IMPLIED WARRANTIES

What are implied warranties?

Warranties deemed included in all contracts of sale by operation of law. (Art. 1547)

1. Warranty that seller has right to sell – refers to consummation stage. Not applicable to sheriff, auctioneer, mortgagee, pledge

2. Warranty against eviction Requisites:

     a. Buyer is Evicted in whole or in part from the subject matter of sale

     b. Final Judgment

     c. Basis of eviction is a right Prior to sale or act imputable to seller

     d. Seller has been Summoned in the suit for eviction at the instance of buyer; or made 3rd party defendant through 3rd party complaint brought by buyer

     e. No waiver on the part of the buyer Note: For eviction – disturbance in law is required and not just trespass in fact.

3. Warranty against encumbrances (non-apparent) Requisites:

     a. immovable sold is encumbered with non-­‐ apparent burden or servitude not mentioned in the agreement

     b. nature of non-­‐apparent servitude or burden is such that it must be presumed that the buyer would not have acquired it had he been aware thereof

Exception: warranty not applicable when non-apparent burden or servitude is recorded in the Registry of Property – unless there is expressed warranty that the thing is free from all burdens & encumbrances

4. Warranty against Hidden Defects Requisites:

     a. Defect is important or Serious

          i. The thing sold is unfit for the use which it is intended

          ii. Diminishes its fitness for such use or to such an extent that the buyer would not have acquired it had he been aware thereof

     b. Defect is Hidden

     c. Defect Exists at the time of the sale

     d. Buyer gives Notice of the defect to the seller within reasonable time

     e. Action for rescission or reduction of the price is brought within the proper period

          i. 6 months – from delivery of the thing sold

          ii. Within 40 days – from the delivery in case of animals

     f. There must be No waiver of warranty on the part of the buyer.

When is implied warranty not applicable?

1. “As is and where is” sale

2. Sale of second hand articles

3. Sale by virtue of authority in fact or law

4. Sale at public auction for tax delinquency

What are the effects of waiver of an implied warranty?

1. Seller in bad faith & there is waiver against eviction –void

2. When buyer w/o knowledge of a particular risk, made general renunciation of warranty – is not a waiver but merely limits liability of seller in case of eviction

3. When buyer with knowledge of risk of eviction assumed its consequences & made a waiver – seller not liable (applicable only to waiver of warranty against eviction)