6 essential characteristics of a contract of sale

[1] A contract of sale is consensual because the contract is perfected by mere consent. This is different from a real contract (perfected by delivery). Paras (2008) explains that a real contract is one perfected by delivery and he gives, as example, a contract of deposit or commodatum.In a real contract, the agreement does not start to operate unless the thing or the person (over and/or for which the contract is made) is placed in the control of one of the parties. Therefore, being consensual, a contract of sale does not require delivery of the thing sold/bought. Such delivery is merely an obligation on the part of the seller (vendor), which he must perform right after perfection, after delivery to him of the purchase price, after a period or after the happening of a condition, etc.

[2] According to Paras, a contract of sale is a bilateral reciprocal contract because both parties are bound by obligations dependent upon each other. In other words, it is bilateral because both parties are obliged to perform an obligation (the seller delivers; the buyer pays). It is reciprocal because the one party's obligation becomes demandable the moment the other party performs his obligation.

Therefore, the moment the seller places the buyer in possession of the thing due, the latter, absent any stipulation to the contrary, should deliver the purchase price to the former. The same is true vice versa.

CASE: Succinct and unmistakable is the provision of Article 1191 of the New Civil Code under which rescission of the sale is a remedy available to an unpaid vendor. A contract of sale is reciprocal and bilateral. Thus, if the vendee of the first sale, the late Maria vda. de Ramos, never performed her reciprocal obligation to pay the full consideration of the said sale, the aggrieved vendors, spouses Agustin Ramirez and Aniceta Ramirez, who are now in the great beyond, could have brought an action for the rescission of the first sale. That they did not take such proper recourse could only mean that there was no ground for them to avail of the remedy of rescission inasmuch as the purchase price of the first sale was fully paid, after all. (G.R. No. 96412)

[3] A contract of sale is onerous because, to acquire the rights, valuable consideration must be given. Cause or consideration is a general requirement for the existence of contract. What is referred to here is valuable consideration (in pecuniary terms). Compare a contract of sale with a deed of donation; the latter does not require, as a rule, a valuable consideration from the donee. Another example would be a gratuitous contract of deposit.

By the way, the opposite of "onerous" is "gratuitous."

[4] A contract of sale is commutative, as a rule, because the values exchanged are almost equivalent to each other. This is the presumption because, in a normal contract of sale, the seller sells and the buyer buys at a price at which both of them are willing to sell and buy. Generally, when persons buy something, they think that what they get is equivalent in value to the money they have to pay.

Paras explains in this 2008 books that, by way of exception, some contracts of sale are aleatory, i.e., what one receives may in time be greater or smaller than what he has given. He gave the sale of a genuine sweepstakes ticket as an example. Another example would be a contract of insurance.

[5] A contract of sale is principal because for it to validly exist, there is no necessity for it to depend upon the existence of another valid contract. In other words, it is principal because it can exist independently.

The opposite of "principal contracts" is "accessory contracts." Examples of accessory contracts given by Paras (2008) are those of pledge and mortgage. They cannot exist independently; there must be an independent contract from which they can derive existence and validity.

[6] A contract of sale is nominate because the New Civil Code of the Philippines refers to it by a special designation or name, i.e., the contract of sale. There are contracts not mentioned in the Code such a contract where a person lets another live in his house in exchange of a daily back massage. These contracts not specifically or specially named by the Code are called innominate contracts.

SOURCE: Paras (2008). Civil Code Of The Philippines Annotated By Edgardo L. Paras † Litt. B., LL.B., LL.M., LL.D. Associate Justice, Supreme Court (1986-1992). 16th Edition, 2008. Volume V Articles 1458-2270 (Special Contracts).

It is important to note that a contract of sale is different from a contract to sell. (G.R. No. 142411. October 14, 2005)

A contract to sell is a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price.

In such contract, the prospective seller expressly reserves the transfer of title to the prospective buyer, until the happening of an event, which in this case is the full payment of the purchase price. What the seller agrees or obligates himself to do is to fulfill his promise to sell the subject property when the entire amount of the purchase price is delivered to him. Stated differently, the full payment of the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to sell from arising and thus, ownership is retained by the prospective seller without further remedies by the prospective buyer.

It is different from contracts of sale, since ownership in contracts to sell is reserved by the vendor and is not to pass to the vendee until full payment of the purchase price, while in contracts of sale, title to the property passess to the vendee upon the delivery of the thing sold. In contracts of sale the vendor loses ownership over the property and cannot recover it unless and until the contract is resolved or rescinded, while in contracts to sell, title is retained by the vendor until full payment of the price.38 In contracts to sell, full payment is a positive suspensive condition while in contracts of sale, non-payment is a negative resolutory condition.

A contract to sell may further be distinguished from a conditional contract of sale, in that, the fulfillment of the suspensive condition, which is the full payment of the purchase price, will not automatically transfer ownership to the buyer although the property may have been previously delivered to him. The prospective vendor still has to convey title to the prospective buyer by entering into a contract of absolute sale. While in a conditional contract of sale, the fulfillment of the suspensive condition renders the sale absolute and affects the seller’s title thereto such that if there was previous delivery of the property, the seller’s ownership or title to the property is automatically transferred to the buyer.

Indeed, in contracts to sell the obligation of the seller to sell becomes demandable only upon the happening of the suspensive condition, that is, the full payment of the purchase price by the buyer. It is only upon the existence of the contract of sale that the seller becomes obligated to transfer the ownership of the thing sold to the buyer. Prior to the existence of the contract of sale, the seller is not obligated to transfer the ownership to the buyer, even if there is a contract to sell between them.