Apartment buyers filed a lawsuit against a contractor demanding the cancellation of the sales agreement and the return of the consideration, after they were provided with substandard parking that could not be reasonably used.
The court accepted the claim for cancellation of the agreement and determined that the violations on the part of the contractor were fundamental and that he must return the full value of the apartment to the buyers. When a material inconsistency in the property is discovered that prevents the contract from being fulfilled or damages its foundation, this constitutes a fundamental breach that justifies the cancellation of the contract. The main remedy following the cancellation of a contract is mutual restitution. The restitution remedy must be done by way of “restitution of value” in real terms (i.e., the value of the property at the actual date of restitution) in order to prevent the violator from unjust enrichment. Here, the agreement was lawfully canceled due to the fault of the contractor, who did not provide the buyers with proper parking as stipulated in the agreement. The buyers have the right to be in the same situation they would have been in had the violation not occurred, namely, that they have an amount of money that allows them to purchase an identical apartment with standard parking at market price. Therefore, the contractor will refund the buyers the current value of the apartment, plus the value of standard parking, without any deductions.
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