PART 1 - SALES

Chapter 1 Nature and Form of the Contract

I. Definitions
1. Contract of Sale
2. Natural Elements
3. Sale by Description
4. Fungible Goods
5. Conditional Sale
II. Discussions
1. Distinguish earnest money from option money.
2. (a) What remedies are available to a vendor in sale of personal property payable in
installments? (b) Is the vendor allowed to recover the unpaid balance of the price?
3. Give the characteristics of a contract of sale. Explain at least three (3) of them.
4. Under the Statute of Frauds, what contract of sale must be in writing to be
enforceable by court action?
5. Give at least three (3) distinctions between a contract of sale and a contract of agency
to sell.
III. Problems
Explain brieflythe rule or reason for your answer.
1. S sold to B certain goods. At the time of sale, C is not the owner of the goods. May
there be a valid sale to B?
2. Same example. The only problem now is that the goods sold have not yet been
identified at the time of the contract? May there be a valid sale to B?
3. The property sold by S is a portion o a parcel of land without indicating the specific
portion thereof. May there be a valid sale to B?
4. Same example. The only problem now is that S and B have not agreed upon a
definite price at the time of sale. May there still be a valid contract of sale between
them?
5. Same example. The only problem in the case is that the price was fixed only by S, Is
the sale valid?
Chapter 2 Capacity to Buy or Sell
I. Definitions
Define or give the meaning of the following:
1. Necessaries
2. Compromise
II. Discussions
1. Are husband and wife allowed to sell property to each other?
2. Under the law, who may enter into a contract of sale?
III. Problems
Explain or state briefly the rule or reason for your answer.
 1. B, a minor, bought a pair of imported shoes worth P3,000.00 from a department
store. Can F, father, cancel the sale on the ground of the minority of B?
2. H and W are husband and wife. After selling his property to W, H borrowed a big
amount of money from C. It appears that H is now bankrupt. Has C the right to
question the sale of H’s property to W in order to have said property answer for H’s
indebtedness to him?
Chapter 3 Effects of the Contract When the Thing Sold Has been Lost
I. Definitions
Define or give the meaning of the following:
1. Specific Goods
2. Divisible Contract
II. Discussions
1. When is a thing sold considered lost?
2. Give the effect in case the thing sold is
A) Lost totally; and
B) Lost partially
III. Problems
Explain or state briefly the rule or reason for your answer.
1. S sold to B 100 bags of sugar at P70.00 per bag for a total price of P70,000 S was
able to deliver only 98 bags because the two (2) bags were stolen without the fault of
S. Has S the right to insist that B pay for the 98 bags since there was no fault in his
part and only (2) bags are lacking? What rights, if any, are given by law to B?
2. Same example. The price was fixed at P70,000 for the whole lot, irrespective of the
number of bags which happens to be also 100 bags. Will your answer be the same?
Chapter 4 Obligations of the Vendor
I. Definitions
Define or give the meaning of the following:
1. Unpaid seller of goods;
2. Traditio brevi manu;
3. Sale or return;
4. Tradition
5. Redhibitory defect;
6. Implied warranty of fitness;
7. Eviction;
8. Caveat venditor.
II. Discussions
1. Give the cases when a sale of property is valid although the seller is not the owner
thereof.
2. What are the different ways of effecting delivery to the buyer of the thing sold?
 3. Give the requisites for the exercise by an unpaid seller of his right of stoppage in
transitu.
4. What are the implied warranties in a contract of sale?
5. Distinguish “sale or return” from “sale on trial.”
6. Suppose the parties failed to stipulate the place of delivery of the thing sold, where is
the place of delivery?
7. What are the principal obligations of the vendor?
8. Suppose the thing sold is lost after perfection of the sale but before its delivery to the
buyer, who shall bear the loss by a fortuitous event? Explain.
III. Problems
Explain or state briefly the rule or reason for your answer.
1. S sold B a parcel of land with an area of 500 sq. Meters at P2,000.00 per sq.meter. It
turns out that the area is only 451 sq meters. Has B the right to cancel or rescind the
sale even if S is willing to accept a proportionate reduction of the price, or only
P902,000.00?
2. Same example, but the price is fixed at P1,000,000.00 without a statement of the
