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Ruling: First, we determine that the project failed to materialize as defined by the contract.
According to the contract, pl’s money was not to be used until the project received a building permit, which is a time at which the most money becomes needed for construction. One can claim there is a mistake in a contract only with proof (Shulchan Aruch, Choshen Mishpat 49:6). The Tumim (49:5) says that this is either when the only logical meaning is something else or when there are witnesses. The Beit Meir (4) adds that it can be a mistake that most people would not catch. Def’s claim does meet any of these criteria, and therefore this claim is rejected.
Although def violated the agreement, pl might have been mochel the violation when they chose, upon learning the money was not in escrow, to continue investing it with def rather than demand its return. However, there are indications that the mechila was on false premises, believing def2 that the building permit was close at hand, which was untrue (see Rama, CM 241:17). Furthermore, it is unclear whether pl’s mechila was explicit, and silent mechila is invalid according to many opinions (see K’tzot Hachoshen 12:1 and Netivot Hamishpat 12:5). Finally, pl have a contract in their favor, in which case many rule the mechila must come with an act of kinyan to be binding (see Rama, CM 241:2). Due to the combination of all these reasons, pl can demand their money back.
P'ninat Mishpat (832)
Beit Din Eretz Hemda - Gazit
642 - Where Could the Investment Money Go?
643 - Where Could the Investment Money Go? – part II
644 - Effective Matchmaking?
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Beit Din Eretz Hemda - Gazit
P'ninat Mishpat A Commercial Rental for a Closed Business – part II
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P'ninat Mishpat Payment for Not Clearing Warehouse On Time – part II
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P'ninat Mishpat Limits of Interest Rate for Loan with Heter Iska – part II
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Rabbis in Midrash
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