Apartment purchasers filed an action against a contractor demanding the rescission of the sale agreement and restitution of the consideration, after they were provided with a non-compliant parking space that could not be reasonably utilized.
The Court accepted the claim for rescission of the agreement and held that the breaches by the contractor were fundamental and consequently the contractor must restore the full current value of the apartment to the purchasers. When a material non-conformity is discovered in the asset which prevents the contract from being realized or fundamentally impairs its essence, this constitutes a fundamental breach justifying the rescission of the contract. The main remedy following the rescission of a contract is mutual restitution. The remedy of restitution must be affected by way of "restitution of value" in real terms (i.e., the value of the asset at the time of the actual restitution) to prevent the unjust enrichment of the breaching party. In this case, the agreement was lawfully rescinded due to the contractor's fault, who failed to provide the purchasers with a compliant parking space as stipulated in the agreement. The purchasers are entitled to be placed in the same position as if the breach had not occurred, meaning they should possess a sum of money that allows them to purchase an identical apartment with a compliant parking space at market price. Consequently, the contractor shall restore to the purchasers the current market value of the apartment, plus the value of a compliant parking space and without set-offs.