The issue of compensating losses in transactions invalidated due to legal incapacity (ḥajr) constitutes one of the most complex matters in Iranian private law particularly when the purchase price is paid within an inflationary economy and its real value sharply declines over time. The Tehran Court of Appeal’s ruling, which obliges the incapacitated seller to return the “current expert-assessed value” instead of compensating for the “actual depreciation of the purchase price,” exemplifies the theoretical and practical tension between two competing approaches: one that measures compensation according to the current value of the sold property, and another that considers the purchasing power of the price originally paid. The central question of this study is therefore whether, in a contract voided due to incapacity, the proper criterion for compensation aligns with the principles of civil law, tort liability, unification-of-procedure precedents, and the economic logic of restoring loss. Using library research and documentary analysis, this article examines both the theoretical and practical dimensions of this question.The findings show that adopting the “current market value of the automobile” as the measure of compensation is inconsistent with the doctrinal foundations of nullity, the rules of tort liability, the principle of restoring the parties to their prior position, and the standards set in Unification of Procedure Ruling No. 811; the market value of property is driven by inflation, market fluctuations, and other factors unrelated to the parties’ conduct, and thus cannot accurately reflect the buyer’s real loss. Conversely, the criterion of “depreciation of the purchase price” accords with the structure of Iranian law, the economic analysis of law, relevant jurisprudential principles, and restorative justice. Moreover, the Court’s reasoning displays deficiencies concerning the validity of the incapacitated party’s confession, allocation of the burden of proof, analysis of successive possessors, coherence of reasoning, and treatment of evidence highlighting the need for revisiting judicial reasoning and clarifying the standards for calculating damages.