price per sq. meter. Has B the right to enforce the contract with the corresponding
reduction of the price to P902,000.00?
3. Same example. The only problem is that S subsequently sold the same property to C
who immediately registered the sale in his name.
a) Who has a better right to the property: B or C?
b) Suppose C did not also register the sale. To whom should the property be
awarded?
4. Same example. C was declared by a court to have a better right. Is S liable to B for
the former’s failure to comply with his warranty against eviction?
5. S sold to B a piano for P10,000.00. It was agreed that payment shall be made within
10 days. Has B the right to demand delivery even before he has paid?
6. B, through fraud, made S sign a contract of sale of a parcel of land. Here, B’s title is
voidable which may be declared void by the court in an action by S. However, B was
able to sell the property to C. Has B the right to recover the property from C?
7. B brought a bottle of medicine from a drug store. Its label says that it provides a
“very effective relief from asthma.” However, B continues to suffer from asthma
attacks. Has B the right to complain for misrepresentation against the drug
manufacturer?
8. S sold to B a parcel of land located in Quezon City under a public instrument signed
by the parties and notarized in Manila. Is B considered already the owner of the
property?
Chapter 5 Obligations of the Vendee
I. Definitions
 Define or give the meaning of the following:
1. Acceptance of goods; and
2. Wrongful refusal of buyer to accept.
II. Discussions
1. When is there implied acceptance by the vendee of the goods sold?
2. Give the cases when the vendee is given the right to suspend payment of the
purchase price.
III. Problems
Explain or state briefly the rule or reason for your answer.
1. S sold to B a parcel of land with the stipulation that upon failure of B to pay the price
within 30 days the sale shall be deemed automatically cancelled.
a) May S refuse to accept payment from B after 30 days on the ground that the sale
is already rescinded?
b) Suppose the property sold is movable. Will your answer be the same?
2. S sold a three (3)-door apartment to B who paid the purchase price only after one (1)
year from the date agreed upon. Is B liable to pay S interest which was not stipulated
by them?
Chapter 6 Actions for Breah of Contract of Sale for Goods
I. Definitions
Define or give the meaning of the following:
1. Goods
2. Recoupment.
II. Discussions
1. In general, what actions are available to the buyer in case of breach of warranty by
the seller of goods?
2. When is the buyer not given the right to rescind although the seller committed a
breach of warranty?
3. Give three (3) situations where the seller is given the right to bring an action for
damages against B.
4. Give two (2) situations where the seller of specific goods is given the right to be paid
notwithstanding that delivery to B has not been effected.
III. Problems
Explain or state briefly the rule or reason for your answer.
1. S agreed to sell and deliver to B specific goods. B refused to accept the goods on the
date designated. S was so infuriated that he was hospitalized for a mild stroke. May S
hold B liable for his hospitalization expense?
2. Same example. The goods are not of the quality warranted by B. S informed B to
deliver the goods at a reduced price. B communicated his acceptance. May S rescind
 the sale and require B to just pay damages?
Chapter 7 Extinguishment of Sale
I. Definitions
Define or give the meaning of the following:
1. Legal redemption;
2. Equitable mortgage;
3. Conventional redemption
II. Discussions
1. What are the requisites for the right of legal redemption of a co-owner to exist?
2. Give the cases when a contract shall be presumed by law to be an equitable
mortgage.
3. What are the obligations of a vendor a retro who desires to exercise his right of
repurchase?
III. Problems
Explain or state briefly the rule or reason for your answer.
1. S signed a document purporting to be a sale of his parcel if land to B with a right of
repurchase. S claims that what he intended is to a mortgage his property to B for
money loaned to him. What remedy is available to S: reformation or annulment?
2. S sold his house to B with a right of repurchase.
a) May B lease the property, knowing that S will certainly exercise his right of
redemption?
b) Has B the obligation to respect the lease after exercising his right of redemption?
3. A, B, C, and D are co-owners of a parcel of land sold to E with a right of repurchase.
