1. On May 18, 2006, the Plaintiff entered into a contract with C on May 18, 2006 by setting a construction period of housing site creation work (hereinafter “instant construction work”) from May 18, 2006 to August 30, 2006, and a price of KRW 520 million (hereinafter “instant contract”). The Defendant jointly and severally guaranteed the Plaintiff’s debt owed to C arising from the instant contract.

C was unable to complete the instant construction within the agreed construction period, and the Plaintiff notified the rescission of the instant contract on the grounds of delay in performance, E, on October 5, 2007, entered into an agreement with the Plaintiff, C, and E to succeed to the instant construction from C (hereinafter “agreement on succession to the instant construction”). The main contents are as follows.

1. E confirms that the instant construction was not completed within the period of construction stipulated in the instant contract, and that there was a portion of non-execution.

2. E recognizes that the height of a retaining wall (the largest width of 8.0 meters) exceeds the current standard height of permission for conversion of a mountainous district, and, at the expense of E, fill the ground of the site below the retaining wall to meet the current standards for permission for conversion of a mountainous district (not more than 3m) and lower the height of the retaining wall.

3. The Plaintiff shall not be held liable to C and E for the construction cost and value added tax paid in excess of C with respect to the performance of the above obligation, the amount of other damages incurred, etc.

However, the Plaintiff did not perform repair works for reinforced earth retaining walls (hereinafter “instant repair works”) during the instant construction works, and forced the Defendant to be liable for nonperformance of obligations against C. The Defendant, on April 18, 2008, paid the Plaintiff KRW 350 million as damages, and paid the amount in the form of borrowed money.