Part Ⅱ Obligations
Chapter II Particular Kinds Of Obligations
Section 1 - Sale
Sub-section 1 General Provisions
A sale is a contract whereby the parties agree that one of them shall transfer to the other his rights over property and the latter shall pay a price for it.
The contract of sale is completed when the parties have mutually agreed on the object and the price.
Although the price is not fixed concretely by the agreement, if it may be decided from the circumstances, it is deemed to be fixed.
If it is agreed that the price shall be fixed according to the market price, it is deemed to be fixed according to such market price at the place and time of performance unless otherwise provided by contract.
The provisions under the present title shall apply mutatis mutandis to such nongratuitous contracts other than those of sale, unless the nature of the contract does not permit.
Sub-section 2 Effects of Sale
The seller of a thing is bound to deliver the thing to the buyer and to make him acquire its ownership.
The seller of a right is bound to make the buyer acquire the right sold. If, by virtue of such right, the seller can possess a certain thing, he is also bound to deliver the thing.
The seller shall warrant that the thing sold is free from any right enforceable by third parties against the buyer.
The seller of a claim of prestation or any other right shall warrant the actual existence of such prestation or right. The seller of valuable securities shall also warrant that it shall not be declared voidance through public summons.
If the buyer knew at the time of concluding the contract the defect of the right sold, the seller is not bound to warrant such defect, unless otherwise provided by contract.
Unless otherwise provided by contract, the seller of a claim of prestation does not warrant the solvency of the debtor. If he warrants the solvency of the debtor he is presumed to warrant the solvency at the time when the claim of prestation is transferred.
If the seller does not perform his duties specified in Articles 348-351, the buyer may exercise his rights in accordance with the provisions concerning non-performance of obligations.
The seller of a thing shall warrant that the thing sold is, at the time when the danger passes to the buyer according to the provisions of Article 373, free from any defect in quality which may destroy or impair its value, or its fitness for ordinary efficacy, or its fitness for the efficacy of the contract of sale. However, if the extent of the impairment is of no importance, such impairment shall not be deemed to be a defect.
The seller also shall warrant that, at the time the danger passes; the thing has the guaranteed qualities.
A seller is not responsible for such defect of quality in the thing sold as specified in the first paragraph of the preceding article, if the buyer knew of the defect at the time when the contract was made.
If a defect of the kind specified in the first paragraph of the preceding article has remained unknown to the buyer in consequence of gross negligence, the seller is not responsible if he has not guaranteed that the thing is free from the defect, except in the case that he has intentionally concealed it.
The buyer is bound to examine without delay the thing received in accordance with the nature of such thing and as far as the ordinary procedure of affairs allows it, and should he discover any defect for which the seller is responsible, he shall immediately notify the seller of such defect.
If the buyer delays giving the notice mentioned in the preceding paragraph, he is deemed to have accepted the thing, except in case where the defect is one which would not have been revealed by ordinary examination.
Should a defect, which could not have been discovered immediately, be discovered subsequently, notice shall be sent to the seller without delay after the discovery. If the buyer delays giving such notice, the thing is deemed to be accepted.
The provisions of the preceding article do not apply to cases where the seller has intentionally concealed the defect.
A buyer, who declines to accept a thing forwarded from another place by asserting that it is defective, is bound to preserve it in his custody temporarily, when the seller has no agent in the place of delivery.
In the case specified in the preceding paragraph, if the buyer fails to take proper measures immediately to prove the existence of the defect, it is presumed that the defect asserted did not exist at the time of the delivery.
If the thing forwarded will easily deteriorate, the buyer may sell it according to the market price when he takes proper measure to prove that. If it is to the advantage of the seller, the buyer is bound to make such sale, when necessary.
The buyer, who sells the thing in accordance with the provisions of the preceding paragraph, shall notify the seller without delay. If he delays the notice, he shall be liable to compensate for the injury arising therefrom.
When there is a defect in the thing sold for which, according to the provisions of the five preceding articles, the seller is responsible for a warranty, the buyer has the option to rescind the contract or to ask for a reduction of the price, unless in the case specified, that a rescission of the contract would constitute an obvious unfairness of the transaction the buyer is only entitled to ask for a reduction of the price.
In the absence of a quality of the thing sold, which was guaranteed by the seller, the buyer may demand to compensate for the injury of nonperformance, instead of rescission of the contract or of a reduction of the price. The same rule shall be applied if the seller has intentionally concealed a defect in a thing.
If the buyer asserts that there is a defect in the thing sold, the seller may fix a reasonable deadline and notify the buyer to declare within such deadline whether he rescinds the contract or not.
If the buyer does not rescind the contract within the deadline specified in the preceding paragraph, the right of rescission is lost.
Rescission of a contract on account of a defect in the principal thing extends to its accessory.
If there is a defect in the accessory, the buyer may only rescind such contract of accessory.
If one of several things sold is defective, the buyer may only rescind such defective thing. If several things are sold for an aggregate price, the buyer may also demand a reduction in the aggregate price proportionate to the defective thing.
In the case provided by the preceding paragraph, either party may rescind the whole contract if he is obviously injured through the separation of the defective thing from the others.
When the thing sold is a thing designated only as to its kind, and the thing is defective, the buyer may, instead of rescission of the contract or a reduction of the price, immediately request the seller to deliver in exchange another thing free from defect.
The seller is also bound to warrant that the thing delivered in exchange under the preceding paragraph is free from defect.
Where there has been delivery of a thing which is defective, the right of the buyer to rescind the contract, or to claim a reduction of the price is extinguished by prescription, according to the provision of article 356, if the buyer does not exercise his rights within six months after notice or after five years from the date of delivery.
