SALES

Midterm Exam Reviewer Tips/Reminders

1. Contract of Sale – by the contract of sale one of the contracting parties obligates himself to
transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a
price certain in money or its equivalent (Art. 1458, Civil Code).
2. Essential Elements of Contract of Sale:
a) Consent or meeting of the minds of the parties.
b) Determinate subject matter (Object).
c) Price certain in money or its equivalent (Cause or consideration).
3. Essential Characteristics of the Contract of Sale:
a) Consensual – it is perfected by mere consent or meeting of the minds.
b) Bilateral reciprocal – both parties are bound by obligations dependent upon each other.
c) Onerous – because to acquire the rights, valuable consideration must be given.
d) Principal – because its valid existence does not depend upon the existence of another
valid contract.
e) Nominate – because it is referred to by a special designation or name.
4. Stages in the Contract of Sale:
a) Negotiation
b) Perfection
c) Consummation or termination
5. Sale Distinguished from Dation in Payment :
Sale Dation in Payment
1) There is no pre-existing credit. 1) There is s pre-existing credit.
2) Give rise to obligations. 2) Extinguishes obligations
3) The cause or consideration is the 3) The cause or consideration, from the viewpoint
price, from the viewpoint of the of the person offering the dation in payment, is
seller; or the obtaining of the object, the extinguishing of his debt; from the
from the viewpoint of the buyer. viewpoint of the creditor, it is the acquisition of
the object offered in lieu of the original credit.
4) There is greater freedom in the 4) There is less freedom in determining the price.
determination of the price.
5) The giving of the price may 5) The giving of the object in lieu of the credit
generally end the obligation of the may extinguish completely or partially the
buyer. credit (depending on the agreement).
6. Contract of Sale Distinguished from Contract to Sell
Contract of Sale Contract to Sell
1) The non-payment of the price is a 1) The payment in full of the price is a
resolutory condition, that is, the contract positive suspensive condition. Hence, if the
of sale may by such occurrence put an price is not paid, it is as if the obligation of
end to a transaction that once upon a time the seller to deliver and to transfer
existed. ownership never became effective and
binding.
2) The title over the property generally 2) Ownership is retained by the seller,
passes to the buyer upon delivery. regardless of delivery and is not to pass
until full payment of the price.
3) After delivery has been made, the seller 3) Since the seller retains ownership, despite
has lost ownership and cannot recover it delivery, he is enforcing not rescinding the
unless the contract is resolved or contract if he seeks to oust the buyer for
 rescinded. failure to pay.
7. Art. 1459 provides that the object must be licit (lawful) and the vendor must have the right to
transfer ownership thereof at the time the object is delivered.
a) To the other qualified beneficiaries.
b) In the absence thereof, the proceeds shall be paid in accordance with the policy contract.
c) If the policy is silent, the proceeds shall be paid to the estate of the insured.
8. Exceptions to Section 20 which provides that a change in interest in any part of a thing
insured without a change in interest in the insurance, suspends the insurance until both
interests just mentioned are vested in the same person:
a) In the case of life, health, and accident insurance.
b) A change of interest in interest in a thing insured after the occurrence of a loss (Sec. 21).
c) A change of interest in one or more several distinct things, separately insured under one
policy (Sec. 22).
d) A change of interest by will or succession on the death of the insured (Sec. 23).
e) A transfer of interest by one of several partners, joint owners, or common owners, who are
jointly insured, to the others (Sec. 24).
9. Concealment – a neglect to communicate that which a party knows and ought to
communicate.
10. Requisites/Elements of Concealment:
a) Facts which are within the knowledge of a party.
b) Facts which are material to the insurance contract.
c) Facts which are not covered by warranties.
d) The other party has no means of ascertaining the concealed facts.
13. Test of the materiality of the facts: Facts are material if they affect or influence the decision
making of the insurer to enter into a contract of insurance.
14. Disqualified: 1) Those guilty of adultery or concubinage; 2) Public officers
15. Persons obliged to give support under the law: