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Week 9 - Obligations of the Vendee & Breach - Coggle Diagram
Week 9 - Obligations of the Vendee & Breach
Obligations of the Vendee
- See concept map on delivery
A. Obligation to Accept Delivery (1582 & 1542)
B. Obligation to Pay the Price (1582 & 1542)
B1. Liability for Interests (1589)
B2. Suspension of Payments (1560;1590;1664)
WHEN AVAILABLE (1590)
- If the thing sold and delivered to the vendee BUT price is not yet paid to the vendor AND only in the following two circumstances.
EFFECT OF PAYMENT
- Extinguishes right to suspend payment under 1590, as the sale is already consummated.
REMEDIES OF VENDEE
- Here, at most vendee can file an action for 1555-1556 if there has been a violation if implied warranty to title.
Disturbed in Possession
- Also applies if there is disturbance in ownership.
Well-Grounded Fear
- That possession/ownership would be disturbed by a vindicatory action or foreclosure of mortgage.
XCPN
- Vendee has no right to suspend payment even if (1) or (2) are present if the following circumstances are present.
Security
- If the vendor gives security for the return of the price in a proper case
Stipulation
- If it has been stipulated that notwithstanding any such contingency, vendee must make payment
Cessation
- If vendor causes the disturbance or danger to cease
Trespass (1664)
- If disturbance is a mere act of trespass
Full Payment
- If the Vendee has already fully paid the price.
RIGHT OF RESCISSION (1560)
- Vendee has no cause of rescission prior to final judgment. There, remedy is suspension of payment.
SALE OF IMMOVABLES (1560)
- This applies to immovables sold encumbered with non-apparent burdens.
RIGHTS OF VENDEE
- May ask for rescisison of the contract if the
NON-APPARENT
easement is not mentioned int he agreement AND is of such a
NATURE
that vendee would not have acquired it had they been aware.
WHEN RESCISSION NOT PROPER -
APPARENT
- If the easement is apparent
REGISTERED
- If easement is registered
KNOWLEDGE
- If vendee knew of easement, regardless if it is registered or not.
FILING OF ACTION
- Action for rescission or damages under 1560 must be brought within (1) year from the execution of the deed of sale.
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When Liable
- The vendee is liable for interest IF payment is made after delivery ONLY in the following circumstances.
Express Stipulation
Fruits or Income
- If the thing sold and delivered produces fruits or income.
Default
- If the vendee defaults in payment. Here, interest is due from the time of demand as it is demand that commences the period of delay.
General Rule
- Vendor is not bound to deliver the thing sold until the price is paid nor is the vendee bound to pay the price before the thing is delivered. tl;dr Delivery must be concurrent with payment.
XCPN
- When there is stipulation that provides otherwise.
TIME & PLACE OF DELIVERY
- If there is no stipulation, the vendee is bound to pay at the time and place of the delivery.
STIPULATION OF TIME
- This can refer to either a stipulation fixing the time of delivery OR the time of payment.
TIME FOR DELIVERY
- If only time for delivery is stipulated, the vendee is required to pay even before the thing is delivered.
TIME FOR PAYMENT
- However, if time for payment of the price has been fixed, the vendee is entitled to delivery even before the price is paid.
DELIVERY OF GOODS IN INSTALLMENTS (1583)
General Rule
- Buyer is not bound to receive delivery of goods in installments. Entitled to delivery of all the goods at the same time.
XCPN
- When there is prior agreement to the contrary. Here, either goods deliverable in installments or the price is payable in installments. The governing rules are determined by w/n the breach is severable or not.
Breach Affects the Whole Contract
- Injured party may sue for damage for breach of the entire contract.
Breach Severable
- Only gives rise to a claim for compensation for the particular breach, no right to treat the whole contract as broken.
4. Inspection and Acceptance
(1584)
Right of Inspection
Manifestation of Acceptance
(1585)
Breach of Warranty
(1586)
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Express
- When the buyer intimates to the seller, either verbally or in writing their acceptance.
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Definition
- When the seller tenders delivery of goods to the buyer, bound on request to afford buyer a reasonable opportunity of examining the goods for the purpose of ascertaining if they are in conformity with the contract.
General Rule
- Seller must afford buyer opportunity to inspect before seller can expect acceptance.
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Condition Precedent
- Right of examination is a condition precedent to the transfer of ownership in actual delivery.
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ACCEPTANCE & DELIVERY
- Separate acts. One can be made even without the other as they are obligations of the vendee and vendor respectively.
BREACH
A. Remedies of the Unpaid Vendor (1525-1526;1533-1534)
- NCC 1526 provides the unpaid seller several remedies but does not include action for recovery of the purchase price.
B. Sale of Movables
C. Sale of Immovables
C1. Anticipatory Breach (1591)
- Refers to situations where there has been delivery of an immovable but no payment yet. Applies to cash and installment sales.
C2. PD 957 (Condo Act)
C3. Maceda Law; Immovables on Installments
COVERAGE
- All immovable properties except for
Industrial
Commercial
Agrarian
WHEN APPLICABLE
(Sec. 3) - If the buyer has paid at-least (2) year of installments in contracts involving sale or financing of real estate on installment payments and he has defaulted.
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REGISTRATION (Sec. 17)
- All instruments relative to sale of subdivision lots and condo units shall be registered by the seller in the register of deeds where the property is located.
MORTGAGES (Sec. 18)
- All mortgages on unit or lot require the approval of the Authority. Approval is granted only if it is shown that the proceeds of the mortgage loan shall be used for the development of condo/subdivision and effective measures have been utilized to ensure such utilization.
NON-FORFEITURE OF PAYMENTS (Sec. 23)
- No installment payment shall be forfeited in favor of he owner or developer IF buyer, after due notice to the owner/developer desists from further payment due to failure to develop the subdivision/condo project according to approved plans within the specified time limit.
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VALUE OF LOAN
- Shall be determined and buyer shall be notified before the release of the loan. Buyer at their option may pay the installment for the lot or unit directly to the mortgagee who shall apply payments to the corresponding debt with a view to enable buyer to obtain title after full payment.
STREETS
- If subdi/condo plans provides that there is a street/passageway or other required open space the register of deeds shall annotate the title indicating that the passageway or any portion thereof shall not be closed or otherwise disposed by registered owner EXCEPT by donation to city/municipality OR without requisite approval under Sec. 22
WHEN AVAILABLE -
Vendor may rescind sale if there is a ground to fear the loss of immovable property sold and its price. If no grounds exist, 1191 applicable.
B1. Action for the Price (1595)
ba. When ownership has passed (1595)
- Buyer wrongfully neglects or refuses to pay for the goods according to the terms of the contract of sale, an action for the payment of the price may be filed by the seller.
bb. Ownership not Passed 1595
bb1. PAYABLE ON A CERTAIN DAY
- Terms of agreement provides for payment on a certain day, irrespective of delivery or transfer of title. Seller may maintain an action for payment of the price. IF there is wrongful refusal or neglect to pay the price.
bb2. GOODS CANNOT BE RESOLD
- Goods cannot be readily resold for a reaosnable price AND buyer wrongfully refuses or neglects to accept them AND 1596 par. 4 is inapplicable, even before ownership of the goods have passed, seller may maintain an action for the price.
DEFENSE AGAINST ACTION
- Buyer may claim that, before the time of payment the seller has manifested an inability to perform the contract of sale OR intent to not perform the same.
B2. Action for damages for non-acceptance (1596)
B3. Rescission 1597, 1593
B4. Sale of movables on Installment (Recto Law) 1484-1486
REMEDIES OF VENDOR (1484)
FULFILLMENT
- upon vendee's failure to pay
CANCEL
- If vendee has failed to pay TWO or more installments
FORECLOSE
- If vendee has failed to pay TWO or more installments AND there is a chattel mortgage installed.
ALTERNATIVE REMEDIES
- Remedies under 1484 are alternative; cannot be exercised cumulatively or successively.
WHEN AVAILABLE (1485)
- Sale of personal property where the price is payable in several installments or, lease of personal property with an option to buy when the lessor has deprived the lessee of possession.
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PAID INSTALLMENTS
- If the contract is cancelled, buyer may demand the return of payments made. But, in foreclosure payments already made cannot be demanded back.
