Civil Transactions
Special Provisions on Sales: Terminal Illness, Sale by an Agent to Himself, Litigious Rights and Third-Party Property
Under the Civil Transactions Law, the provisions governing sale during terminal illness, sale by an agent to himself, sale of litigious rights, and sale of third-party property are as follows:
First: Sale during Terminal Illness
1. Terminal illness means an illness in which a person becomes unable to carry on his usual affairs, death is likely to result from it, and death in fact occurs in connection therewith.
2. Cases in which a person is exposed to a risk of death and death is likely to occur in similar circumstances shall be deemed equivalent to terminal illness, even if the person is not suffering from an illness.
3. A sale made by a person suffering from terminal illness to an heir, or a purchase made by such person from an heir, involving preferential treatment, shall not be effective against the other heirs to the extent of such preferential treatment unless they ratify it.
4. A sale made by a person suffering from terminal illness to a person who is not an heir, or a purchase made by such person from a non-heir, involving preferential treatment, shall not be effective against the heirs to the extent by which such preferential treatment exceeds one-third of the estate at the time of death, including the sold item itself, unless the heirs ratify it or the transferee returns to the estate an amount sufficient to complete two-thirds of the estate.
5. The non-effectiveness of a sale made by a person suffering from terminal illness may not be invoked if the buyer disposes of the sold item in a manner that grants a bona fide third party an in-kind right over the sold item for consideration, without prejudice to the heirs’ right to have recourse against the buyer for an amount sufficient to complete two-thirds of the estate or for the market value.
Second: Sale by an Agent to Himself
1. Subject to the applicable legal provisions, an agent may not purchase for himself, whether in his own name or in the name of another person, even by way of auction, anything that he has been entrusted to sell by virtue of his agency, unless he is authorized to do so.
The same prohibition applies to a broker, expert, or any person of similar capacity with respect to property entrusted to him for sale or valuation.
2. If a sale is concluded in any of the foregoing circumstances, it shall not be effective against the person for whose benefit the sale was made unless such person ratifies it. Such person may not invoke the non-effectiveness of the sale against a particular successor who, in good faith and for consideration, acquires an in-kind right in the property.
Third: Sale of Litigious Rights
1. A judge, a member of the Public Prosecution, a person of similar capacity, or a court employee may not purchase, whether in his own name or in the name of another person, a litigious right or any part thereof. Any contract made in violation of this provision shall be null and void.
2. A lawyer may not purchase, whether in his own name or in the name of another person, a litigious right or any part thereof where he is acting as an agent in relation to such right. Any contract made in violation of this provision shall be null and void.
3. A right shall be deemed litigious if a lawsuit has been filed concerning its subject matter or if a serious dispute has arisen in relation thereto.
Fourth: Sale of Third-Party Property
1. If a person, without authorization, sells a specific item that he does not own, the sale shall not be effective against the owner. If the owner ratifies the sale, it shall become effective against him, without prejudice to the rights of third parties.
2. The buyer may seek annulment of the sale unless ownership of the sold item passes to the seller after the conclusion of the contract or the owner ratifies the sale.
3. If the buyer is unaware that the sold item is not owned by the seller and the sale is annulled, the buyer may claim compensation, even if the seller acted in good faith.
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