CHAPTER 4 – OBLIGATIONS OF

THE VENDORSection 3 (Subsection 1-2)

ByBuenviaje, Jillian B.

BSA-4

SECTION 3 CONDITIONS AND

WARRANTIES

ART. 1545 Where the obligation of either party to a contract of

sale is subject to any condition which is not performed, such party may refuse to proceed with the contract or he may waive performance of the condition. If the other party has promised that the condition should happen or be performed, such first mentioned party may also treat the nonperformance of the condition as a breach of warranty.

Where the ownership in the thing has not passed, the buyer may treat the fulfillment by the seller or his obligation to deliver the same as described and was warranted expressly or by implication in the contract of sale as a condition of the obligation of the buyer to perform his promise to accept and pay for the thing.

CONDITION Uncertain event or contingency

on the happening of which the obligation of the contract depends.

Contract of sale :oAbsoluteoConditional

EFFECT OF NON-FULFILLMENT OF CONDITION

1) Either party is subject to any condition and such condition is not fulfilled:

a. Refuse to proceed with the contract; orb. Proceed with the contract, waiving the

performance of the condition.

2) If the condition is in the nature of a promise that it should happen, the non- performance of such condition may be treated as a breach of warranty.

EXAMPLE Jose (buyer) entered into a contract with

Pedro for the purchase of certain equipment. The arrival of the goods to be shipped from Korea is made a condition of the bargain, there being no promise by Pedro that the goods will arrive. If the equipment does not arrive, Pedro is not guilty of breach of contract.

But if Pedro promises or warrants that the equipment will be shipped or that it was already in its way, the non-arrival constitutes a breach of contract.

ART. 1546WARRANTY Representation made by the seller of the thing

with respect to its character, quality, or ownership, by which be induces the buyer to purchase the same relying on said representation.

EXPRESS WARRANTY Affirmation of fact Promise by the seller Natural tendency to induce the buyer

to purchase the thing.

EXAMPLE  Polly Pasta goes to her local StupendoMart and

buys an aluminum saucepan set made by the HotStuff Manufacturing Company. Polly takes the pans home and immediately cooks all her favorite dishes in them. To her amazement and horror, the handles of all the pans break, through no fault of hers. She looks at the box in which the pans were packed and finds a "limited warranty" which promises that the company will replace defective pans at no cost. Polly has the right to replacement pans in accordance with the terms of the written express warranty.

EXPRESSION OF OPINION

No matter how positively asserted, does not import a warranty unless the seller is an EXPERT .

ART. 1547 IMPLIED WARRANTY

o Implication or inference from the nature of transaction.o The law attaches an obligation to the sellero Not expressed in any words.

1) Implied warranty as to seller’s title2) Implied warranty against hidden defects or unknown

encumbrances.3) Implied warranty as to fitness or mechantability

EXAMPLE  Polly Pasta buys a Miraco Food Mixer. She

unpacks the mixer from its box when she gets it home and tries it out; the mixer, however, will not mix food. In addition to any express warranties made by the manufacturer or seller of the mixer, Poly can rely on the implied warranty of merchantability. This warranty may become important in cases where the manufacturer or seller of the product makes no express warranties and unsuccessfully tries to disclaim implied warranties.

WHEN IMPLIED WARRANTY NOT APPLICABLE

“As is and where is” sale Sale of secondhand articles Sale by virtue of authority in fact or law

SUBSECTION 1. – WARRANTY IN CASE OF

EVICTIONART. 1548

EVICTIONo Judicial process whereby the vendee is deprived of the

whole or part of the things purchased by the virtue of a final judgment based on a right prior to the sale or an act imputable to the vendor.

ESSENTIAL ELEMENTS OF THE WARRANTY AGAINST

EVICTION1) The vendee is deprived in whole or in part of the

thing purchased.2) He is so deprived by virtue of a final judgment.3) the judgment is based on a right prior to the

sale or an act imputable to the vendor.4) The vendor was summoned in the suit for

eviction at the instance of the vendee.5) There is no waiver on the part of the vendee.

ART. 1549 The vendee need not appeal from

the decision in order that the vendor may become liable for eviction.

ART. 1550 EFFECTS OF PRESCRIPTION

o Completed before saleo Completed after sale

EXAMPLE:A sold to B a building which is claimed by C who has been in possession of the property in the concept of owner publicly and continuously for 30 years. Under the law, C is deemed to have acquired ownership over the building by prescription without need of title or of good faith.In this case, A shall be liable to B in case of eviction.

ART. 1551 If the property is sold for

nonpayment of taxes due and not made known to the vendee before the sale, the vendor is liable for eviction.

ART. 1552 The judgment debtor is

also responsible for eviction in judicial sales, unless it is otherwise decreed in the judgment.

ART. 1553STIPULATION WAIVING WARRANTY

1) Effect of vendor’s bad faith2) Effect of vendee’s bad faith

ART. 1554KINDS OF WAIVER EVICTION 1) CONSCIENTE

- voluntarily made by the vendee without the knowledge and assumption of the risks of eviction.

2)INTENCIONADA- waiver made by the vendor with

knowledge of the risk of eviction and assumption of its consequences.

ART. 15551) Return of value of thing2) Income or fruits of thing3) Costs of the suit4) Expenses of the contract5) Damages and interests

ART. 1556 RIGHTS OF THE VENDEE IN CASE OF

PARTIAL EVICTIONo 1556 deals with partial eviction while

1554 deals with total evictiono 1556 states that if there is partial

eviction, the vendee has the option either to enforce the vendor’s liability for eviction or to demand rescission of the contract.

