Background
Purchasers of several office units in a commercial building sued the developer and the trust company (our clients), claiming that "the advertising promising financing and guaranteed rental income was not true" and seeking to void or rescind the pre-sale contracts and recover the pre-sale price paid. Changchun represented the developer and the trust company (the defendants).
The Issue — Are the Pre-Sale and Rental Management Contracts One and the Same, and Was There Deception or Mistake?
The purchasers argued that ① the pre-sale contract and the separate rental management agreement were economically one and the same, so both were void together, and that ② there had been deception or mistake in the sales agent's inducements.
How Changchun Helped
Changchun (attorney Donghwan Shin) established in turn that ① the two contracts differed in their parties and content and did not necessarily accompany one another, so they could not be treated as an indivisible whole (Supreme Court 2000Da54659, among others); ② there was no evidence that our clients knew, or through negligence tantamount to intent failed to know, that "failing to install partition walls would cause disadvantages in financing and rental management," so neither deception nor breach of a duty of disclosure was established; and ③ because the walls could have been installed within the designated occupancy period, there was no mistake as to a material element either.
Outcome
The court dismissed the purchasers' claims in full. Our clients were freed entirely from any burden of refunding the pre-sale price.
A vague assertion that "it wasn't what the advertising said" does not by itself void or rescind a pre-sale contract. Working through the structure of the contracts and the law of disclosure duties and mistake item by item can defeat a large refund claim. (Outcomes may differ depending on the facts of each matter.)