May E require all on them to repurchase the whole property instead of partial
repurchase by each of them as regards his own share?
Chapter 8 Assignment of Credits and Other Incorporeal Rights
I. Definition
Define assignment of credit
II. Discussions
1. What does an assignor of credit warrant and what liabilities will he incur in case of
violation thereof?
2. Why is assignment of credit regarded as really a sale?
III. Problems
Explain or stare briefly the rule or reason for your answer.
1. S, being in need of money, sold to B for P500,00.00, his right to inheritance from his
father who has died telling B that he believes that its value is more than P500,000.00.
It turns out that the calue is only P300,000.00. Is S liable to B?
 2. C, creditor, assigned his credit against D, debtor, to T, without securing the consent
of F. Subsequently, D paid C who became bankrupt. Has T the right to recover from
D the payment made to C?
Chapter 9 General Provsions
I. Definitions
Define or give the meaning of the following:
1. Legal tender
2. Thing or chose in action
II. Discussions
1. As used in the law, what does the phrase “document of title to goods” include?
2. Under the law, when is a person deemed insolvent and when are goods considered in
a “deliverable state?”
III. Problem
Explain or state briefly the rule or reason for your answer.
 S sold to B a parcel of land. Is T, a third person, that is, one who is not party to a
contract, be bound by the sale in case he should later acquire a right or interest in the
property?
Chapter 10 Barter of Exchange
I. Definition
 Define barter
II. Discussions
1. Why is barter considered a sale?
2. When is the contract of barter perfected and consummated?
III. Problems
Explain or state briefly the rule or reason for your answer.
1. S exchanged his parcel of land for the new car of B. It turns out the car was subject to
a chattel mortgage and was sold at public auctions for failure of B to comply with the
conditions of the mortgage. What rights are given by law to S?
2. Same example. The only problem here is that B was judicially evicted from the land
by C who was adjudged the true owner in an action by him against S. What rights are
given by law to B?
Chapter 11 The Bulk Sales Law
I. Definitions
As used in the law, define:
1. Fixtures
2. Merchandise.
II. Discussions
 1. Under the law, when is sale or transfer considered in bulk?
2. Give the purpose and general scheme of the law.
III. Problems
Explain or state briefly the rule or reason for your answer.
1. S, businessman with money unpaid debts, is planning to sell substantially all the
assets of his business to B. What obligations are imposed by law on S for the benefit
or protection of the latter’s creditors?
2. Same example. The assets were sold without complying with the requirements
prescribed by law. Give the effects of the sale if B acted in faith?
PART 2 – AGENCY
Chapter 1 Nature, Form and Kinds of Agency
I. Definitions
Define or give the meaning of the following:
1. General agent;
2. Authority of an agent;
3. Contract of agency; and
4. Power of attorney.
II. Discussions
1. May a principal be bound by the act of an agent beyond his power? Explain.
2. What do you understand by the statement agency is a representative relation?
3. Give at least four (4) cases when a special power of attorney is necessary for their
execution by an agent?
4. Enumerate the four (4) essential elements of agency.
III. Problems
Explain or state briefly the rule or reason for your answer.
1. A receives a power of attorney from P appointing him as agent with respect to a
particular business transaction. Is A’s silence or inaction, or lack of objection be
deemed an implied acceptance by him of the agency?
2. Same example. A expressly accepted the agency but he acted in his own name
without disclosing that P was his principal to T, the other contracting party. Has T a
right of action against P?
3. A, agent, and P, principal, are very good friends. On many occasions, P has done
favors to A which are more than the value of the services that A will perform for P.
In view of this, is P still bound ti compensate A as his agent?
4. P, Inc. appointed A as its agent in connection with the company’s business and
advertised the appointment in a newspaper. Before the advertisement, T, a client
 who happened to drop by, was informed of the appointment which was revoked
also by advertisement after a few months. A week later, entered into a contract with
A as agent of P, Inc. Now, T seeks to make P, Inc. Liable. Can T recover from P,
Inc.?

