Commercial Cassation Judgment: Latent Defects in Vehicle Sale Contract

Judgment summary

A buyer purchased a car for AED 65,000 intended for export, but later discovered significant, undisclosed chassis repairs from a previous accident, rendering it unsuitable. The seller refused to take the car back. Subsequently, the vehicle was damaged by severe floods while in storage. The Court of First Instance ordered a full refund and compensation. The Court of Appeal, however, reduced the refund to the car's diminished post-flood value of AED 20,000 and canceled the compensation. The Federal Supreme Court overturned the appellate decision, affirming the buyer's right to rescind the contract and receive a full refund due to the pre-existing latent defect. It held that the seller's refusal to accept the return made them liable for the subsequent flood damage. The initial judgment for a full refund and compensation was reinstated.