EXAMPLE Dylan sells to Tyler a parcel of land,

represented by Dylan as containing 350 square meters, at the rate of P1200 per square meter. Tyler needs a lot of at least 350 square meters on which to build a factory. Tyler is evicted from a 20-square-meter portion of the land. Tyler would not have bought the land had be known of its smaller area.

Under the facts, Tyler can either sue for damages for breach of warranty or demand rescission of the contract. He can also exercise his alternative rights if there were two parcels of land sold and he should lose one of them by reason of eviction.

ART. 1557 Final judgment of eviction

essential.o1557 merely reiterates two of the essential elements for the enforcement of warranty in case of eviction namely:•1. deprivation in whole or in part of the thing sold•2. existence of a final judgment

ART. 1558 -1559 1558

o Vendor not obliged to make good proper warranty

o Unless summoned in the suit for eviction.

1559o Defendant vendee shall ask within the

time fixed in the Rules of Court.

ART. 1560 RIGHTS OF VENDEE WHERE

IMMOVABLE SOLD ENCUMBERED WITH NON-APPARENT BURDENoSERVITUDE OR EASEMENT – an

encumbrance imposed upon an immovable for the benefit of another immovable belonging to a different owner.

SUBSECTION 2. – WARRANTY AGAINST HIDDEN DEFECTS OF,

OR ENCUMBRANCES UPON, THE THING SOLD

ART. 1561 Vendor shall be responsible

for warranty against the hidden defects.

REQUISITIES FOR WARRANTY AGAINST HIDDEN EFFECTS

The defects must be important or serious. It must be hidden. It must exist at the time of the sale. The vendee must give notice of the defect to

the vendor within a reasonable time. The action for rescission or reduction of the

price must be brought within the proper period.

There must be no waiver of warranty on the part of the vendee.

WHEN DEFECT HIDDEN Lydia sold to Stiles a car. After the

sale, Stiles discovered that the radiator and other interior parts had been sunken in flood and a result, the car was in danger of overheating. The defects of the car were hidden and concealed and were unknown to Stiles until a closer inspection was made by him.

ART. 1562 IMPLIED WARRANTIES OF

QUALITYo 1) Implied warranty of fitnesso 2) Implied warranty of

merchantability

WARRANTY OF QUALITY

WARRANTY OF MERCHANTABILITYo Warranty that goods are reasonably fit for the general

purpose for which they are sold.

WARRANTY OF FITNESSo Warranty that goods are suitable for the special purpose

of the buyer which will not be satisfied by mere fitness for general purposes.

ART. 1563 Specified article under its patent or other trade

name , there is no WARRANTY as to its fitness. Unless there is stipulation.

EXAMPLE:o Derek buy a car in Toyota Inc. He chose a particular car

and he intended to enter it to a car race but this fact was not made known to the seller.

o Toyota Inc. is not liable if Derek didn’t informed them about the purpose of the car.

ART. 1564 An implied warranty or condition

as to the quality or fitness for a particular purpose may be annexed by the usage of trade.

ART. 1565 MERCHANTABILITY OF

GOODS SOLD BY SAMPLEo 1) Where sample were not

merchantableo 2) Where sample subject to latent

defect

ART. 1566 Vendor is responsible to

the vendee for any hidden faults or defects.

Provision does not apply if the vendor is not aware of the defect.

ART. 1567 The vendee may elect between:

oWithdrawing from the contractoDemanding a proportionate

reduction of the price

ART. 1568 EFFECT OF LOSS OF THING SOLD ON

ACCOUNT OF HIDDEN DEFECTS:

o VENDOR AWARE OF HIDDEN DEFECTS• Vendee’s right to recover:

• A) Price paid• B) Expenses of the contract• C) Damages

o VENDOR NOT AWARE OF HIDDEN DEFECTS• Vendor’s obliged to return only:

• A) Price • B) Interest• C) Expenses of the contract

ART. 1569 If the vendor acted in bad faith. He

shall pay damages to the vendee. EFFECT OF LOSS OF DEFFECTIVE

THING SOLDo If thing sold had no hidden defects

and loss through a fortuitous event the fault must borne by the vendee.

o If the thing sold has a hidden defect at the time of its loss the vendor is obliged to return the price paid less the value of the thing.

ART. 1570 The preceding articles in sub. 2 are applicable to judicial sales except the judgment debtor shall not be liable to damages.

ART. 1571-1572 1571

o Ten preceding article shall be barred after 6 months, from the delivery of the thing sold.

1572o Sale of two animals together

o EXAMPLE• X sold 2 dogs to Y for P10000. If one of the dog is

defective, X is only liable of warranty on the defective animal only.

ART. 1573-1575 1573

o Respect to the sale of animals shall in like manner be applicable to the sale of other thing.

1574o No warranty to hidden defects of animals sold at

fair, public auctions, or livestock sold as condemned.

1575o Sale of contagious animal shall be void.

ART. 1576-1579 1576

o REDHIBITORY VICE OR DEFECTS – a defect in the article sold against which defect the seller is bound to warrant.

1577o Limitation of action in sale of animals

1578o Responsibility of vendor where animal dies.

1579o Liability of buyer in case of sale of animal rescinded

ART. 1580-1581 1580

o The sale of animals with redhibitory defects, the vendee shall also enjoy the right mentioned in art. 1167

1581o The form of sale of large cattle shall be

governed by special laws.