The Right of Annulment for Excessive Gain in Pre‑Purchase Building Contracts: Validity, Effects, and Challenges
Subject Areas : Civil LawSeyedeh Zahra Hosseini 1 , Afshin Ghafghazi 2
1 - Student of Master’s Degree in Private Law, Department of Law, Ahrar Institute of Higher Education, Rasht, Iran.
2 - Assistant Professor of Private Law, Department of Law, Faculty of Humanities, Mashhad Branch, Islamic Azad University, Mashhad, Iran.
Keywords: Right of Annulment for Excessive Gain, Pre‑Sale of Buildings, Contractual Imbalance, Rescission, Price Adjustment, Commutative Contracts.,
Abstract :
The right of annulment for excessive gain, as one of the expressly recognized options in Iranian civil law, is an important protective mechanism for establishing transactional justice and addressing gross imbalance in the value of reciprocal performances. The main question of this research is the position of the right of annulment for excessive gain in pre‑sale building contracts, considering the specific and staged nature of these contracts, in terms of its validity, scope, effects, and manner of enforcement. Using a descriptive–analytical method and relying on statutory sources and judicial practice, the study shows that, from the perspective of the general rules of contracts and pursuant to Articles 416 to 421 of the Civil Code, the principle of the validity of the right of annulment for excessive gain in pre‑sale contracts is accepted, unless the parties have waived it in the pre‑sale agreement or the nature of the contract and ordinary fluctuations in the housing market reduce the gain from gross to ordinary. The Pre‑Sale of Buildings Act of 2011 and the requirement of executing an official deed (Articles 1 and 3) do not prevent the application of the right of annulment for excessive gain; rather, they primarily concern formalities and the Guarantee of transparency. In terms of effects, the most important consequence of the occurrence of excessive gain is the establishment of the right of rescission for the aggrieved party, subject to observance of customary promptness in exercising the option. At the same time, the challenges in applying this option in this field include determining the time for assessing excessive gain in pre‑sale building contracts. These challenges can be addressed through a prudent acceptance of the right of annulment for excessive gain, together with a restrictive interpretation of general exceptions and the development of the doctrine of contractual equilibrium.
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