ON OBLIGATIONS & CONTRACTS
On the contract of sale & purchase
On the nature & form of this contract
Pursuant to the contract of sale and purchase, one of the contracting parties undertakes to deliver a specific object and the other to pay a certain price for it, in money or something which represents it.
If the sale price were to consist in part in money and in part in something else, the contract shall be classified pursuant to the manifest intention of the contracting parties. If such intention is not stated, the contract shall be deemed to be barter, if the value of the object given as part of the price exceeds the amount of money or its equivalent; and a sale if otherwise.
For the price to be deemed certain, it shall be sufficient that it be certain by reference to another certain object, or that its establishment is left to the discretion of a specific person.
If such person were not able to or does not wish to set the price, the contract shall become without force and effect.
Likewise, the price shall be deemed certain in the sale of securities, grains, liquids and other fungible objects, if the value set is the value which the objects sold had on a specific day, exchange or market, or if an amount higher or lower than the price on the day, exchange or market had set, as long as it is certain.
The setting of the price may never be left at the discretion of one of the contracting parties.
The sale shall be perfected between the purchaser and the seller, and shall be binding on both, if they have agreed on the object constituting the subject matter of the contract and on the price, even if neither has been delivered yet.
An undertaking to sell or purchase, if there is agreement as to the object and the price, shall entitle the contracting parties to reciprocally claim the performance of the contract.
If the undertaking of sale or purchase cannot be kept, the provisions concerning obligations and contracts provided in the present Book shall apply to the seller and purchaser, as the case may be.
Damages or improvements in the objects sold after perfecting the contract shall be regulated by the provisions of Articles 1096 and 1182.
This provision shall apply to the isolated sale of fungible objects for a lump sum price, or without considering the weight, number or measurement thereof.
If the fungible objects are sold for a price set in relation to the weight, number or measurement thereof, the risk shall not be conveyed to the purchaser until they have been weighed, counted or measured, unless the latter has incurred in default.
The sale made on trial or to test the objects sold, and the sale of objects which it is usual to taste or sample before receiving them shall always be presumed to have been made subject to a condition precedent.
If earnest money or a deposit has been provided in a contract of sale and purchase, the contract may be rescinded by the purchaser by agreeing to forfeit the earnest money or deposit, or the seller by refunding double the amount.
The expenses of executing a public deed shall be borne by the seller, and those of the first copy and any other copies subsequent to the sale shall be borne by the purchaser unless otherwise covenanted.
Forced sales for causes of public utility shall be governed by the provisions of special laws.
On the capacity to purchase or sell
All persons authorised by this Code to bind themselves may enter into the contract of sale and purchase, save for the amendments contained in the following Articles.
Spouses may reciprocally sell goods to one another.
The following persons may not acquire objects by purchase, even if it is in a public or judicial auction, by themselves or using any intermediary:
1. Persons who exercise any position of guardianship, in respect of the goods of the person or persons who are under their custody or protection.
2. Attorneys, in respect of the goods whose administration or disposal is entrusted to them.
3. Executors, in respect of the goods entrusted to their care.
4. Public officials, in respect of goods pertaining to the State, Municipalities, villages and public establishments, of which they are in charge of the administration.
This provision shall apply for Judges and experts who in any way partake in the sale.
5. Magistrates, Judges, Public Prosecutors, Court Clerks and Court Officials, in respect of the goods and rights subject to dispute before the Court of Law in whose jurisdiction or territory they perform their respective duties; this prohibition shall extend to the act of acquiring pursuant to assignment.
The case of hereditary actions between co-heirs, or assignment in payment of credits, or to secure the goods they possess shall be excepted from this provision.
The prohibition contained in this Number 5 shall comprise Solicitors and Barristers in respect of the properties and rights which constitute the subject matter of the dispute in which they partake as a result of their profession and work.
On the effects of the contract of sale & purchase if the thing sold were lost
If at that time of entering into the sale, the object constituting the subject matter thereof has been lost in its entirety, the contract shall become without force and effect.
