[2] The meaning of "in cases where the estimated amount of damages is unreasonably excessive"

[3] The case holding that an agreement that "if a buyer fails to fulfill his/her obligation under a sales contract, he/she shall not return the down payment already paid, and transfer the buyer's ownership of the land to the seller" shall be deemed as an agreement of penalty presumed to be liquidated damages under Article 398 (4) of the Civil Code, and that the estimated amount of damages shall be unfairly excessive

1. As to the principal lawsuit

The court below, on February 4, 2004, concluded a sales contract with the plaintiff (Counterclaim defendant, hereinafter "the plaintiff") to purchase KRW 110 million on the land of this case owned by the defendant (the plaintiff only) and paid KRW 10 million on the same day to the plaintiffs. At the time of the above sales contract, the plaintiffs and the defendant removed the building within the land of this case, and upon the removal of the building, the defendant paid KRW 100 million on the remaining land of this case to the plaintiffs. The defendant did not return the down payment already paid to the plaintiffs, and the ownership of the land of this case was transferred to the second land of this case to the plaintiffs, and if the defendant wants to purchase the land of this case to purchase KRW 10 million on the land of this case, the defendant did not lawfully purchase and sell the land of this case to the defendant, and the defendant did not purchase and sell the land of this case in lieu of the down payment contract of KRW 10 million,000,000,000,000,000.

In light of the records, the court below's determination that the above sales contract was lawfully rescinded by the plaintiff's expression of intent to cancel the contract is justified, and there is no error in the misapprehension of legal principles as to the exercise of the right to cancel the bilateral contract as alleged in the grounds of appeal.

However, we cannot accept the decision of the court below that the transfer of the ownership of the land No. 2 to the plaintiffs in the case of the above agreement constitutes a penalty for breach of contract, and that all plaintiffs' claims for the principal lawsuit are accepted for the following reasons.

Since a penalty is presumed to be an estimate of the amount of damages under Article 398(4) of the Civil Act, special circumstances should be asserted and proved in order to interpret the penalty as a penalty for breach of contract (see, e.g., Supreme Court Decision 2000Da35771, Dec. 8, 2000). Meanwhile, in cases where the amount of liquidated damages is unreasonably excessive, the court may reduce it ex officio without any allegations by the parties. Here, the term “unfairly excessive cases” in this context means cases where it is acknowledged that the payment of the liquidated damages would result in the loss of fairness by imposing unfair pressure on the debtor in light of the general social concept, such as the status of the creditor and the debtor, purpose and content of the contract, the anticipated motive and content of the amount of the liquidated damages, the ratio of estimated amount of the damages to the amount of the liquidated damages, the estimated amount of the liquidated damages, and the transaction practices at the time, etc. (see, e., Supreme Court Decision 97Da15371, Jul. 25,

Examining the facts acknowledged by the court below in light of the above legal principles, the provision that "the defendant does not return the down payment already paid, and transfers the ownership of the land No. 2 to the plaintiffs" under the above contract is an agreement of penalty which the defendant planned to pay damages in the event that he does not perform his obligation under the contract for sale and purchase due to any cause attributable to him, which is presumed to be an estimate of damages in accordance with Article 398 (4) of the Civil Act. However, there is no special circumstance to interpret it as a penalty in the record. Thus, the above agreement of penalty for breach of contract shall be deemed to be an estimate of damages. Meanwhile, in light of the contents of the above sale and purchase contract, the ratio of the estimated amount of damages to the purchase and sale price, the developments leading up to the determination of the estimated amount of damages, general transaction practices, and the amount of damages actually accrued to the plaintiffs, it shall be deemed to be unduly excessive to have the defendant transfer the ownership of the land No. 2 in addition to the waiver of the claim for the return of the down payment of KRW 1

Nevertheless, the court below accepted the plaintiffs' claim in whole without examining whether the above penalty agreement was a penalty for breach of contract and the estimated amount of damages was excessive. The court below erred by misapprehending the legal principles on the estimate of damages and failing to exhaust all necessary deliberations, which clearly affected the conclusion of the judgment. The ground of appeal pointing this out has merit.

2. As to the counterclaim

After compiling the adopted evidence, the court below acknowledged the facts as stated in its holding, and dismissed the plaintiff's counterclaim based on the premise that the plaintiffs did not delay the fulfillment of their obligations stipulated in the above agreement. In light of the records, the fact-finding and decision of the court below is just and acceptable, and there is no error of law as alleged in the grounds of appeal.

3. Conclusion

Therefore, the part of the judgment of the court below regarding the principal lawsuit is reversed, and that part of the case is remanded to the court below for a new trial and determination. The remaining grounds of appeal are dismissed as they are without merit. It is so decided as per Disposition by the assent of all participating Justices on the bench

Justices Ahn Dai-hee (Presiding Justice)