Two parties each held half of a plot of land. After one discovered that approximately 34 square meters of its share had been taken by the other, the parties reached a compromise under which the other would return the taken land, with the location of the returned land to be chosen by it. The area returned was distant, inaccessible, and not adjacent to the land of the party from whom the area had been taken.
The Court held that the compromise agreement had been breached and the party that had taken the land is required to return a portion of the land adjacent to the land of the aggrieved party. Generally, a contract should be construed in light of its purpose, rather than solely by its formal language, considering the principle of good faith that governs contractual performance. Furthermore, when the interpretation of a contract leads to an absurd outcome, it indicates that the interpretation is flawed and should be rejected, even if the contract grants a party broad discretion regarding its performance. Here, the return of a portion of land that is inaccessible and not adjacent to the land of the party from whom the land was taken undermines the purpose of allowing the aggrieved party to fully and practically possess the land owned by them. It thus constitutes a misuse of the discretion granted to the encroaching party under the compromise and breaches the principle of good faith. Therefore, the interpretation advanced by the encroaching party must be rejected, and land adjacent to the aggrieved party's property must be returned.