CONTENTS
- 1. The Act on the Sale of Buildings Litigation, the Detailed Circumstances?
- - The Act on the Sale of Buildings Litigation, the Relevant Statutes?
- 2. The Act on the Sale of Buildings Litigation, the Court's Determination?
- - The Special Provision of the Contract as Determined by the Court
- - The Exercise of the Right of Rescission and the Duty of Restitution as Determined by the Court
- 3. The Act on the Sale of Buildings, Daeryun's Strategy?
1. The Act on the Sale of Buildings Litigation, the Detailed Circumstances?
The plaintiff in this case entered into a sale contract with the defendant, who owned the □□ commercial building.
At the time, the defendant explained that "the opening of an internal medicine clinic and a dermatology clinic on floors 2 through 4 of the building had been confirmed," and the defendant also advertised this on the sale flyers and on the exterior wall of the building.
Accordingly, the plaintiff paid a higher purchase price than for other units in the building and entered into the contract, and at the same time included in the sale contract a special provision stating that "if the opening of the clinics (internal medicine and dermatology) in the building is not completed, the plaintiff may terminate the contract."
However, six months after the contract was concluded, only the "internal medicine clinic" had opened, while the "dermatology clinic" operated by a specialist had not opened.
Even the internal medicine clinic that had opened was not operated steadily, repeatedly opening and closing.
Accordingly, the plaintiff filed a lawsuit arguing that, because the defendant had (1) breached the special provision, the plaintiff sought to (2) 🔗terminate the sale contract and have the purchase price returned, and to (3) be paid, as damages, the taxes and interior construction costs related to the unit.
However, the defendant countered that the "opening" specified in the special provision meant the opening of a clinic offering internal medicine and dermatology as its medical departments, regardless of whether a specialist was present, and that because the opened internal medicine clinic offered dermatology as one of its medical departments, the defendant could not be regarded as having breached the special provision.
The Act on the Sale of Buildings Litigation, the Relevant Statutes?
▣ Act on the Sale of Buildings
Article 6-4 (Cancellation of a Contract for a Building Offered for Sale)
A permitting authority or a sale business operator may cancel a contract with a person who has purchased a unit in any of the following cases:
1. Where the sale under Article 6-2 (1) was obtained by false or other wrongful means
2. Where a resale was made in violation of Article 6-3 (1) or (2)
Article 10 (Penalty Provisions)
(1) A person who sells a building without filing a sale report under Article 5 (1), or who files a sale report by false or other wrongful means and sells a building, shall be punished by imprisonment for not more than three years or a fine not exceeding 300 million won.
2. The Act on the Sale of Buildings Litigation, the Court's Determination?
The High Court that heard the lawsuit relating to the Act on the Sale of Buildings ruled in favor of the plaintiff, holding that "the defendant shall, as sought by the plaintiff, return the purchase price already paid as restitution following the rescission of the contract."
The court then explained the grounds as follows.
The Special Provision of the Contract as Determined by the Court
The court first reviewed the special provision of the sale contract in question.
The court took into account that a pharmacy's main income depends on the volume of prescriptions issued by clinics. That is, the court determined that there was bound to be a significant difference in the volume and level of prescriptions issued between a clinic where internal medicine and dermatology specialists were resident, as stated in the special provision, and a clinic operating without specialists.
In addition, considering that the plaintiff had purchased the unit at a substantially higher price than other units in the same building, the court found that the plaintiff had entered into the contract on the natural premise that specialists would operate the clinics.
Accordingly, because a clinic operated by a dermatology specialist had not opened, and because even the internal medicine clinic that had opened did not conduct normal business for a considerable period, so that the opening was found not to have been completed, the court held that the defendant had breached the special provision.
The Exercise of the Right of Rescission and the Duty of Restitution as Determined by the Court
Because the plaintiff exercised the right to rescind the sale contract on the ground of the defendant's failure to perform the special provision, the sale contract can be regarded as having been lawfully rescinded.
Accordingly, the court held that the defendant has a duty to return to the plaintiff the purchase price already paid, together with statutory interest, in exchange for receiving the plaintiff's registration of ownership transfer.
However, the court dismissed the claim for damages asserted by the plaintiff, taking into account that the contract did not separately provide for it.
3. The Act on the Sale of Buildings, Daeryun's Strategy?
This was a High Court judgment holding that, in relation to the Act on the Sale of Buildings, where a commercial unit was purchased in order to operate a pharmacy on the premise that a hospital would open, but the hospital did not open, the contract may be terminated.
As in the case above, not only where a defendant concludes a contract through false advertising, but also where the agreed terms at the time of the sale contract are not kept, such as failing to meet the move-in date or promising guaranteed returns, may constitute sale fraud.
If you wish to terminate a sale agreement on this basis, you must present clear supporting evidence. In such cases, it can be helpful to obtain the assistance of an attorney experienced in these matters.
Daeryun Law Firm LLP operates a 🔗Construction and Real Estate Group and assists many clients facing difficulties relating to the termination of sale contracts.
If you need assistance in this regard, you are welcome to request a 🔗legal consultation at any time.
