BUSLAW4 – Lesson 5
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RULES GOVERNING DELIVERY IN INSTALLMENT
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The buyer or goods is not bound to accept delivery by
installment, unless stipulated.
Where separate price has been fixed for each installment, the
buyer may reject the succeeding installment in case of
defective deliveries, and sue for breach of contract
Where the buyer unjustly refuse to accept delivery or to pay
one or more installments, seller may sue for breach of contract
if the breach is so material as to affect the whole contract.
Where breach is severable, it will give rise to claim for
compensation for the particular breach but will not affect the
whole contract.
RIGHTS OF VENDEE TO SUSPEND PAYMENT
1.
2.
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In actual delivery of goods
In goods delivered COD/not COD, if stipulated or if permitted
under usage of trade
MODES OF MANIFESTING ACCEPTANCE
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Express acceptance – verbal or in writing
Implied acceptance – buyer does any act inconsistent with the
seller’s ownership
– buyer retains the goods after the lapsed
of reasonable time
1.
2.
3.
4.
5.
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Buyer should give notice to seller of any such breach within
reasonable time
Failure to give notice to the seller within reasonable time shall
discharge the seller of his liability
EFFECT OF REFUSAL TO ACCEPT DELIVERY
Valid refusal
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Buyer should notify the seller of his refusal to accept the goods
Buyer has the obligation to take reasonable care of the goods
Seller has the duty to take delivery of the goods
Risk of loss is on the seller
Buyer may resell goods if seller ails to take delivery of the goods
General Rule:
Vendor may sue for rescission of the contract should the vendee fail
to pay the agreed price
Exceptions:
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Cases when vendor may rescind contract of sale:
1.
2.
1.
2.
3.
2.
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If interest is stipulated
Action for payment of the price
Action for damages for non-acceptance of the goods
Action for rescission
ACTION OF THE SELLER FOR PAYMENT OF THE PRICE
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Vendee is liable for the interest from the time of delivery to the
payment of the price:
Failure of the vendee to appear to receive delivery
Having appeared, failed to tender the price of the same, unless,
a longer period for its payment has been stipulated
REMEDIES OF THE SELLER FOR BREACH OF CONTRACT OF SALE
1.
LIABILITY OF THE VENDEE FOR INTEREST
If there is a stipulation to the contrary
If the vendee pay even after the stipulated time but before
demand for rescission has been made by the vendor
RESCISSION OF SALE OF MOVABLE PROPERTY
Wrong refusal
Title passes to the buyer
Risk of loss is borne by the buyer
If the vendor gives security for the return of the price in a
proper case
If it has been stipulated that notwithstanding any such
contingency, the vendee must make payment
If the vendor has caused the disturbance or danger to cease
If the disturbance is a mere act of trespass
If the vendee has fully paid the price
RULE ON RESCISSION OF SALE OF REAL PROPERTY
BREACH OF PROMISE OR WARRANTY
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If vendee is disturbed in the possession or ownership of the
thing bought
If the vendee has well-grounded fear that his possession would
be disturbed by a vindicatory action or foreclosure of mortgage
CAUSES WHEN VENDEE MAY NOT SUSPEND PAYMENT
BUYER’S RIGHT TO EXAMINE THE GOODS
Arises:
If the thing sold and delivered produce fruits or income
If vendee is in default from the time of demand for payment of
the price
3.
When ownership of the goods has passed to the buyer and he
wrongfully neglects or refuse to pay for the price.
When the price is payable on a certain day and he wrongfully
neglects or refuses to pay such price irrespective of delivery or
transfer of title.
When the goods cannot readily be resold for a reasonable price
and the buyer wrongfully refuses to accept them even before
the ownership in the goods has passed.
ACTION OF THE SELLER FOR DAMAGES FOR NON-ACCEPTANCE OF
THE GOODS
3.
4.
1.
2.
3.
In case of wrongful neglect or refusal by the buyer to accept or
pay for the thing sold
In an executory contract, where the ownership in the goods has
not passed, and the seller cannot maintain an action to recover
the price.
If the goods are not yet identified at the time of the contract or
subsequently
MODES OF EXTINGUISHMENT OF SALE
1.
2.
3.
ACTION OF THE SELLER FOR RESCISSION
1.
2.
3.
When the buyer has repudiated the contract of sale
When the buyer has manifested his inability to perform his
obligation thereunder
When the buyer has committed a breach of the contract of sale
1.
2.
3.
Action for specific performed
Action for rescission or damages for breach of warranty
ACTION OF BUYER FOR SPECIFIC PERFORMANCE
1.
2.
Where the seller has broken the contract to deliver specific or
ascertained goods
The judgment or decree may be unconditional, or upon such
terms and conditions as to damages, payment of the price and
otherwise as the court may deem just.
ACTION OF BUYER FOR RESCISSION OR DAMAGES FOR BREACH OF
WARRANTY
1.
2.
3.
4.
Recoupment – accept the goods and set up the seller’s breach
to reduce or extinguish price.
Action for damages – accept the goods and maintain an action
for damages for breach of warranty.
Counterclaim for damages – refuse to accept the goods and
maintain an action for damages for breach of warranty.
Rescission – rescind the contract by returning or offering the
return of the goods and recover the price already paid.
1.
2.
3.
4.
5.
6.
2.
3.
1.
2.
2.
