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EFFECT OF GROSS INADEQUACY OF PRICE 1. If the thing is lost before perfection, the seller bears the loss.
2. If the thing is lost at the time of the perfection, the contract is
Mere inadequacy of the price does not affect the validity of the sale, void or inexistent.
except: 3. If the thing is lost after perfection but before delivery, the risk of
1. When there is fraud, mistake, or undue influence. loss is shifted to the buyer.
2. When it shows that the parties really intended a donation or 4. If the thing is lost after delivery, the buyer bears the risk of loss.
some other act or contract. ART. 1481
EFFECT WHERE PRICE IS SIMULATED 1. Sale of Goods by Description
1. The act may be shown to have been in reality a donation, or 2. Sale of Goods by Sample
some other act or contract. 3. Sale by Description and Sample
2. If not and either party had any intention whatsoever that the EARNEST MONEY
amount will be paid (absolutely simulated): the sale is void.
3. If there is a real price but what is stated in the contract is not the Money given by the buyer to the seller to bind the bargain.
one intended to be paid (only relatively simulated): the contract Part of the price and as proof of the perfection of the contract.
of sale is valid but subject to reformation.
EARNEST MONEY VS. OPTION MONEY
EFFECT OF FAILURE TO DETERMINE PRICE
Earnest Money Option Money
1. In executory contract – the contract is without effect. It is part of the purchase price. It is given as a distinct
2. Where delivery has been made – the buyer must pay a consideration for an option
reasonable price. contract which gives the
buyer specific period within
PERFECTION OF CONTRACT OF SALE which to purchase the thing.
It is given only when there is It is given at a time when the
Perfected at the moment there is meeting of the minds upon the already a perfected sale. sale had not yet been
thing and price. perfected. What had been
perfected only is the option
Effect: parties may reciprocally demand performance
contract
RULES GOVERNING AUCTION SALE When it is given, the buyer is Even if option money is paid
bound to pay the balance of by the would-be-buyer he is
1. Sales of separate lots by auction are separate sales. the agreed purchase price. not bound to buy the thing.
2. Sale perfected by the fall of the hammer. If the sale does not materialize, If the buyer decides not to
3. Right of Seller to bid in the auction. the earnest money paid must buy the thing, he cannot
be returned, unless a contrary recover the option money he
DELIVERY OF THING SOLD agreement had been paid as consideration for the
stipulated. contract of option.
General Rule:
a. Vendor has the duty to pay expenses for execution of the sale
and registration, unless stipulated otherwise
b. Expenses subsequent to the transfer of title shall be borne by
the buyer
1. That private property shall not be taken for public use without
just compensation
2. That o person shall be deprived of his/her life, liberty, or
property without due process