ARTICLE 1523. DELIVERY OF GOODS TO COMMON CARRIER

Where, in pursuance of a contract of sale, the seller is authorized or required to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer is deemed to be a delivery of the goods to the buyer, except in the cases provided for in article 1503, first, second and third paragraphs, or unless a contrary intent appears.

Unless otherwise authorized by the buyer, the seller must make such contract with the carrier on behalf of the buyer as may be reasonable, having regard to the nature of the goods and the other circumstances of the case. If the seller omits so to do, and the goods are lost or damaged in course of transit, the buyer may decline to treat the delivery to the carrier as a delivery to himself, or may hold the seller responsible in damages.

Unless otherwise agreed, where goods are sent by the seller to the buyer under circumstances in which the seller knows or ought to know that it is usual to insure, the seller must give such notice to the buyer as may enable him to insure them during their transit, and, if the seller fails to do so, the goods shall be deemed to be at his risk during such transit.

1. F.O.B. and F.A.S

FOB – FREE ON BOARD

The goods are to be delivered free of expense to the buyer to the point where they are F.O.B.

The seller is required to deliver the goods on board the ship, named in the contract. Thus, the seller has to bear all expenses up to and including shipment of goods on behalf of the buyer, who is responsible for their freight, insurance and subsequent expenses.

Thus, as soon as the goods are put on board the ship, the property in them passes to the buyer. This will be so even if the goods are not specific or ascertained. The buyer is liable to pay the price even if the goods are lost in transit. The property in goods shall, however not pass if the seller reserves the right of disposal.

F.A.S – FREE ALONGSIDE SHIP

The seller is required to deliver the goods alongside the ship named in the contract and to notify the buyer that the goods have been so delivered. The property in the goods passes to the buyer when the seller delivers the goods alongside the ship. Thereafter, it is the buyer's duty to arrange for the contract of freighting to the place and insurance of the goods while the transit.

2. C.I.F. and C&F

C.I.F – COST INSURANCE and FREIGHT

They signify that the price fixed covers not only the cost of the goods, but the expenses of freight and insurance to be paid by the seller up to the point especially named.

C & F – COST and FREIGHT

This is same term as CIF. Except here the insurance cost right from the port of loading till the final destination of the importer has to be paid by the importer and not the exporter.

3. Place of delivery A particular point where the buyer receives the goods.

Sale warranties (1546-1547)

Warranty – A warranty is a promise or assurance that a certain statement is considered as true and can be relied upon.

Implied Warranty – Where the transfer of ownership, “implies” certain rights to the new owner, such as the case with real estate, where the new owner is given the right to use his property in any way he see fit.

Consumer warranty – Most consumer items have a warranty which states that they will receive a replacement for that item if that item breaks.

Article 1546

An affirmation of fact or any promise by the seller relating to the thing to be sold is considered an express warranty if the tendency of such promise is to induce the other party to buy the object. No affirmation of the value of the thing, nor any statement purporting to be a statement of the sellers opinion only, shall be considered a warranty, unless the seller made such an affirmation or statement as an expert and relied upon buy the buyer.

A warranty is given when the seller tries to convince the other party to buy the object. A statement of the things value or the seller’s opinion can be a warranty, unless it is a statement relied upon by the buyer.

Article 1547

In a contract of sale, unless there is a contrary intention:

* An implied warranty on the part of the seller that the seller has a right to sell the thing when the ownership is to be passed on and from that time, the buyer shall enjoy peaceful and legal possession of the thing.

* There is an implied warranty that the thing shall not have any hidden faults or defects, or charge and encumbrances that is not known by the buyer.

Exception to Article 1547 : A sheriff, auctioneer, mortgagee, pledgee or any other person professing to sell a thing by virtue of the authority of the law, for the sale of a thing in which a third person has legal or equitable interest.

ARTICLE 1561 - WARRANTY AGAINST HIDDEN DEFECTS

The vendor shall be responsible for warranty against the hidden defects which the thing sold may have, should they render it unfit for the use for which it is intended, or should they diminish its fitness for such use to such an extent that, had the vendee been aware thereof, he would not have acquired it or would have given a lower price for it; but said vendor shall not be answerable for patent defects or those which may be visible, or for those which are not visible if the vendee is an expert who, by reason of his trade or profession, should have known them.

