Question B.15, Civil Law, 2019 Bar Exam

Mr. P offered to sell his Manila Polo Club shares to Ms. Q for ₱2,500,000.00. Ms. Q accepted on the condition that their agreement will not take effect until after one (1) year. Mr. P then acceded and both of them shook hands. Excited about the prospect of acquiring Mr. P's shares, Ms. Q approached the former and offered to pay him an earnest money equivalent to 1 % of the purchase price, which Mr. P accepted. After one (1) year, Ms. Q approached Mr. P seeking the enforcement of their agreement for Mr. P to sell his shares to her. Mr. P refused to honor their agreement, claiming that the same was covered by the Statute of Frauds because it was not reduced into writing and hence, unenforceable.

Is the position of Mr. P correct? Explain. (3%)

Suggested Answer:

No. Answer

Under jurisprudence, Statutory Fraud applies only to executory contracts, i.e., those where no performance has yet been made. Where the verbal contract of sale has been partially executed through the partial payments made by one party duly received by the vendor, the contract is taken out of the scope of the Statute.  Rule

In the case at bar, Ms. Q paid earnest money equivalent to 1% of the purchase price, which Mr. P accepted. This resulted in the exclusion of the transaction from the coverage of the Statue of Fraud. Apply

Thus, the position of Mr. P is not correct. Conclusion

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