How to cancel a sale

Termination of the real estate purchase contract

In our system, the principle of unimpeachable contractual autonomy is in force.

However, there may be situations in which the freedom to conclude a contract, such as a real estate sale, clashes with the need to protect other types of interests.

In essence, one cannot do whatever one wants even if one’s economic interests are at stake.

There are specific situations, governed by the law; on the basis of which it is possible to ask for the termination of the contracta term by which we mean a form of dissolution of the contractual relationship, when the two particular reasons identified by the law occur.

As in the case of the cancellation of the contract, in case of termination the effects of the signed contract are lost.

Real estate sale: contract concluded in a state of danger

A first cause for termination, governed by article 1447 of the civil code, concerns the contract, even a compromise, concluded in state of danger.

In the event that the signed contract assumes an obligation a unfair conditionsi.e. with strong disproportion between the value of what is given and the value of what is received, due to the need to to save self or others from current danger of a serious damage to the person, the injured party may request the judge to rescind the contract.

A necessary condition for the existence of the required conditions is that such a state of necessity must exist noto to the other party. The concept of serious harm to the person is understood in a broad sense, including any injury to the rights of the personality and not just to physical integrity.

Contract concluded in a state of necessity

Another hypothesis of a rescindable contract, governed by article 1448 of the civil code, is that of a contract concluded in state of necessity.

Again, reference is made to disproportion between the performance of one party and that of the other. In practice, the disproportion is an element in common with the hypothesis of a contract concluded in a state of danger described above.

Purchase termination
In the case of a contract signed in a state of necessity, the disproportion depended on the situation, even momentary, of economic need of one party, which the other party has taken advantage of.
If the party under conditions of necessity changes his mind over time, deciding not to conclude the deal, he can therefore request the termination of the contract for theesion.

This is the case of those who, finding themselves in economic difficulty, journeyman own home in order to make money and the buyer, aware of the seller’s conditions of need, takes advantage of it by buying at a low price.

State of need requirement

The requirement of the state of need is not understood in the sense of absolute poverty but as mere economic difficulty which affects the free determination to contract and constitutes the reason for accepting the disproportion between the services.

the extreme oftake advantage of the counterparty is considered present when there is a double awareness of the state of need of the other contracting party and of the serious objective disproportion existing between the services; in this case wanting the contract is equivalent to taking advantage of the aforementioned state of need.

When is there a disproportion between benefits?

The law establishes a criterion to establish when there is disproportion between the services and therefore injury, i.e. damage for the party who has contracted in a state of need.

One is needed lesion more than half: the service received (for example the price) must be less than half the value of the service performed (value of the house sold) at the time of conclusion of the sale.

This disproportion must persist until the time when any rescission action is proposed.

Unlike the rules on the cancellation of the contract due to defects in consent, the rules on rescission do not simply protect the contractual freedom of the contractor as they protect the contractor only in the event of a contract stipulated under unfair conditions.

If the state of need, which someone takes advantage of, induces someone to sell the house that otherwise he would never have sold, but this is sold without suffering more than half an injury and therefore at the right price, the contract cannot be rescinded.

The action for rescission

L’termination action must be activated before the Judge, therefore a lawsuit must be undertaken and the services of a lawyer must be used.
That is, it cannot be asserted directly by one party against the other.

How to ask for cancellation
For the purposes of exercising the termination action, it is specified that such action, in both cases described, is subject to the short statute of limitations of one year starting from the conclusion of the contract.

As a result of the rescission of a sale, it will be possible to get back the house for which a small price was collected.

The party against whom the request for termination is exercised will be able to avoid it by offering to change the conditions of the contract, in order to bring them back to fair conditions, taking into account the market value of the services deduced in the contract.
The right price of the house can therefore be paid to the seller.

Since the causes of termination are defects in the process of forming the contract, it will thus be possible to remedy the imbalance between the services.

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