Example: Io sold to Alex a car. After the sale, Alex saw that the interior parts of the car had been destroyed. The defects of the car were hidden and were unknown to Alex until he made an inspection of the car.

Io is liable for the defects even though she was not aware of it and Alex may elect between the rescission of the contract and a reduction of the price of the care, with damages in either case.

a. ARTICLE 1562 - MERCHANTABILITY

In a sale of goods, there is an implied warranty or condition as to the quality or fitness of the goods, as follows:

Where the goods are brought by description from a seller who deals in goods of that description (whether he be the grower or manufacturer or not), there is an implied warranty that the goods shall be of merchantable quality.

IMPLIED WARRANTY OF MERCHANTABILITY – Where goods are bought by description, the seller impliedly warrants that the goods are of merchantable quality.

b. ARTICLE 1562 – FITNESS FOR A PARTICULAR PURPOSE

IMPLIED WARRANTY OF FITNESS – There is no implied warranty as to the quality or fitness for any particular purpose of goods under a contract of sale, except as follows:

The buyer, expressly or by implication, manifests to the seller the particular purpose for which the goods are acquired

The buyer relies upon the seller’s skill or judgment whether he be the grower or manufacturer or not

c. ARTICLE 1565 – WARRANTY IN SALE BY SAMPLE

In the case of a contract of sale by sample, if the seller is a dealer in goods of that kind, there is an implied warranty that the goods shall be free from any defect rendering them un-merchantable which would not be apparent on reasonable examination of the sample.

MERCHANTABILITY OF GOODS SOLD BY SAMPLE

1. WHERE SAMPLE IS NOT MERCHANTABLE – All the buyer is entitled to, in case of a sale or contract to sell by sample, is that the goods be like the sample.

2. WHERE SAMPLE IS SUBBJECT TO LATENT DEFECT – Where the defect in the goods is of such a character that inspection will not reveal it, so in the case of a sale by sample, if the sample is subject to a latent defect, and the buyer reasonably relies on the seller’s skill or judgment, the buyer is entitled not simply to goods like the sample, but to goods like those which the sample seems to represent, that is, merchantable goods of that kind and character.

d. ARTICLE 1562 – WARRANTY AS TO QUALITYWhere the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are acquired, and it appears that the buyer relies on the seller’s skill or judgment (whether he be the grower or manufacturer or not), there is an implied warranty that the goods shall be reasonably fit for such purpose;

e. ARTICLE 1568 AND 1569 – LOSS OF THING SOLD WHICH HAS HIDDEN DEFECTS

ARTICLE 1568

If the thing sold should be lost in consequence of the hidden faults, and the vendor was aware of them, he shall bear the loss, and shall be obliged to return the price and refund the expenses of the contract, with damages. If he was not aware of them, he shall only return the price and interest thereon, and reimburse the expenses of the contract which the vendee might have paid

EFFECT OF LOSS OF THING SOLD ON ACCOUNT OF HIDDEN DEFECTS

1. VENDOR AWARE OF HIDDEN DEFECTS – If the vendor was aware of the hidden defects in consequence of which the thing sold was lost, he shall bear the loss because he acted in bad faith. In such case, the vendee has the right to recover:

The price paid The expenses of the contract Damages

2. VENDOR NOT AWARE OF HIDDEN DEFECTS – If the vendor was not aware of the, shall be obliged only to return:

The price The interest thereon Expenses of the contract if paid by the vendee. He is not made liable for

damages because he is not guilty of bad faith

ARTICLE 1569

If the thing sold had any hidden fault at the time of the sale, and should thereafter be lost by a fortuitous event or through the fault of the vendee, the latter may demand of the vendor the price which he paid, less the value which the thing had when it was lost.

If the vendor acted in bad faith, he shall pay damages to the vendee.

EFFECT OF LOSS OF DEFECTIVE THING SOLD

If the thing sold had no hidden defects, its loss through a fortuitous event or through the fault of the vendee is, of course, to be borne by the vendee.

The vendor is obliged to return the price paid, less the value of the things, at the time of its loss in case where hidden defects existed. The vendor is still made liable on his warranty.