usage. b. If the buyer does not return the property within the time, c. If the buyer pays the price or part of it, d. If the buyer disposes of the property or does any other act from which acceptance may be 53 implied.  5. Sale by auction. An auction has the following characteristics: a. It is an open sale which gives opportunity to the public to bid price. b. There are three parties involved: the seller (the owner), the auctioneer and the buyer (the public). c. The highest bidder will get the property. d. The sale is complete when the auctioneer announces its completion by the fall of hammer or in any other customary manner. Until such announcement is made any bidder may revoke his bid. 54  e. The auctioneer must advertise before opening the bidding. f. The auctioneer cannot bid or employ any person to bid at an auction conducted by him. g. The seller cannot bid or employ any person to bid, unless it is expressly stated in the advertisement of the auction that he has such rights. h. The auctioneer can withdraw property from the auction whenever he thinks that the highest bid is insufficient. 55  i. A bidder ceases to be bound by his bid as soon as a higher bid is made, or as soon as the lot is withdrawn from the auction. j. The highest bidder must pay the price in ready money on the completion of the sale, or at the time fixed by the notice advertising the sale. k. If the highest bidder fails to pay the price, the auctioneer shall resell the property. If the net proceeds of such sale do not cover the price and costs of the first auction, the original bidder is liable for the difference. 56