Chapter 2 Obligations of the Agent

I. Definitions
Define or give the meaning of the following:
1. Commission agent;
2. Subagent; and
3. Guarantee commission.
II. Discussions
1. When may an agent incur personal liability to the party with whom he contracts?
2. State the right given to the principal in case sale on credit is made by the agent
without authority from the principal.
3. Give at least (5) specific obligations of the agent.
III. Problems
Explain or state briefly the rule or reason for your answer.
1. P appointed A, as agent, who in turn, appointed S as subagent or substitute to
perform that which A was supposed to do for P.
a) Is the substitution valid?
b) Is A liable to P for damages caused by S’s negligence?
c) Assuming that the substitution was authorized, may A be still liable for S’s
negligence?
2. P, principal, authorized A, agent, to sell the former’s car for not less than
P500,000.00 overprice?
3. Same example. Can A buy the car of P fpr P500,000.00?

Chapter 3 Obligations of the Principal

I. Definitions
Define or give the meaning of the following:
1. Apparent authority; and
2. Authority by estoppel
II. Discussions
 1. Give at least four (4) specific obligations of the principal.
2. In what cases will the principal not be liable for expenses incurred by the agent in
the performance of the agency?
III. Problems
Explain or state briefly the rule or reason for your answer.
1. A, agent, went beyond his authority given to him by P, principal, when he entered
into a contract with X. State two (2) situations when P would still be liable to X.
2. P authorized A to sell former’s car. P sold the car today to X without informing A
who sold the same to Y the following day. Who has a better right to the car?

Chapter 4 Modes of Extinguishment of Agency

I. Definition
What is meant by an agency coupled with interest?
II. Discussions
1. What are the three (3) modes of extinguishing an agency?
2. Give three (3) examples of implied revocation of an agency.
III. Problems
Explain or state briefly the rule or reason for your answer.
1. A is the agent of P. May A withdraw from the agency at any time with or without
any valid reason? State the law on A’s right to withdraw.
2. Same example. May P revoke the agency at any time with or without any valid
reason? State the law on P’s right to revoke the agency.

PART 3 – CREDIT TRANSACTIONS

Introduction
I. Definition
Define or give the meaning of the term “credit transactions.”
II. Discussion
How is bailment created?
III. Problem
Explain or state briefly the rule or reason for your answer.
Under a contract of bailment, property was received by E from R. In general, what are the
obligations of E? For whose benefit is the contractual bailment created?
A. LOAN
I. Definition
Define or give the meaning of the term”contract of loan.”
II. Discussion
Give at least four (4) distinctions between commodatum and mutuum (simple loan).
III. Problem
Explain or state briefly the rule or reason for your answer.
Yesterday, C and D signed an agreement whereby C loans a sum of money to D today.
a) Is there already a contract of loan today?
b) Suppose C is able to give the money the following day. How will you characterize
their contract? Why?

Chapter 1 Commodatum
I. Definition
Define or give the meaning of the term”precarium.”
II. Discussions
1. In what cases is the bailee/borrower liable to the bailor/ lender for loss of the thing
loaned even if through a fortuitous event without his fault?
2. When is the bailor given the right to demand the return of the thing loaned at any
time?
III. Problems
Explain or state briefly the rule or reason for your answer.
1. E borrowed a cavan of rice from R. Is the contract one of commodatum?
2. E borrowed R’s car to be used by him for 15 days. Now the car needs major
repairs. Is E obliged to pay for the expenses?

Chapter 2 Simple loan or Mutuum

I. Definitions
Define or give the meaning of the following:
1. Fungible things; and
2. Compound interest.
II. Discussions
1. Distinguish mutuum and commodatum form barter.
 2. How shall the interest be determined if for money loaned, the same shall be payable
instead in kind?
III. Problem
Explain or state briefly the rule or reason for your answer.
1. E borrowed money from R. There was no stipulation to pay interest. After paying
interest, E seeks to recover the amount thereof. Is R obliged to return the interest
paid?
2. Same example. There was a stipulation to pay interest which E has not paid. Has R
the right to demand interest?

B. DEPOSIT
Chapter 1 Deposit in General and its Different Kinds
I. Definition
Define or give the meaning of the term”deposit.”
II. Discussions
1. Distinguish deposit from mutuum.
2. Distinguish deposit from commodatum.
III. Problems
Explain or state briefly the rule or reason for your answer.
1. R agreed to entrust to Y the former’s jewelry and other personal property for
safekeeping for a certain period of time in consideration of the payment by R of
P2,000.00. Immediately, R paid Y. Is there already a perfected contract of deposit?
2. Same example. There was no stipulation as to how much shall be paid by R. Is Y
entitled to compensation?

Chapter 3 Necessary Deposit

I. Definition
Define or give the meaning of the term”necessary deposit.”
II. Discussions
1. Give at least three (3) examples of necessary deposit made in compliance with a
legal obligation.
2. When is a hotel-keeper not liable for loss of, or injury to, effecys deposited by
guests or travellers?
III. Problems
Explain or state briefly the rule or reason for your answer.
1. The hotel-keeper posted a notice to the effect that it is not responsible for the
articles brought by guests. G, guest, lost his camera. Can G, hold the hotel-keeper
liable?
2. Same example. An investigation disclosed that the camera was stolen by a person
who entered the hotel and opened the door with the use of a false key. Is the hotel-
keeper liable?