The buyer cease to be liable for the price, his obligation is to
return the goods
The buyer may recover the price he has paid
Buyer a retro automatically acquires full ownership
There must be judicial order before ownership of real property
is consolidate in the buyer a retro
RIGHTS OF VENDEE A RETRO
1.
2.
To be subrogated to the vendor’s right and actions.
Right against creditor of the vendor not to exercise the right of
redemption until after they have exhausted the property of the
vendor.
To compel the vendor of a part of undivided immovable to
redeem the whole property in case the vendee a retro of such
part acquires the entire immovable.
REDEMPTION IN JOINT SALE BY CO-OWNERS/CO-HEIRS
Rule:
1.
RIGHTS AND OBLIGATIONS OF THE BUYER IN CASE OF RESCISSION
1.
Price of sale with right to repurchase is unusually inadequate.
Seller remains in possession as a lessee or otherwise.
Upon/after expiration of right to repurchase, another
instrument extending the period of redemption is executed.
Buyer retains for himself a part of the purchase price.
Seller binds himself to pay taxes on thing sold.
Real intention of parties is to secure the payment of a debt or
performance of other obligation
EFFECT OF FAILURE TO EXERCISE RIGHT OF REDEMPTION
3.
If the buyer accepted the goods knowing of the breach of
warranty without protest
If he fails to notify the seller within a reasonable time of his
election to rescind
If he fails to return or offer to return the goods in substantially
a good condition as they were in at the time of the transfer of
ownership to him
Seller reserved the right to repurchase thing sold
Coupled with obligation to return price of the sale, expenses of
contract and other legitimate payments and the necessary and
useful expenses made on the thing sold
Right must be recognized in the deed of sale
INSTANCES OF EQUITABLE MORTGAGE
INSTANCES WHEN RESCISSION BY BUYER ARE NOT ALLOWED
1.
Common – those causes which are also the means of
extinguishing all other contracts
Special – those causes which are recognized by the law of sales
Extra-special – Conventional redemption
– Legal redemption
CONVENTIONAL REDEMPTION
REMEDIES OF THE BUYER FOR BREACH OF CONTRACT OF SALE
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The buyer has the right to hold the goods as bailee for the seller
should the latter refuse the return of the goods.
The buyer may have lien on the goods for any portion of the
price already paid
2.
When an undivided thing is sold by co-owners/co-heirs,
vendors a retro may only exercise his right over his respective
share.
Vendee a retro may demand that they must come to an
agreement first and may not be compelled to consent to a
partial redemption.
3.
When rights of co-owners over an undivided thing is sold as
regards to their own share – vendee a retro cannot compel one
to redeem the whole property.
RIGHT OF LEGAL REDEMPTION OF ADJACENT OWNERS OF RURAL
LANDS
1.
REDEMPTION AGAINST HEIRS OF VENDEE
Rules:
1.
2.
The vendor a retro can exercise the right to redeem against the
heirs of the vendee a retro with respect only to their respective
share.
If the property has been divided and the thing sold has been
awarded to one of the heirs, the vendor can exercise the right
to redeem against such heir.
EFFECT OF RIGHT OF REDEMPTION
Vendor a retro must return first the following:
1.
2.
3.
The price of the thing sold
Expenses of the contract and other legitimate payments made
by reason of the sale
Necessary and useful expenses made on thing sold
2.
3.
4.
5.
6.
PRE-EMPTION VS REDEMPTION
PRE-EMPTION
Arises before sale
No rescission because no sale
as yet exists
The action is directed against
the prospective seller
1.
Rules:
2.
2.
3.
If there were fruits at the time of sale and the vendee paid for
them, he must be reimbursed at the time of redemption.
If no indemnity was paid, there shall be no reimbursement at
the time of redemption.
If the property has no fruit at the time of sale and there are
some at the time of redemption, the vendee shall received a
prorated portion corresponding to the last year he possessed
the property.
LEGAL REDEMPTION
Is the right to be subrogated upon the same terms and conditions
stipulated in the contract, in the place of one who acquires the thing
by purchase or by dation in payment or by other transaction
whereby ownership is transmitted by onerous title.
RIGHT OF LEGEL REDEMPTION OF CO-OWNER
Requisites:
1.
2.
3.
There must be a co-ownership
There must be alienation of all or of any of the shares of the
other co-owners
The sale must be to a 3rd person
RIGHT OF LEGAL REDEMPTION
1.
2.
Any co-owner may exercise right of redemption by paying
reasonable price of property to the buyer.
If 2 or more co-owners desire to exercise right of redemption,
they may only do so in proportion to the share they may
respectively have in the thing owned in common.
REDEMPTION
Arises after sale
There can be rescission of the
original sale
Action is directed against the
buyer
PERIOD OF REDEMPTION
RIGHTS OF PARTNERS AS TO FRUITS OF LAND
1.
Both the land of the one exercising the right of redemption and
the land sought to be redeemed must be rural
The lands must be adjacent
There must be an alienation
The rural land must not exceed one (1) hectare
The vendee must also own some rural land
The rural land must not be separated by brooks, drains, ravines,
roads, and other apparent servitudes from the adjoining land.
Right of legal pre-emption of redemption shall be exercised
within 30 days from notice by the buyer.
Deed of sale not to be recorded in Registry of Deeds unless
accompanied by affidavit that buyer has given notice to
redemptioners.