Contract Review | Contract Review for a Client's Nullity of a Sales Contract

The Civil Act sets out the grounds and cases in which a contract becomes void.

Representative examples include ▲matters contrary to good morals or other social order, ▲cases that markedly lose fairness because of a party's distress, rashness, or inexperience, ▲cases in which a sham contract is intentionally concluded with the other party, ▲contracts establishing or transferring a real right not provided for by statute or customary law, and ▲cases in which co-owned housing is leased without the consent of a majority of the co-ownership shares.

Ordinarily, when a real estate sales contract is concluded, a down payment is made and the interim and balance payments are paid in installments.

If the other party has committed an act of breach of contract for some unlawful reason at this point, the contract may be rescinded or rendered void through a statutory right of rescission under the provisions of the law.

A lawsuit to confirm the nullity of a sales contract is a civil lawsuit filed to have a court confirm that the sales contract is void.

It mainly applies when the requirements for the formation of the contract are not met, or when the content of the contract is unlawful or violates a mandatory provision.

This lawsuit to confirm the nullity of a sales contract begins when the plaintiff submits a complaint clearly presenting the grounds and evidence for asserting that the contract is void.

The defendant submits an answer setting out the position that the contract is valid, or an answer presenting evidence against the nullity of the contract, and the court hears the arguments of both sides and the submitted evidence and renders a judgment.

If the court confirms that the sales contract is void, the contract is deemed to have had no effect from the beginning.

If a 🔗Return of the Purchase Price of goods, money, or the like under the contract is needed, a separate claim for return may follow.

The most important point in a lawsuit to confirm the nullity of a sales contract is securing evidence.

The plaintiff must secure documents or evidence that can prove the grounds for the nullity of the contract.

The client concluded a real estate sales contract but argued that there had been fraudulent conduct on the part of the defendant in the course of concluding the contract.

In particular, a discrepancy was confirmed between the information the defendant provided at the time of the contract and the actual content of the contract, and disadvantageous changes to the terms were repeatedly made against the client even during the performance of the contract.

The client's attorney presented these problems as evidence and strongly argued the nullity of the contract.

Under Article 147, Paragraph 2 of the Civil Act, a juristic act subject to a condition subsequent loses its effect from the time the condition is fulfilled.

In addition, under Article 150, Paragraph 1, if a party who would be disadvantaged by the fulfillment of a condition obstructs the fulfillment of the condition in bad faith, the other party may assert that the condition has been fulfilled.

∙Civil Act Article 147 (Effect of the Fulfillment of a Condition)
① A juristic act subject to a condition precedent takes effect from the time the condition is fulfilled.
② A juristic act subject to a condition subsequent loses its effect from the time the condition is fulfilled.
③ If the parties have manifested an intention to make the effect of the fulfillment of a condition retroactive to a time before its fulfillment, that intention governs.

∙Civil Act Article 150 (Act Contrary to Good Faith Regarding the Fulfillment or Nonfulfillment of a Condition)
① If a party who would be disadvantaged by the fulfillment of a condition obstructs the fulfillment of the condition in a manner contrary to good faith, the other party may assert that the condition has been fulfilled.
② If a party who would benefit from the fulfillment of a condition brings about the fulfillment of the condition in a manner contrary to good faith, the other party may assert that the condition has not been fulfilled.