WHEN AVAILABLE (1597)
- There must be
no prior delivery
AND the presence of any of the following circumstances AND
Notice
has been given.
REPUDIATION
- Buyer has repudiated the contract of sale
INABILITY
- Buyer has manifested inability to perform their obligations
BREACH
- Buyer has committed a breach of the contract of sale.
REAL v. PERSONAL
In the sale of real property, the vendor must make a demand for rescission before he can have the right to rescind the contract
In the case of personal property (which has not yet been delivered to the vendee), the vendor can rescind the contract, as a matter of right, if the vendee, without any valid cause, does not (1) accept delivery or (2) pay the price unless a credit period for its payment has been stipulated.
WHEN APPLICABLE
- Only in the following (3) circumstances.
REFUSAL WITHOUT CAUSE
- Buyer refuses without lawful cause or neglects to accept and pay for the same, seller may maintain an action for damages on the basis of non-acceptance.
EXECUTORY
- In executory contracts where title has not yet passed and the seller cannot maintain an action for the price, aciton for damages is the proper remedy.
GOODS NOT YET IDENTIFIED
- Goods are not yet identified at the time of the contract or subsequently. Seller's right is confined to action for damages.
AMOUNT OF DAMAGES
- Limited to the following:
DIFFERENCE
- between contract price and market price
FULL
- amount of damages IF there is no available market in which the goods can be sold at the time
PROXIMATE
- damages of a greater amount than the difference between the contract price and market price under special circumstances.
REPUDIATION
- Seller repudiates the contract or notifies seller of intent to not proceed with the same, damages for labor and expenses for materials prior to notice of repudiation AND unrealized profits proper.
ENUMERATION OF REMEDIES (1526)
POSSESSORY LIEN
- On the goods or right to retain them for the price while in the possession of the vendor.
STOPPAGE
- Right to stop the goods in transit in case of insolvency of the buyer
RESALE
RESCISSION
- For the sale.
A1. Possessory Lien (1527-1529)
- Unpaid seller is allowed to retain possession of the goods until payment or tender of the price in the following circumstances:
NO CREDIT
- When the goods have been sold without any stipulation as to credit.
EXPIRATION OF TERM
- Where the term of credit has expired
INSOLVENCY
- Refers to the insolvency of the buyer
CREDIT SALE
- Seller binds to give goods over to the buyer without receiving at the time of delivery payment for them. This is an exception to the general rule that payment must be made at delivery.
INSOLVENCY
- Basis being non-fulfillment of an obligation excuses the other party from performing theirs.
LOSS OF POSSESSORY LIEN
- Occurs after COMPLETE delivery. Thus, partial delivery means that seller still has lien over remainder of the goods in proportion of the price due on account of the goods retained.
SYMBOLIC DELIVERY
- If there is partial delivery BUT symbolic delivery of the whole is intended, then waiver of any right to retention as to the remainder is lost.
REVIVAL OF LIEN
- If buyer refuses to receive the goods OR buyer returns the goods in wrongful repudiation of the sale.
As a rule, the seller always has a lien upon the goods sold until payment or tender of the price.
A2. Stoppage In Transitu (1531-1535, 1532 (2))
DEFINITION OF TRANSIT (1531)
- Goods are considered in transit when:
TRANSMISSION
- From the time they are delivered to a carrier or other bailee for transmission to the buyer until buyer or agent in their behalf takes delivery
REJECTION
- When buyer rejects the goods and carrier continues in possession, even if seller has refused to receive them back.
WHEN NOT IN TRANSIT (1531)
DELIVERY
- If buyer or agent of buyer obtains delivery of the goods, even if prior to arrival at the appointed destination
ACKNOWLEDGMENT
- After arrival of goods at appointed destination carrier acknowledges to buyer that they hold the goods on their behalf and continues in possession
WRONGFUL REFUSAL
- If carrier/bailee refuses wrongfully to deliver the goods to the buyer or their agent.
ATTORNMENT
- The right to stop goods in transit terminated NOT by simple delivery, but by ATTORNMENT (formal delivery) of bailee to the buyer.
