Question from a reader:
If both the seller and buyer fulfill their obligations under an invalid sales contract, can the seller demand the return of profits from the buyer when the buyer uses the item received? Additionally, can the buyer request the return of interest on the payment made to the seller? Please explain this matter.

Considering Invalid Sales Contracts and
Their Legal Effects

Recently, I received a question from a reader regarding invalid sales contracts. Specifically, the inquiry was about what happens when both the seller and buyer fulfill their obligations, especially concerning the return of profits and interest on payments when the contract is invalid. In this article, I would like to explore this issue from a legal perspective.

What is an Invalid Sales Contract?

First, let’s briefly explain what an invalid sales contract is. An invalid contract refers to a contract that is not recognized as having legal effect. For example, if one of the parties to the contract is a minor or if the contract’s content is illegal, the contract becomes invalid. However, what legal effects arise when the parties have exchanged goods or made payments based on an invalid contract?

Seller’s Claim for Return of Profits

Now, if a seller sells an item based on an invalid contract and the buyer uses that item, can the seller demand the return of profits derived from that use? The key point here is the provisions regarding “unjust enrichment” in civil law. Profits obtained from an invalid contract are treated as “unjust enrichment.” This means that the seller can seek to reclaim profits gained from the buyer’s use of the item. For instance, let’s say a buyer purchased an expensive bicycle under an invalid contract. If the buyer used the bicycle for commuting every day and saved on transportation costs, the seller might claim, “Return the profits gained from that bicycle.” However, proving how much profit was actually gained may be difficult. This is where the complexities of law come into play.

Buyer’s Claim for Return of Interest

Next, let’s consider whether the buyer can get back the interest on the payment made to the seller. In transactions based on an invalid contract, the buyer’s right to demand the return of the payment is often recognized. This is based on the concept of “unjust enrichment.” In other words, the payment made under an invalid contract must be returned to the buyer. Therefore, the buyer can demand the return of the payment made to the seller, and there is a possibility of claiming interest as well. However, this also depends on specific circumstances, as the reasons for the contract’s invalidity and the situation can vary.

Practical Case Study

Let’s consider a specific case. For example, suppose a friend purchased a used car based on an invalid sales contract. This contract was invalid because the seller did not own the car. The friend used the car for several months for commuting. In this case, the friend could say to the seller, “I bought the car under an invalid contract, so return it.” Furthermore, the friend could also demand the return of profits gained from using the car—such as the savings on monthly transportation costs. However, proving how much profit was actually gained can be quite challenging for an amateur. This is where the deep complexities of law lie.

Conclusion and Reflection

We have found that the legal issues related to invalid sales contracts are very complex. The seller may have the possibility of reclaiming profits, and the buyer can seek the return of the payment and its interest. However, in actual cases, specific circumstances and the availability of evidence can significantly affect the outcome. Personally, I sometimes feel that the law can be cold. It seems unreasonable that both parties suffer simply because a contract is invalid. I believe that the law should be applied with more human emotion. Of course, the law is based on logic, and it is not permissible to be swayed by emotions. However, from these real-life examples, I sense that there is always a gap between the coldness of the law and human emotions. I recommend consulting a legal expert regarding issues related to invalid contracts. You can obtain appropriate advice based on specific circumstances. The law is complicated, but having knowledge can help alleviate some of the anxiety. I hope this blog is somewhat helpful to everyone. The world of law is never simple, but having the right knowledge can assist in avoiding future troubles.