1. Regarding ground of appeal No. 1

A. A bank shall not, in entering into a currency option contract with an enterprise having the purpose of foreign exchange hedging, grasp the business situation in advance, such as the expected foreign currency inflow amount of the company, asset and sale size, the asset status including exchange hedging, whether it is necessary, transaction purpose, transaction experience, the degree of knowledge or understanding of the contract in question, and whether the contract in question is a foreign exchange hedging contract, etc., and accordingly, shall not invite the company to enter into a kind of product or a currency option contract having such characteristics as are deemed inappropriate for the company in question. If a bank actively solicited a currency option contract that causes an excessive risk in light of the business situation of the company in violation of such a duty, it shall be deemed that such solicitation constitutes an unlawful act that violates the principle of suitability and is against the duty to protect customers and constitutes a tort.

In addition, financial institutions must explain to the extent that customers can fully understand major information on the transaction, taking into account the characteristics and risk level of financial products, transaction purpose of customers, investment experience and ability, etc. In particular, the relevant financial products are developed with high level of financial engineering knowledge, and the result of profit and loss depending on the difficult changes in the future, such as exchange rate. Furthermore, in cases where the objective situation appears to have reached the degree of pursuing exchange margin according to exchange rate rather than exchange hedging purpose in light of the expected foreign currency inflows of customers who are individual parties to the transaction, financial institutions are obligated to explain specific and detailed information on the risk of transaction of over-the-counter derivatives so that customers can clearly understand the risk of transaction of over-the-counter derivatives (see Supreme Court en banc Decision 2012Da146, Sept. 26, 2013).

B. According to the reasoning of the judgment below and the evidence duly admitted by the court below, the Plaintiff was a company that manufactures and sells electronic parts, etc. used for mobile phones of approximately KRW 30.9 billion in 206, KRW 96.1 billion in operating income in 2006, KRW 3.2 billion in 2007, USD 7.166 million in 2006, KRW 82.7 million in 2007, KRW 90,0260 in 207, KRW 150 in 200 in 207, and KRW 15.7 in 200 in 207.7 in 200 in 207.7 in 207.7 in 200 in 207, the Plaintiff visited the Plaintiff’s domestic exchange rate of 10.7 in 20 in 20 in 20 in 20 in 20.7.

C. We examine these facts in light of the legal principles as seen earlier.

In light of the Plaintiff’s management situation, although there was a need for exchange hedging on US dollars flowing into export from around 2007, the Plaintiff’s export amount at the time of the conclusion of the instant currency option contract does not appear to have been expected to increase significantly more than 2007 years. Thus, it is reasonable to deem that the amount needed for exchange hedging during the contract period of the instant currency option is the amount of USD 82,70,000, export price in 2007 or a certain amount of return. Nevertheless, the Defendant recommended the Plaintiff to enter into the instant currency option contract, the total sum of the call hedging contract amount of USD 120,000,000,000, and as a result, the Plaintiff was liable to sell US dollars pursuant to the instant currency option through additional expenditure when the exchange rate of USD /$ 100,000 or more, and the Plaintiff was in violation of the Plaintiff’s duty to sell it in the course of concluding the instant currency option contract.

Meanwhile, since the Plaintiff had no exchange hedge experience, even if the Defendant explained the content and risk of the instant currency option contract from the Defendant, it would have not been aware of the risk by taking account of US currency goods into account. However, the Defendant explained that the instant currency option contract, which has an speculative nature in excess of the amount necessary for exchange hedge, was a hedge transaction, thereby causing the Plaintiff to mislead and conclude the contract. In this regard, the Defendant did not perform its duty to explain regarding the conclusion of the instant currency option contract.

D. Although the reasoning of the judgment of the court below on this part is somewhat inappropriate, the defendant's decision on the violation of the suitability principle and duty to explain is justified as a result, so the judgment of the court below erred by misapprehending the legal principles on the suitability principle and duty to explain, which affected the conclusion of the judgment is not acceptable

2. Regarding ground of appeal No. 2

A. “The date when the injured party becomes aware of the damage and the perpetrator” under Article 766(1) of the Civil Act, which serves as the starting point of the short-term extinctive prescription of a claim for damages due to a tort, means the time when the injured party, in fact and in detail, knows the facts of the requirements for the tort, such as the occurrence of the damage, the existence of the illegal harmful act, and the proximate causal relation between the harmful act and the occurrence of the damage. Whether the injured party, etc. is deemed to have actually and specifically perceived the facts of the requirements for the tort should be reasonably acknowledged by taking into account the various objective circumstances in each individual case and taking into account the situation in which the claim for damages is practically possible (see Supreme Court Decision 2011Da8

B. The reasoning of the lower judgment and the evidence duly admitted by the lower court reveal the following: (a) the Plaintiff incurred a loss equivalent to the difference between the market exchange rate and the exercise exchange rate from December 207, 2007, which was the first settlement date of the instant currency option contract, to November 19, 2008; and (b) the amount also exceeded KRW 1.765 billion in light of the Plaintiff’s financial status, etc.; (c) as the Plaintiff’s employee participated in the conclusion of the instant currency option contract continued to have incurred a loss different from the anticipated at the time of the conclusion of the contract on early 2008; and (d) on the part of the Plaintiff, Mana, etc., against the Korea Exchange Co., Ltd., Ltd. on a contract similar to the instant currency option contract, a decision of acceptance was made through the media in the case of partial disposition of acceptance on December 30, 2008.

C. Examining these factual relations in light of the legal principles as seen earlier, the Plaintiff appears to have been aware that the contract was not appropriate for the Plaintiff as the risks were incurred much more than expected in the instant currency option contract, and that the Defendant did not specifically explain such risks. Therefore, it is reasonable to view that the Defendant’s tort related to the instant currency option contract was actually and specifically recognized on or around the end of December 2008, which was after the expiration of the contract period. Therefore, the Plaintiff’s claim for damages occurred from the time when the statute of limitations expired and the instant lawsuit was filed three years after the lapse of the said period, and thus, the Plaintiff’s claim expired.

Nevertheless, the lower court rejected the Defendant’s defense of extinctive prescription solely on the grounds stated in its reasoning. In so determining, the lower court erred by misapprehending the legal doctrine on the starting point of the extinctive prescription, thereby adversely affecting the conclusion of the judgment. The ground of

3. Conclusion

The part of the lower judgment against the Defendant is reversed, and that part of the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Yong-deok

Justices Kim In-young

Justices Lee Dong-won