Short answer. It depends on fault. If the thing deteriorates before delivery without the seller's fault, the buyer bears the impairment. If the seller is at fault, the buyer may choose between cancelling the sale and demanding delivery anyway, with damages either way. Total loss without fault extinguishes the obligation.
What the law says
In case of loss, deterioration or improvement of the thing before its delivery, the rules in article 1189 shall be observed, the vendor being considered the debtor.
Civil Code, Article 1538 — Loss/Improvement Before Delivery. Read the full provision →
What the law says
When the thing deteriorates without the fault of the debtor, the impairment is to be borne by the creditor
Civil Code, Article 1189 — Loss, Deterioration, Improvement Pending a Suspensive Condition. Read the full provision →
The seller is the debtor — that is the key
Article 1538 of the Civil Code does not write its own rules. It borrows the rules on loss, deterioration and improvement in Article 1189 and tells you how to read them: the vendor is the debtor, which makes the buyer the creditor. Every rule in that article turns on which of the two you are.
Once you fix those roles, the outcomes follow mechanically. "Fault of the debtor" means fault of the seller. "Borne by the creditor" means borne by the buyer. Readers get this backwards constantly, and a whole dispute can turn on it, so make the substitution on paper before you apply anything.
Deterioration: damage short of destruction
If the thing deteriorates without the seller's fault — ordinary wear, a typhoon, an event nobody could control — the impairment is borne by the buyer. Harsh as it sounds, the buyer takes the thing in its damaged state and still owes the price.
If the deterioration is through the seller's fault, the buyer gets a choice: rescind the sale, or insist on delivery of the thing as it now stands. Either way he may claim indemnity for damages. Note that this is the buyer's choice, not the seller's. A seller who damaged the goods cannot force a refund on a buyer who would rather have the item and be compensated.
Total loss, and improvements
If the thing is lost without the seller's fault, the obligation is extinguished. The law treats a thing as lost when it perishes, goes out of commerce, or disappears so that its existence is unknown or it cannot be recovered. If it is lost through the seller's fault, he is obliged to pay damages.
Improvements run the other way and favour the buyer. An improvement arising by nature or by the passing of time — a growing animal, an accretion, appreciation attaching to the thing itself — belongs to the buyer. Where the seller improved it at his own expense, he gets only the rights the law gives a usufructuary, essentially the right to remove what he added if it can be done without damage.
Limits, and what to do in practice
This article governs the gap between perfection and delivery, and it applies to a determinate thing — a specific car, a specific parcel, this particular machine. Generic goods behave differently, because a seller who owes fifty sacks of rice can always source fifty more.
The parties can also change the allocation by agreement, and in commercial sales the delivery terms and any insurance usually decide the question long before the Civil Code is reached. So the practical steps are: read the delivery clause, check who insured the item, and photograph and document the condition at every handover point. If a seller is telling you a loss is simply your problem, have the contract and the circumstances of the damage reviewed by a lawyer before you pay.
Related provisions
- Civil Code, Article 1538 — Loss/Improvement Before Delivery
- Civil Code, Article 1189 — Loss, Deterioration, Improvement Pending a Suspensive Condition