§ I. On the Nature of the Contract of Purchase and Sale

954. • What it is and how the contract of purchase and sale is perfected.

I. What is it? The contract of purchase and sale is thus defined by Blackstone:¹ "A transmutation of property from one man to another, in consideration of some price or recompense in value." - From this definition it is clear that these three things are essentially required for the contract of purchase-sale:

a) The legitimate consent of seller and buyer;

b) Merchandise, i.e. a vendible thing, to be handed over for a price;

c) The price to be paid for the merchandise, and that determined by the contracting parties themselves or to be determined by the judgment of a third party.

But by the name of price here is understood money alone; for an agreement concerning merchandise to be handed over for merchandise is the contract of exchange (exchange), and not purchase-sale properly so called.

Therefore Blackstone's definition also comprehends exchange.

955. • II. How the contract of purchase and sale is perfected.

It is perfected by the consent alone of the parties. Nor does it matter for the forum of conscience whether consent is expressed by word or by writing. Writing is used only to prove that the contract has been entered. But although purchase-sale is perfected among us by the consent alone of the parties, nevertheless "the peril of the thing," says Kenrick,² "does not seem ever to pass to the buyer unless it" has been "handed over in some manner," or has begun to be handed over. "There must be," says Kent, "a) a delivery or tender of it, or b) payment, or tender of payment, or earnest given, or c) a memorandum in writing signed by the party to be charged."

Yet these things are not valid in every way for Louisiana and Virginia. "Everything depends on the custom of merchants" (I would add also on agreement).² But it is certain:

1° That Churches and pious causes from the disposition of Roman Law³ acquire dominion without any handing over.

2° That the peril of the thing pertains to the seller, if it is a question either a) of the sale of things by weight, number, or measure, which have not yet been weighed, numbered, or measured; or b) of the sale of things for tasting or testing, which have not yet been tasted or tested.

3° If the thing sold perishes either from an intrinsic defect already existing at the time of sale, or from the fault of the seller, or also by a fortuitous event at the time when the seller was in culpable delay for handing over the thing, the seller is held for the price accepted and for the expenses of the contract.

Cases. - 1. Josephine expressed consent by words, by which for a determined price she sells her field to a certain monastery. - The dominion of the field passes to the monastery without any handing over; for it was sold to the Church.

2. Titius sold to Caius ten measures of grain, existing in his abundantly supplied granary; but before that quantity was determined by measure, an equal quantity of grain perishes by fire or is taken away by theft. To whose damage? To the damage of Titius, unless agreement bears otherwise.

3. Titius absolutely bought from Caius a determined horse to be handed over after a month; but the horse perishes before the month has elapsed. To whose damage? To the damage of Caius, if it perishes either from an intrinsic defect existing at the time of sale, or by defect of due vigilance or care on the part of Caius, or after the month has elapsed, if Caius was in culpable delay in handing over the horse to Titius, provided nevertheless that in this last case the horse would not have perished by the same fortuitous event, for example by fire, equally at Titius's place.

956. Questions. - Query 1° To whom do the fruits of a thing sold pertain, for example calves from a cow sold?

Resp. Distinguish. For either agreement has been made between the parties concerning this matter, or not. If the former, one must stand by the agreement; if the latter, subdistinguish. For either the thing has already been handed over, or it still is to be handed over. If handed over, they belong to the buyer, and that practically also in the case in which the latter is in delay as to payment of the price; for the seller vindicates for himself only the increase (interest) of the price, according to the agreement of the contracting parties. - If a determined thing, for example this cow, is still to be handed over, i.e. according to what was said above in n. 955, if in no manner it has been handed over or begun to be handed over, again it must be distinguished. For either the thing is sold absolutely, or conditionally. If absolutely, the fruits of the thing pertain to the buyer, and civil laws opposed on this point have been reproved by Canon Law, as favorable to usurious profit.¹ Yet in the case in which, from custom, the peril of the thing would not belong to the buyer, I would resolve the contrary; for then the reason of equity alleged by St. Alphonsus, namely that he who has the inconvenience ought also to have the advantage, militates rather for the seller. If conditionally, i.e. under a suspensive condition, we think it must be distinguished thus. Either that thing sold produces fruits after the condition has been fulfilled, and the fruit will belong to the buyer, as in absolute sale, such as that about which there is question becomes when the condition has been fulfilled; or before the fulfillment of the condition, and then it is disputed. Therefore in this case the condition of the possessor, the seller, will be better, especially since the peril of the thing sold belongs to him up to the fulfillment of the condition.

Query 2° At whose expenses come the acts which are usually made in the purchase-sale of things, especially immovables; likewise at whose expenses is the handing over or transmission of the thing?

Resp. to the 1st. Excepting the case of special agreement, the laws of each State must be consulted.

Resp. to the 2nd. Unless it has been agreed otherwise, at the expenses of the buyer.

Query 3° What must be held concerning the firmness of the contract of purchase-sale entered with the giving of earnest; namely whether, when earnest is given, it is licit for the giver to withdraw from the contract with the loss of the earnest?

Preliminary Note. - By the name of earnest (earnest-money) is understood that which sometimes is given by one of the contracting parties to the other either as pledge of the firmness of the contract entered, or as pledge of the obligation of not withdrawing from the contract except with the loss of the thing given. Whence a twofold earnest is distinguished, namely: earnest which is simply given for the greater security of the contract entered, from which therefore it will not be licit to withdraw; and earnest which is given only for establishing the obligation of not withdrawing from the contract, except under the penalty of losing it; so that it is indeed licit to withdraw from the contract, but not except with the loss of the earnest.¹

Resp. In doubt of which kind the earnest is, and unless custom holds otherwise, it is to be held as a pledge of the firmness of the contract entered.²