Notwithstanding the foregoing, if it has been lost only in part, the purchaser may choose between desisting from the contract or claiming the existing part, paying its price proportionally to the covenanted total sum.
On the seller’s obligations
Section One. General provision
The seller is bound to perform delivery of and warrant the object constituting the subject matter of the sale.
Section Two. On delivery of the thing sold
The object sold shall be deemed to have been delivered if it is put in the power and possession of the purchaser.
If the sale has been made pursuant to a public deed, the execution thereof shall be equivalent to the delivery of the object constituting the subject matter of the contract, except if this is not so or the opposite can clearly be deduced from the public deed.
Outside the cases stated in the preceding Article, delivery of movable goods shall take place: by delivery of the keys of the place or location where they are stored or kept; and by mere agreement or conformity between the contracting parties, if the goods sold cannot be moved to the possession of the purchaser at the time of the sale, or if the latter already has them in his power for some other reason.
In respect of incorporeal objects, the provisions of the second Paragraph of Article 1462 shall apply. In any other case in which such provision does not apply, delivery shall be deemed to mean the fact of putting the deeds of ownership in the purchaser’s power, or the use of the right by the purchaser with the consent of the seller.
Delivery expenses of the objects sold shall be borne by the seller, and those relating to transport or freight shall be borne by the purchaser, unless there is a special stipulation.
The seller shall not be obliged to deliver the object sold if the purchaser has not paid the price or the contract has provided no period to pay.
The seller shall also not be obliged to deliver the object sold if a forward period or term for the payment has been covenanted if, after the sale, it is discovered that the purchaser is insolvent, so that the seller runs an imminent risk of losing the price.
The case where the purchaser secured all his payment in the period provided shall be excepted from this provision.
The seller shall deliver the object sold in its condition at the time of perfecting the contract.
All fruits shall pertain to the purchaser from the day on which the contract was perfected.
The obligation to deliver the object sold comprises the obligation of putting in the purchaser’s power any object stated in the contract, pursuant to the following provisions:
If a sale of immovable goods were to have taken place stating the volume thereof, as a price per unit of measurement or number, the seller shall be obliged to deliver to the purchaser, at the latter’s request, all that has been stated in the contract; nevertheless,
If this were not possible, the purchaser may choose between a proportional reduction of the price or the rescission of the contract, provided that, in this last case, the reduction is not lower than one tenth of the volume attributed to the goods.
The same shall be done, even if the volume is the same, if a part thereof is not of the quality stated in the contract.
In this case, rescission shall only take place at the will of the purchaser, if the reduction in value of the object sold exceeds one-tenth of the agreed price.
If, in the case of the preceding Article, the immovable goods were to have greater capacity or number than that which was stated in the contract, the purchaser shall have the obligation to pay the excess price if the greater capacity or number does not exceed one twentieth of the amount set forth in the same contract; nevertheless, if it were to exceed such one-twentieth, the purchaser may choose between paying the higher value of the immovable goods, or desist from the contract.
In the sale of immovable goods made for a lump sum and not at a rate per unit or number, no increase or reduction thereof shall take place, even if they were to have greater or lower capacity or number than those stated in the contract.
This shall also occur if two or more properties are sold for a single price; nevertheless if, as well as stating the boundaries, which is indispensable in any disposal of immovable properties, the contract were to set out their volume or number, the seller shall be obliged to deliver all that is comprised within the same boundaries, even if it were to exceed the volume or number stated in the contract; and, if he is unable to, he shall suffer a reduction in the price, proportional to the shortfall in volume or number, unless the contract is to be annulled because the purchaser does not accept failure to deliver what was stipulated.
Actions arisen as a result of the three preceding Articles shall prescribe after six months, counted from the day of delivery.
If the same object were to have been sold to different purchasers, ownership shall be conveyed to the person who first took possession of it in bona fide, if it were to be a movable object.
Of it was to be an immovable good, ownership shall pertain to the acquirer who first registered it with the Registry.
