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Statute of Frauds Dation en pago / Dation in payment

- Needs to be in writing - Objective novation

o Novation
Changes the parties (subjective) or
- Needs to be in writing substitutes the subject matter
- You do not pay the donor (gratuitous, (objective
as opposed to being onerous) - Mode of extinguishment of an
- If with a burden: obligation
o Burden is lower than donation –
Contract to sell
still a donation
o Burden is higher than donation - Expressly reserving the right to transfer
– onerous donation under the ownership upon fulfillment of
law on sales, because the conditions
essence of a sale is an - The fulfillment of condition does not
obligation to transfer automatically transfer ownership
ownership and consideration - The fulfillment of condition creates an
for it (even though the essential obligation to transfer ownership
elements are not necessarily - The obligation of the seller is not to
met) deliver, but to enter into a contract of
Substance over form
- In case of non-payment, there is no
- The title of a particular agreement is cancellation because seller has no
not binding obligation to transfer something
- Read the essential provisions
Issues on consent
Gross inadequacy
- Vitiation
- In real life, the difference between the o Voidable if consent is vitiated
fair value and the purchase price is (through mistake, fraud, undue
construed as donation and applied with influence, intimidation, etc.)
donor’s tax o Remedy is ratification (can be
- Theoretically, mere gross inadequacy of express or implied)
price does not affect the validity of a - Capacity to give consent
Rule on spouses
Contract of sale vs contract for a piece of work
- Reasons:
- If it depends on the seller’s o Protection of third persons
craftsmanship, it is a piece of work o Conjugal property (no logic in
- If the subject matter is purely about the selling to one another)
thing itself (no consideration as to the o Intimidation and undue
craftsmanship or mastery of the influence
maker), it is a sale - Restriction also applicable to common-
law spouses
- Subject to exceptions
Contract of agency - You can sell a portion (not specified)
o You’ll only know your portion at
- A broker is not an agent
the termination of the co-
- Principal and agent do not have 1
juridical personality (separate)
Emptio spei
Importance of determining the subject matter
- Not a future thing, sale of the hope
- It goes into the heart of your case
(when you go after the seller, you will
go after the subject matter) Hope

Sale of a lotto ticket - Should not be vain, otherwise it will be

- The object is the lotto ticket itself (can
be also construed as the hope itself but Price certain
it can give rise to many complications)
- Specified amounts in money
Requisites for a subject matter
1. Licit (Art. 1347, 1459, 1575, 1409)
- Rule: if ascertainable, valid
2. Possible
o Agreed by the parties
3. Determinable (Art. 1460)
o Set by a third party
- Only relevant for generic goods
 If third party is
- Reckoning point: perfection of the
unwilling and unable,
sale is inefficacious (can
Sale of personal property be fixed by agreement
between the parties)
- What you’re not buying is the metes
 If through bad faith or
and bounds, what you’re buying is what
mistake, the courts may
you see in the ocular inspection
fix the price
Quantity of subject matter (Art. 1349, 1246)  If cannot ascertain due
to fault of either buyer
- Necessary for a valid contract and a or seller, one who’s not
subject matter to be determinate in fault can demand
- May refer to a formula to become fulfillment or rescission
determinable with damages
- If not specifically provided, seller o With regard to another thing
cannot give inferior goods and buyer certain
cannot demand specific goods
Price can be set by third parties but subject
Fungible goods matter cannot be
- One unit is equivalent to every unit of - Price is fungible (generic) while subject
its kind matter should be
Buying/selling an undivided interest determinate/determinable (Specific)
- Third party may assign a subject matter
- You can sell a part of it (specific) that a seller will not be able to give
Price is unascertainable Manner of payment

- Sale is inefficacious unless already - Should not be requisite to the

appropriated perfection of the contract but there are
- If there is delivery and appropriation exceptions from SC decisions
without agreeing on the price, there is - For the purposes of the boards, manner
no sale but seller should be paid of payment is essential
because of equity
Art. 1353 vs Relatively simulated sale
Price is simulated
- Art. 1353 is about the meeting (or lack
- Sale is void but it may be shown to be thereof) of the minds and is void
another contract in essence, such as a because there is no certain cause
contract of donation or equitable - In relatively simulated sale, the meeting
mortgage of the minds is present but the
instrument/paper just does not reflect
the true intention (agreed price) of the
- As if nothing happened between the parties
- If already delivered, the buyer has to
give the item back - The following can be fixed by the
Impari delicto
o Price
- If both are at fault, courts will leave o Place
them as they are to absorb their o Time
damages o Manner of acceptance
- If one it not at fault, they can recover - Qualified acceptance is merely a
False price - Acceptance by letter is only binding
- Sale is valid, subject to reformation from the time the acceptance comes to
the offeror’s knowledge
Inadequacy of price - The offer is presumed to made where
- Sale is valid, unless there is a defect in the contract has been entered into
the consent due to mistake, fraud, - So long as the intention is to accept,
undue influence, violence, and even if there are some requests, the
intimidation or there is another acceptance is valid
contract in mind such as donation Option
Expectation of profits - If there is no consideration, there is a
- Valid price valid offer (continuing offer)

Non-payment of purchase price Withdrawal of offer

- Does not affect validity of contract - General rule: during the period, before
acceptance, you can withdraw (except if
there is consideration)
Rule for specific performance on a written o Valid but does not bind third
contract parties if not in a public
- Prescribes after 10 years
Option contract with contract of lease, period
expired and contract is renewed - Presumption of regularity
- Parties should appear personally to
- Option to buy is extinguished
state that they sign a document with
Breached option contract their free and voluntary will

- Still no clear answer if specific Failure to object to parole evidence

performance is applicable
- Ratifies voidable contracts
Right of first refusal
If both parties are incapable of giving consent
- Preparatory contract, accessory
- Contract is unenforceable
- Right to have option to refuse first in One party is incapable of giving consent
case the seller ultimately decides to sell
- Contract is voidable
the property
- Obliges seller to negotiate any sale to Can a third party invoke unenforceability?
the promisee first
- Need not be a complete offer - No, unless they’re assignees
- Does not need separate compensation
- Usually found in lease contracts
- Remedy if breached: rescission (if the
third party buyer knew about the right),
damages (if third party buyer is
- Seller should offer the changed terms
to the promisee first if every they
change their minds about the original
terms (or seller should not change the
original terms offered to the promisee)
- Extinguished upon renewal of lease
since only an accessory to the principal
- Not under the statute of frauds

Rule on forms

- Statute of frauds
o Some contracts need to be in
writing to be enforceable
- Sale of immovables