The provisions of the preceding paragraph concerning six months periods shall not be applied if the seller has intentionally concealed the defect.
An agreement releasing the seller of liability on account of defects in a right or a thing or limiting such liability is void if the seller has intentionally concealed the defect.
The buyer is bound to pay to the seller the agreed price and to accept delivery of the object sold.
If the buyer has good causes to fear that a third party may assert rights which may deprive the said buyer of the whole or a part of the rights derived from the sale, he may refuse to pay the whole or a part of the price, except the seller has furnished proper security.
In the cases specified in the preceding paragraph, the seller may request the buyer to lodge the price.
Unless otherwise provided, by the act, by contract or by customs, the delivery of the object sold and the payment of the price shall take place simultaneously.
If a deadline for the delivery of the object sold has been fixed, such deadline is presumed to be the deadline for the payment of the price.
If the delivery of the object sold and the payment of the price shall take place simultaneously, the price shall be paid at the place of delivery.
If the price is calculated according to the weight of the thing sold, the weight of the packing shall be deducted. Unless otherwise provided by the contract or if there is a specific custom, such contract or custom shall be followed.
The profits and dangers of the object sold pass to the buyer at the time of delivery, unless otherwise provided by contract.
If the buyer requests that the object sold be delivered at a place other than the place where delivery ought to be made, the dangers pass to the buyer at the time when the seller delivers the object to the person who transports it or is entrusted with its transportation.
If the dangers have passed to the buyer before delivery of the object sold, and the seller incurs any necessary outlay on the object before delivery and after such dangers have passed, the buyer is bound to compensate the seller for such outlay in conformity with the provisions concerning Mandate.
If the outlay incurred under the circumstances described in the preceding paragraph was not necessary, the buyer is bound to compensate such outlay in conformity with the provisions concerning Management of Affairs without Mandate.
If the buyer has given specific instructions as to the manner of forwarding the object sold and the seller deviates from those instructions without urgent reason, and the seller is liable to the buyer for any injury resulting therefrom.
When the object of a sale is a right, by virtue of which the seller may possess a certain thing, the provisions of the four preceding articles shall be mutatis mutandis applied.
Unless otherwise provided by the act, by contract or by customs, the costs of sale are to be borne according to the following rules:
(1) The costs of the contract of sale are to be borne by both parties equally;
(2) The costs of transferring the right sold, the costs of transporting the object sold to the place of performance, and the costs of delivery are to be borne by the seller;
(3) The costs of accepting delivery of the thing sold, the costs of registration and the costs of forwarding the thing sold to a place other than the place of performance, are to be borne by the buyer.
Sub-section 3 Redemption
When in the contract of sale, the seller reserves the right of redemption, he may redeem the object sold on returning the price.
If the price for redemption specified in the preceding paragraph has been fixed by an agreement, such agreement shall be followed.
The interest on the original price and the profits obtained by the buyer from the object sold are deemed to be offset against each other.
The redemption period shall not exceed five years. If a longer period is provided by the contract, it shall be reduced to five years.
The person who redeems shall return the costs of the sale paid by the buyer together with the price of redemption.
Costs of redemption are borne by the person who redeems.
The person who redeems shall return the expenses and other beneficial outlays made by the buyer for the improvement of the object, in so far as the value of the object has been presently increased thereby.
The buyer is bound to the person who redeems to deliver the object sold along with its accessories.
If, owing to circumstances for which the buyer is responsible, the object sold cannot be delivered, or has been obviously altered, the buyer shall be bound to compensate for any injury arising therefrom.
Sub-section 4 Particular Kinds of Sale
A contract of sale on approval is a contract which is constituted to be subject to the suspenseful condition of the approval of the object of the sale by the buyer.
In a contract of sale on approval the seller is bound to permit the buyer to examine the object sold.
If the object has been examined without being delivered and the buyer has not declared his acceptance within the agreed deadline, the buyer is deemed to have refused acceptance. The same rule shall be applied, if in the absence of an agreed deadline the buyer has not declared his acceptance within a reasonable deadline fixed by the seller.
If an object has been delivered to be examined and the buyer does not return the object or declare his refusal within the agreed deadline, or, in the absence of an agreed deadline, within a reasonable deadline fixed by the seller, the buyer is deemed to have accepted.
If the buyer has paid the whole price or a portion of it, or does any action which is not necessary for examining the object, he is deemed to have accepted it.
In a sale according to sample the seller is deemed to warrant that the object delivered will have the same quality as the sample.
A clause in a contract of sale by installments that the whole of the: price may be claimed by seller as soon as the buyer is in default shall not be enforced, unless the buyer is in default for installments representing at least one-fifth of the total price.
A clause in a contract of sale by installments, if it is agreed that, upon the rescission of the contract, the seller may retain the installments received, the amount retained shall not exceed an amount representing the rental of the object sold plus damages in case the object sold has sustained any injury.
A sale by auction is constituted when the auctioneer announces its completion by knocking down the hammer or in any other customary manner.
The auctioneer shall not bid nor employ any person to bid at any auction conducted by him.
Unless the person who has ordered the sale has expressed a contrary intent, the auctioneer has the right to adjudge the lot to the highest bidder.
The auctioneer may not announce the completion of the sale, and withdraw a lot from the auction if he thinks that the highest bid is insufficient.
A bid made by a bidder ceases to be binding, when a higher bid is made or when the lot is withdrawn from the auction.
The buyer at a sale by auction shall pay the price in cash when the sale by auction constituted or at the time fixed by the notice advertising the sale.
If the buyer at a sale by auction fails to pay the price in time, the auctioneer may rescind the contract and resell the thing by auction.
If the price of the second auction does not cover the original price and costs of the resell by auction, the original buyer is liable for the difference.