In the absence of registration, ownership shall pertain to the person who first takes possession of it in bona fide; and, in the absence thereof, to the person who presents a deed with a prior date, provided that he has acted in bona fide.
Section Three. On warranty
Pursuant to the warranty mentioned in Article 1461, the seller shall be liable to the purchaser:
1. For the lawful and peaceful possession of the objects sold;
2. For any hidden faults or defects it was to have.
1. On warranty against eviction
Eviction shall take place if the purchaser is deprived of all or a part of the object purchased by a final judgment and pursuant to a right prior to the purchase.
The seller shall be liable for eviction even if no object has been stated in the contract.
The aforesaid notwithstanding, the contracting parties may increase, reduce or suppress this legal obligation of the seller.
Any covenant which exempts the seller from liability for eviction shall be null and void if he has acted in mala fide.
If the purchaser were to have renounced the warranty against eviction, in the event that such eviction was to occur, the seller shall deliver only the price of the objects sold at the time of eviction, unless the purchaser were to have made the renunciation being aware of the risk of eviction and submitting to the consequences thereof.
If a warranty has been stipulated, or if nothing has been covenanted on this matter, in the event of eviction the purchaser shall be entitled to request from the seller the following:
1. Restitution of the price of the objects had at the time of eviction, irrespective of whether it is higher or lower than the sale price;
2. Fruits or returns, if the buyer has been sentenced to deliver them to the party who won the trial;
3. Court costs of the proceedings which gave rise to eviction and, as the case may be, court costs of the proceedings initiated against the seller on account of the warranty;
4. Contractual expenses, if paid by the purchaser;
5. Damages and interest and voluntary or purely recreational or decorative expenses, if the sale was carried out in mala fide.
If the purchaser were to lose, as a result of the eviction, a part of the objects sold which is of such importance in connection to the whole that he would not have bought it without such a part, he may demand the rescission of the contract; but with the obligation to return the object without any other encumbrances than it had when he acquired it.
The same shall be observed if two or more objects are sold jointly for a lump sum, or for a specific sum for each of them, if it were to be clearly set forth that the purchaser would not have bought the one without the other.
The warranty may not be enforced until a final judgment has been issued sentencing the purchaser to forfeit the object acquired or a part thereof.
The seller shall be obliged to honor the relevant warranty if it is proved that he was given notice of the claim of eviction at the purchaser’s request. In the absence of such notice, the seller shall not be obliged to honor the warranty.
A defendant purchaser shall request, within the period provided in the Civil Procedure Act to reply to the claim, that notice thereof be served on the seller or sellers without delay.
Such notice shall be given as set forth in the same law to summon defendants.
The period granted to the purchaser to reply to the claim shall be suspended until expiration of the periods provided to the seller or sellers to appear and reply to the claim, which shall be the same periods provided for all defendants in the aforesaid Civil Procedure Act, counting from the notice provided in Paragraph 1 of this Article.
If the parties summoned in the eviction proceedings were to fail to appear in due time and form, the period granted to reply to the claim shall continue in respect of the purchaser.
If a property sold were to be encumbered with any lien or non-apparent easement, of such a nature that it can be presumed that the purchaser would not have acquired it if he had known it, and the public deed failed to mention it, the purchaser may request rescission of the contract, unless he prefers the corresponding compensation.
For one year counting from the execution of the public deed, the purchaser may exercise the action for rescission, or request compensation.
After the lapse of one year, he may only claim for damages within a similar period, counting from the day on which he discovered the lien or easement.
2. On the warranty against hidden defects or encumbrances of the object sold
The seller shall be obliged to provide a warranty for hidden defects of the object sold, if they render it unsuitable for the use to which it is destined, or if they reduce such use in such a way that, if the purchaser had known them, he would not have acquired it or would have given a lower price for it; but he shall not be liable for manifest defects or those which are in plain sight, nor for those which are not, if the purchaser is an expert who, as a result of his trade or profession, ought easily to have been aware thereof.