DELIVERY TO CHARTERED SHIP, etc
. - Covers delivery to ship, train, truck, etc. chartered by the buyer does not automatically make the delivery to carrier delivery to the buyer.
RIGHT TO STOP GOODS IN TRANSIT
- Once the right is exercised, the seller is entitled to he same rights to the goods as if he had never parted possession with them.
WHEN RIGHT EXISTS (1534)
UNPAID
- Seller must not have received payment
INSOLVENT
- Buyer must be insolvent
IN TRANSIT
- Goods must be in transit
POSSESSION/CLAIM
- Seller must either take possession or give notice of claim to the carrier or person in possession
SURRENDER
- Seller must surrender the negotiable document of title if one has been issued by the carrier or bailee.
BEAR EXPENSES
- Seller must bear expenses of delivery of the goods after the exercise of the right.
EXERCISE OF RIGHT
- May be done by:
ACTUAL POSSESSION
- When seller takes actual possession by stopping delivery and ordering re-delivery to themselves
NOTICE OF CLAIM
- Must be given at such a time and circumstance that the principal, by exercise of reasonable diligence may communicate it to his agent to prevent the delivery to the buyer
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DELIVERY TO AGENT OF THE BUYER
- Delivery to the carrier becomes delivery to the buyer if they are considered as an agent of the buyer.
PARTIAL DELIVERY
- The mere fact that part of the goods has been delivered does not deprive the seller of the right to stop with respect to the remainder just as the seller may still exercise his right of lien on the remainder after part of the goods had been delivered.
A3. Resale (1533)
WHEN AVAILABLE
UNPAID
- Seller is unpaid
LIEN/STOPPAGE
- Seller has a right of lien or right of stoppage over the goods
PERISHABLE
- Goods are perishable in nature
EXPRESS RESERVATION
- Right to resell is expressly reserved, in case buyer defaults
DELAY
- Where the buyer delays in the payment of the price for an unreasonable amount of time
Any of these 3 circumstances give rise to a right of resale
EFFECT OF RESALE
AS TO SELLER
- Not liable for any profit made by reason of the resale; if resale is for less than the price, may sue for the balance.
AS to 2nd BUYER
- 2nd buyer acquires a good title to the goods.
FORM REQUIRED
- Need not be done through a formal auction. May be done so by public or private sale. BUT seller may not directly or indirectly buy the goods.
NOTICE OF INTENT
- Notice of intent to resell is not essential to the validity thereof. However, may be used to fix the time within which it is reasonable that the buyer should perform the obligation to pay in case the goods are non-perishable.
NOTICE OF TIME AND PLACE
- Also not essential to validity of resale. Need not be given to the original buyer.
A4. Rescission (1534)
WHEN AVAILABLE
-
WHEN AVAILABLE
UNPAID
- Seller is unpaid
LIEN/STOPPAGE
- Seller has a right of lien or right of stoppage over the goods
UNREASONABLE DELAY
- Buyer delays in the payment of the price for an unreasonable time
EXPRESS RESERVATION
- Right to rescind is expressly reserved, in case buyer defaults
Any of these 2 circumstances give rise to a right of resale
EFFECTS
- Seller resumes ownership of the goods.
HOW DONE
- May be manifested by notice to the buyer or some overt act showing of an intention to rescind. There need not be communication of intent to rescind to the buyer.
SELLER/VENDOR (1525)
- Includes an agent of the selle to whom a bill of lading has been indorsed or, a consignor or agent who has paid or is directly responsible for the price or, any other person in the position of the sellor.
WHEN THERE IS NO PAYMENT (1525)
- Covers all circumstances where there has been no full payment.
Partial Payment
- It is full payment that extinguishes the seller's lien
Payment By Negotiable Instrument
- NCC 1249 provides that negotiable instruments provide full payment only when they have been encashed or when they are impaired through creditor's fault. In sales, this applies when the negotiable instrument is paid as conditional payment and the condition on which it has been received has been broken by reason of dishonor of the instrument, insolvency of the buyer, etc.
Tender of Payment
- Not the same as performance. Thus, seller to whom tender of payment has been made is considered as unpaid.