Profesor Vance
Fall 2010
SALES AND LEASE
Book 3
Part 1: The Nature of the Contract of Sale
Section 1: General Concepts, Contrast with other Contracts
Nominate Contracts
contracts with a special name
Innominate contracts
contracts without a special name
If you are going to apply the code correctly, then you need to be sure you characterize the contract correctly. For example: whether the contract is one of sale or construction.
A sale is the contract that started the Roman idea of contract. Used sales as the model for all rules on contracts. The sale is the most common kind of contract because of fanatic American consumers. Any time there is a doubt in the regulation of a contract, the civilian will resort to the contract of sale to determine the rules. This is the same for common law.
A sale is an onerous contract
a price is paid in money
CC 2429: person transfers ownership of a thing for a price paid in money
thing, price, and consent are required for the perfection of a sale
different from a donation where you get nothing in return
synallagmatic-gives rise to reciprocal obligations. The buyer pays a price and the seller is bound to deliver.
consensual (CC 2456: ownership is transferred on consent alone even thought the thing has not yet been delivered or the price paid.)
Dave has a horse for sale for $100. Lit agrees to buy the horse and he says he’s coming tomorrow to pick up the horse. From then on, Lit, the buyer, is the owner. Ownership has been displaced.
Lit is a merchant. Dave is a shirtmaker. Lit places an order for 100 shirts-an offer and Dave thanks him and says I’ll deliver.
CC 2457: when the things are segregated from the larger mass, then ownership is transferred
CC 2458: sales by tale, weight or measure are instances of segregating thing from a larger mass. When this is done with the buyer’s consent, ownership is transferred
CC 2438
Contract of sale is governed by the rules on obligations in general and conventional obligations/contracts if there is no specific provision
CC 2440
Sale of immovable property
the sale or promise to sell an immovable thing must be made by authentic act or act under private signature
requires a writing for a valid transfer
1839: exception for an oral sale when the delivery has taken place and the deliveror has so recognized under oath. The court transcript is written and then you have the required writing.
2442: the transfer of ownership is effective from the time the act is made. It is effective against 3rd parties only from the time it is recorded in the registry.
2443: Sale from parents to children is suspect of simulation when no price has been paid or the price paid is LESS than ¼ of the actual market value of the property. (Not ¼ less than the market value. There is a difference.)
Chapter 2: Persons Capable of Buying and Selling
2447: officers of a court may NOT purchase litigious rights under contestation in the jurisdiction of that court. The purchase of the right is NULL and makes the purchaser liable for all costs, interest and damage.
Chapter 3: Things which May be Sold
2448: All things corporeal and incorporeal susceptible of ownership may be the object of a contract of sale unless the sale of the particular thing is prohibited by law. Ex. Lit has a credit against Dave. Dave owes him $1,000 and it is undisputed. He can sell the right to this credit. If the credit is disputed in court, this is a litigious right. Lit may assign a litigious right as long as the parties are not officers of the court.
2450: a future thing may be the object of the contract of sale.
Suspensive condition: you have a pregnant cow and you sell the unborn calf. However, if the cow terminates the pregnancy, then no contract.
Merchant places an order with a manufacturer for a thing that he does not have in stock but that he could produce. If the manufacturer does not produce the goods that he promised, then the shirts never come into existence. Through his fault, the contract is not complete and he is liable for damages.
Future crops:
2452: Sale of a thing of another
David sells a horse to Lit but that horse is not his to sell. Lit does not acquire ownership. This sale does not convey ownership. However, under the present day code, the sale is not null so Lit can sue him for damages.
Take the situation where Dave sells land to both Lit and Jonathon, but Jonathon records first. Jonathon keeps the land. Dave sold something he no longer owned to Lit, so Lit has a claim for damages.
Sale of a Thing Pending Litigation of Ownership
2453 :when the ownership of the thing is subject to litigation, the sale of that thing during pendancy of the suit does not affect the claimants rights. Where the thing is immovable, the rights of 3rd persons are governed by the laws of registry.
Chapter 4
How the contract of Sale must be perfected, ownership is not transferred from the seller to the buyer until the latter gives his approval. Ex. Mail order catalog.
2460: Sale on view or trial
When the buyer has reserved the view or trial of the thing
Lease
rent may be paid in commodities or in fruits extracted from the land leased
2456: Transfer of Ownership
ownership is transferred as soon as there is an agreement on the thing
contrast with 2467: risk is transferred at the time of delivery
2480: Retention of possession by seller, presumption of simulation
· When the thing sold remains in the corporeal possession of the seller the sale is presumed to be a simulation, and, where the interest of heirs and creditors of the seller is concerned, the parties must show that their contract is not a simulation.
· forced heir or creditor of the buyer can attack the transaction as null.
· shift in the burden of proof
· usually the party claiming the nullity has the burden of proof, but in the case where the seller maintains possession, then the seller has the burden
2670: Essential Element of a Lease
· Lease-a person may lease out his services whic
ool to fit and install a new science lab.
· Rowley had obtained several other contracts for the school board
· Rowley brought the materials to the school and were to install them the next day. Like Hunt, a fire ensued and the stuff was destroyed. Who bears the loss?
· The Judge revaluates Hunt where there was a clear bill itemizes the cost of marble and assembling the pieces. There were 2 contracts between the parties-one for the materials (sale) and another for the assembly.
· In the present case, there is a different situation. There is a single budget/price and then there is an itemization for the materials. Regardless of the percentages for materials, labor and overhead, the price is a single one.
· According to the trial court, the schools insurance company was to bear the loss. The appellate judge was of a different mind because according to the bid specs, the bids called for construction where the builder furnished full insurance while the job is in progress. The builder didn’t take out insurance to spare costs. They never took out insurance before.
· Clever and Devious: The wily builder says we saw the bid, we filed it and the school board sent us a document titled “Purchase Order.” They argued that if one party is purchasing, the other is selling which would make it a contract of sale.
· In common law, you can BUY services. In civil law, a service is rendered by a person. Not at civil law.
· The judge says no way, this is not a sale. In failing to take out insurance, Rowley breached and the school board is entitled to damages.
· Who owned the cabinets at the time they were consumed by fire? If it was a sale, the school board’s insurer was to pay because the school was the owner on delivery. However, if it was a building contract, then the K was not complete at the time of delivery.
· 2758: when the undertaker furnishes the materials for the work, if the work is destroyed before it is delivered, then the undertaker bears the loss unless the proprietor is in default for not receiving it.
· The sale is one with a suspensive condition of installation. If there has been no installation, then the sale is not complete, no delivery. Even if you won’t call this a building contract, it’s not a fully performed contract and it is not fair for the board insurer to pay the risk.
Hebert v. McDaniel
the contract was for the building of a steel structure topped by a roof. Around the structure, the plaintiff built a house Steel frame instead of wood frame.