The seller shall be liable to the purchaser for the warranty for hidden defects or flaws of the objects sold, even if he was unaware thereof.
This provision shall not apply when it has been stipulated otherwise and the seller was unaware of the hidden defects or flaws of the object sold.
In the cases of the two preceding Articles, the purchaser may choose between withdrawing from the contract, being paid any expenses he has paid or a reduction of the price in a proportional amount, pursuant to an expert’s opinion.
If the seller had been aware of the hidden defects or flaws of the object sold and did not tell the purchaser, the latter shall have the same option, and shall further be compensated for any damages if he were to choose rescission.
If the object sold were to be lost as a result of the hidden defects, and the seller had been aware thereof, the latter shall suffer the loss and shall return the price and pay the contractual expenses, together with any damages. If he was not aware thereof, he shall only return the price and pay the contractual expenses paid by the purchaser.
If the object sold were to have had any hidden defect at the time of the sale and it were to subsequently be lost as a result of a fortuitous event or pursuant to the purchaser’s fault, the latter may claim from the seller the price he paid, deducting the value the object had at the time of its loss.
If the seller acted in mala fide, he shall pay the purchaser any damages and interest. Article 1489
In judicial sales, the liability for damages shall never apply; but the remaining provisions of the preceding Articles shall do so.
Actions resulting from the provisions of the five preceding Articles shall perish after six months, counting from delivery of the object sold.
If two or more animals were to be sold together, either for a lump sum, or by paying a price for each of them, any unacceptable defect in an animal shall only give rise to such animal being refused, and not the others, unless it is apparent that the purchaser would not have purchased the healthy animal or animals without the defective one.
This last instance shall be presumed to be the case if a couple, yoke, pair or set of animals have been purchased, even if a separate price has been set for each of the animals comprising it.
The provisions of the preceding Article relating to the sale of animals are deemed to apply equally to the sale of other objects.
The warranty for hidden defects of animals and livestock shall not apply to sales performed in a fair or a public auction, or to the sale of horses disposed of for slaughtering purposes, save in the care regulated in the following Article.
Livestock and animals which suffer from contagious diseases may not be the subject matter of sale contracts. Any contract entered into in respect thereof shall be null and void.
Likewise, a sales contract over livestock and animals shall also be null and void if the contract were to state the service or use for which they are acquired and they prove useless for such purpose.
Even if they have been examined by a veterinary doctor, if the nature of an animal’s hidden defect were to be such that expert knowledge is not enough to discover it, the defect shall be deemed unacceptable.
The aforesaid notwithstanding, if the expert, as a result of ignorance or mala fide, were to fail to discover or disclose it, he shall be liable for any damages.
The action to rescind due to unacceptable defects based on an animal’s hidden defects or flaws must be brought within forty days, counting from delivery thereof to the purchaser, unless local custom were to provide longer or shorter periods.
This action in respect of animal sales may only be exercised in respect of defects or flaws foreseen at law or pursuant to local custom.
If the animal were to die within three days of its purchase, the seller shall be liable, provided that the illness which caused the death existed prior to the contract, in a practitioner’s opinion.
Upon termination of the sale, the animal shall be returned in the condition in which it was sold and delivered, and the purchaser shall be liable for any impairment resulting from his negligence, which was not originated by the unacceptable defect or flaw.
In sales of animals and livestock with unacceptable defects, the purchaser shall also have the power stated in Article 1486; but he must exercise it within the same period respectively provided to exercise the action to rescind a sale due to unacceptable defects.
On the purchaser’s obligations
The purchaser is obliged to pay the price of the objects sold in the time and place set forth in the contract.
If none were set, payment shall be made at the time and place in which the object sold is delivered.
