Conditions and warranties in sale on seller

Sales contract with suspensive condition

If the sales contract is under a suspensive condition which is not met, the innocent party may refuse to proceed with the contract or he may waive performance of the condition.[1]

Breach of warranty

In addition to the above rule, the innocent party may also consider the non-performance of the condition as a breach of warranty if the other party has promised that the condition should happen or be performed.[2]

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Seller’s obligation to deliver

The seller is obligated to transfer the ownership of and deliver the object of the sale, as well as answer for its warranty.[1]

The buyer acquires ownership of the thing sold from the moment it is delivered to him: (a) through the various modes of delivery, or (b) in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee.[2] Not mere agreements but tradition or delivery transfers the ownership of things (Non nudis pactis sed traditione dominia rerum transferentur).[3]

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Concept of Sale

In a contract of sale, “one of the contracting parties obligates himself to transfer the ownership and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.”[1] A sales contract may either be absolute or conditional.[2]

Perfection of sales contract

The perfection of the sales contract happens when there is a meeting of minds upon the thing which is the object of the contract and upon the price.[3] The parties may reciprocally demand performance reckoned from such moment subject to the provisions of the law governing the form of contracts.[4]

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Liquidated Damages

In a contract, parties may agree to liquidated damages as indemnity or penalty for non-performance of any or all of the obligations in their agreement.[1]

Best Legal Practices:

Stipulate liquidated damages – The party who has interest to protect in a transaction should ask for liquidated damages to be stipulated in the contract. The amount for the penalty depends on the value of transaction involved to the said party.

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Actual damages

Actual or compensatory damages is award to aperson who is entitled “to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved” except as otherwise provided by law or by stipulation.[1] Actual or compensatory damages include the value of the loss suffered and the profits which the injured party failed to obtain.[2]

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Loss in Insurance and Notice of Loss

Except as otherwise provided in the case of life insurance, a stipulation prohibiting the transfer of the claim of the insured against the insurer after the loss has happened is void if such conveyance was made before the said loss.[1]

Insurer liable for a loss of which a peril insured was proximate cause

Unless otherwise stipulated in the policy, the insurer is liable for a loss which a peril insured against was the proximate cause even if the peril not contemplated by the contract may have been the remote cause of the loss.[2] Conversely, the insurer is not liable for a loss which the peril insured against only a remote cause.[3]

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