A Contract of Sale outlines the transfer of property in movable goods for a monetary price, forming the foundation of retail and wholesale trade.
1. Sale vs. Agreement to Sell (Section 4)
- Sale: The transfer of ownership in the goods from the seller to the buyer occurs immediately at the time of contract formation. It is an executed contract.
- Agreement to Sell: The transfer of ownership is to take place at a future time or subject to some conditions. It is an executory contract.
2. Conditions vs. Warranties: Section 12
Stipulations in a contract of sale are classified based on their importance to the main objective:
| Condition (Essential) | Warranty (Collateral) |
|---|---|
| A stipulation essential to the main purpose of the contract. | A stipulation collateral to the main purpose of the contract. |
| Breach gives the buyer the right to reject the goods and claim a refund. | Breach gives the right to sue for damages, but NOT reject the goods. |
Note: Under Section 13, a buyer can elect to treat a breach of condition as a breach of warranty and claim only damages.