The purchaser shall owe interest for the time elapsed between delivery of the object and payment of the price, in the three following cases:
1. If it has been thus covenanted;
2. If the object sold and delivered produces fruits or rent;
3. If the purchaser were to be in default, pursuant to Article 1100.
If the purchaser were to be disturbed in the possession or ownership of the object acquired, or were to have reasonable grounds to fear being disturbed by an action to claim ownership or a mortgage action, he may suspend payment of the price until the seller has made the disturbance or the danger cease, unless the latter secures the return of the price, as the case may be, or unless it were to have been set forth that, notwithstanding any contingency, the purchaser shall be obliged to pay.
If the seller were to have reasonable grounds to fear the loss of the immovable good and the price, he may immediately rescind the sale.
In the absence of such grounds, the provisions of Article 1124 shall be observed.
In the sale of immovable good, even if it were to have been provided that termination of the contract shall take place ipso facto upon failure to pay the price within the agreed period, the purchaser may pay, even after expiration of the term, prior to being demanded to do so judicially or pursuant to notarial deed. After the demand has been made, the Judge may not grant a further period.
In respect of movable goods, termination of the sale shall take place ipso iure, in the interests of the seller, if the purchaser, prior to expiration of the term provided to deliver the goods, were not to appear to receive them or, having appeared, were he not to offer the price at the same time, save if a further deferment were to have been covenanted for such purposes.
On termination of the sale
A sale shall be rescinded on the same grounds as obligations, and, further, on the grounds stated in the preceding Chapters and pursuant to contractual repurchase or legal pre-emption.
Section One. On contractual repurchase
Contractual repurchase shall take place if the seller reserves the right to recover the objects sold, with the obligation to comply with the provisions of Article 1518 and whatever else has been covenanted.
The right mentioned in the preceding Article, in the absence of an explicit covenant, shall last four years counted from the day of the contract.
If a period is explicitly provided, it may not exceed 10 years.
If a seller were to fail to comply with the provisions of Article 1518, the purchaser shall irrevocably acquire ownership of the object sold.
A seller may exercise his action against any possessor whose right originates from the purchaser, even if no mention has been made to the contractual repurchase provision in the second contract; except for the provisions of the Mortgage Act with respect to third parties.
A purchaser shall substitute the seller in all rights and actions thereof.
A seller’s creditors may not exercise contractual repurchase against the purchaser until after having proceeded against the seller’s goods.
A purchaser encumbered by a repurchase covenant in respect of a part of undivided goods who subsequently acquires the whole of such goods in the case provided in Article 404 may oblige the seller to purchase it entirely if the latter were to wish to exercise their repurchase covenant.
If several persons were to sell an undivided property jointly and in a single contract encumbered by a repurchase covenant, each of them may only exercise this right for their respective part.
The same shall be observed if the person who has sold a landed property on his own has bequeathed it to several heirs, in which case each heir may only recover the part acquired by him.
In the cases mentioned in the preceding Article, the purchaser may require all sellers or co-heirs to reach an agreement on the repurchase of the entirety of the object sold; if they were to fail to do so, the purchaser may not be compelled to accept a partial repurchase.
Each co-owner of an undivided property who has sold his part separately may exercise, with the same separation, the right of repurchase for his respective share, and the purchaser may not compel him to repurchase the whole property.
If a purchaser were to leave several heirs, the action to repurchase may only be exercised against each heir for his respective share, irrespective of whether the property remains undivided or has been distributed amongst them.
The aforesaid notwithstanding, if the estate has been divided and the object has been adjudicated to one of the heirs, the repurchase action may only be addressed against him for the whole.
A seller may not exercise the repurchase right without reimbursing the purchaser the sales price and, also:
1. Contractual expenses and any other lawful payment made pursuant to the sale;
2. Necessary and useful expenses made in the object sold. Article 1519
If, upon entering into the sale, the property were to have fruits which are manifest or born, no payment or pro rating of any fruits existing at the time of the repurchase shall take place.
If there were none at the time of the sale, and there are fruits at the time of the repurchase, they shall be prorated between the repurchaser and the purchaser, and the latter shall receive the share corresponding to the time during which he possessed the property in the preceding year, counting from the sale.
A seller who recovers the object sold shall receive it free from any lien or mortgage imposed by the purchaser, but shall be obliged to accept any leases established by the latter in bona fide, pursuant to local custom.
Section Two. On legal repurchase
Legal repurchase is the right to become subrogated, under the same conditions provided in the contract, in the position of the person who acquires the object pursuant to a sale or dation in payment.
A co-owner of an object owned in common may use the right of repurchase in the event that the shares of all other co-owners or of any of them were to be disposed of to a stranger.
If two or more co-owners were to wish to use the right of repurchase, they may only do so pro rata to their share in the object owned in common.
Owners of adjoining lands shall also be entitled to repurchase in sales of rural property the surface whereof does not exceed one hectare.
The right mentioned in the preceding Paragraph shall not apply to adjoining lands separated by streams, irrigation ditches, ravines, paths and other apparent easements to the benefit of other properties.
If two or more adjoining owners were to exercise the right of repurchase at the same time, the owner of the adjoining land with less surface shall be preferred; and if they have the same, the first who so requests.
A legal right of repurchase may only be exercised within nine days counting from registration of the sale in the Registry and, in the absence thereof, from the time in which the person entitled to repurchase were to become aware of the sale.
The right of repurchase of co-owners excludes that of adjoining owners.
The provisions of Articles 1511 and 1518 shall apply to legal repurchase.
On the conveyance of credits & other incorporeal rights
Assignment of a credit, right or action shall not be effective against third parties until the day on which it is to be deemed certain pursuant to Articles 1218 and 1227.
If it were to refer to immovable goods, it shall be effective from the day of registration thereof at the Registry.
A debtor who, prior to becoming aware of the assignment, were to pay the creditor, shall be released from the obligation.
The sale or assignment of a credit comprises that of all ancillary rights thereof, such as guaranty, mortgage, pledge or privilege.
A bona fide seller shall be liable for the existence and lawfulness of the credits at the time of the sale, unless it has been sold as a doubtful credit; but not for the debtor’s solvency, unless explicitly provided or unless the insolvency was prior and publicly known.
Even in these cases, he shall only be liable for the price received and any expenses mentioned in Number 1 of Article 1518.
A mala fide seller in shall always be liable for the payment of all expenses and damages.
If a bona fide assignor were to have accepted to be liable for the debtor’s solvency, and the contracting parties were to have covenanted no provision concerning the duration of such liability, it shall only last one year, counting from the assignment of the credit, if the credit were already due.
If the credit were to be payable in a forward term or period which has not expired, liability shall cease one year after maturity thereof.
If a credit were to consist of a perpetual income, liability shall be extinguished after ten years, counting from the day of the assignment.
A person who sells an estate without listing the objects comprised therein shall only be liable for his capacity as heir.
A person who sells for a lump sum or as a global sale a whole set of specific rights, income or products shall comply with his obligations by being liable for the lawfulness of the whole in general; but shall not be obliged to warrant each of the parts comprising it, save in the event of eviction of the whole or of the most.
If a seller were to have benefited from some fruits or were to have perceived anything from the estate sold thereby, he shall pay them to the purchaser, unless otherwise covenanted.
A purchaser shall, in his turn, pay the seller all that the latter has paid for any debts and liabilities on the estate and for the credits held against it, unless otherwise covenanted.
In the event of the sale of a litigious credit, the debtor shall be entitled to extinguish it by reimbursing the assignee the price paid, any costs incurred and interest on the price from the day on which it was paid.
A credit shall be deemed litigious from the time that a reply to the claim relating thereto is filed.
A debtor may exercise this right within nine days, counting from the assignee’s demand for payment.
The following assignments or sales shall be excepted from the provisions of the preceding Article:
1. Those made to a co-heir or co-owner of the assigned right;
2. hose made to a creditor as payment of his credit;
3. Those made to the possessor of a landed property subject to the litigious right assigned.
The provisions of the present Title shall be construed pursuant to the provisions of the Mortgage Act in respect of immovable goods.