Korean Standards Bank, Inc.

The plaintiff's appeal on the return of unjust enrichment is dismissed.

1. As to the Plaintiff’s ground of appeal regarding the claim for restitution of unjust enrichment

The court below rejected all the plaintiff's assertion that the contract of this case is invalid on the grounds of violation of the Act on the Regulation of Terms and Conditions, unfair legal acts under the Civil Act, defects in the resolution of the board of directors, etc., and that the contract of this case is cancelled on the grounds of mistake on the value of options, rocis, and possibility of exchange rate fluctuations, and ③ the contract of this case is terminated on the grounds of change in circumstances that the expected increase in exchange rates occurring after the contract was concluded, and ④ since the defendant renounced the call option of this case by failing to notify the exercise of the call option, the payment of the plaintiff's settlement amount is not a legal ground. In light of related legal principles and records, the court below's above determination is just, and there is no violation of law as otherwise alleged in the ground of appeal.

Meanwhile, according to the records, the court below did not explicitly determine the plaintiff's assertion that the contract of this case was revoked on the ground that the defendant deceivings the plaintiff as to the value of the options mutually exchanged in the contract of this case, the possibility of exchange rate fluctuations, etc.

However, the Defendant cannot be deemed to have a duty to inform the Plaintiff of the theoretical value, fees, etc. of options included in the structure of the instant contract, and as long as the Defendant is an enterprise pursuing profit, it cannot be said that the Defendant expressed the Plaintiff as Rocost in the sense that he did not receive a certain fee because it is reasonable for the Defendant to gain a certain profit through the instant contract.

Furthermore, there are no circumstances suggesting that the Defendant predicted the rapid increase in the exchange rate in the future at the time of entering into the instant contract. Therefore, it cannot be said that the omission of judgment by the lower court was adversely affected the conclusion of the judgment on the ground that it is obvious that the Plaintiff’s aforementioned assertion is dismissed. The Plaintiff’s allegation in this part

2. As to the Defendant’s grounds of appeal Nos. 1 and 2 relating to the claim for damages

A. Based on its stated reasoning, the lower court determined that the Defendant violated the suitability principle and the duty to explain on the grounds that the Plaintiff solicited the conclusion of the instant contract, instead of compensating for losses arising from the currency option contract entered into with the Gyeongnam Bank Co., Ltd. (hereinafter “Gyeongnam Bank”) and the futures exchange contract, and did not specifically explain the content and risks of the instant contract in the process.

B. However, such determination is difficult to accept for the following reasons.

(1) In concluding a contract with an enterprise with a purpose of foreign exchange hedging, a bank shall not invite a company to enter into a contract with a kind of product or a currency option contract with such characteristics, including the expected foreign currency input amount, assets and sales size of the company, the asset status of the foreign exchange hedging, whether it is necessary for exchange hedging, transaction purpose, transaction experience, degree of knowledge or understanding of the contract in question, and other exchange hedging contract. In light of the above, if the bank actively solicited the contract to enter into a contract which causes an excessive risk in light of the company’s management situation in breach of such a duty, it shall be deemed that such solicitation constitutes a tort as it violates the principle of suitability and is in violation of the duty to protect customers.

However, a customer who deals with a financial institution, such as a bank, etc. and a customer who deals with a financial product at his/her own risk and ultimately decides on whether to engage in the transaction at his/her own responsibility and the details of the transaction. The principle of self-responsibility does not change fundamentally because it is a complicated and high risk transaction, such as over-the-counter derivatives transaction. Therefore, in cases where an enterprise intends to enter into a currency option contract for investment or speculative purposes, such as seeking exchange gains by using exchange rate, not exchange hedging, rather than exchange hedging, if the financial institution sufficiently notifies the customer of the risks inherent in the contract, it cannot be readily concluded that the financial institution violated the suitability principle and failed to perform its duty to protect the customer, merely because it did not interfere with or refuse the conclusion

Meanwhile, in a case where a financial institution trades over-the-counter derivatives with ordinary customers having specialized knowledge and analysis capabilities, it is obligated under the principle of good faith to clearly explain major transaction information, such as risk factors inherent in the transaction and potential loss, so that customers can accurately evaluate the structure and risk of the transaction. However, in a case where a customer already knows the content of the transaction, the financial institution’s explanation obligation cannot be acknowledged even with regard to such matters (see, e.g., Supreme Court en banc Decision 2013Da26746, Sept. 26, 2013).

(2) Review of the reasoning of the lower judgment and the evidence adopted up to the lower court reveals the following facts.

① The Plaintiff’s total amount of assets as of the end of 2007 KRW 102.2 billion, sales amounted to approximately KRW 107.9 billion in 205, KRW 13.9 billion in 2006, KRW 133.9 billion in 2007, and KRW 66 billion in 2005, KRW 69 billion in 2006, KRW 69.1 billion in 2006, KRW 89.1 billion in 2007, and KRW 60% in 2007. The Plaintiff was anticipated to have exported KRW 30 million in 207.

From January 2007 to April 2007, the Plaintiff had experienced in purchasing exchange insurance policies that amount to a total of 33,80,000,000 won with respect to transition oil. From around 2006 to the conclusion of the instant contract, the Plaintiff entered into a currency option contract and a forward exchange contract with Gyeongnam Bank on several occasions, and managed exchange risk. However, from January 2007, the Plaintiff entered into a forward exchange contract and a forward exchange contract with Gyeongnam Bank with Gyeongnam Bank on the rise of a foreign currency exchange rate (hereinafter referred to as “exchange rate”) which the Plaintiff entered into with Gyeongnam Bank. In March 2007, 269,636,400 won, and 337,228,000 won on April 207, 207, the Plaintiff sold twice the contract price as the above currency contract conditions were fulfilled.

③ On March 23, 2007, the Defendant’s employees G visited the Plaintiff, to interview D, E, and F, an officer or employee of the Plaintiff, and to explain the Plaintiff’s monetary options products related to US$, and to invite the Plaintiff to join. D, an employee of the Plaintiff, sought measures to reduce anticipated loss from existing transactions entered into with the Gyeongnam Bank regarding emulation.

④ On April 25, 2007, the Defendant proposed that the Plaintiff re-structured with the Plaintiff at the same time a contract with the Gyeongnam Bank, which takes place for a currency option contract and a gift exchange contract against the emulation, by the method of concluding a contract term of two years. The proposal stated that the emulation method is based on the Rocost as in the previous transaction, and the cost necessary for the liquidation of the existing currency option contract and gift exchange contract should be reflected in the exchange rate of the currency option transaction proposed newly by the Defendant, and the exchange rate between the parties is expected to increase or maintain the current level.

⑤ On May 4, 2007, the Defendant presented to the Plaintiff a preliminary confirmation of the instant contract and the terms and conditions of the contract, the profit and loss scenarios due to exchange rate fluctuations, the risk that may arise if the conditions were met, and in particular, at an exchange rate lower than the market exchange rate when green conditions are fulfilled, the Defendant sold twice the contract amount at a lower rate than the market exchange rate. As such, the Defendant presented a product proposal, etc. specifically stating that the Plaintiff should not exceed the amount of foreign exchange that should be sold on the option settlement date does not exceed the amount of foreign exchange inflows

(6) On May 7, 2007, the Plaintiff entered into the instant contract with the Defendant on May 7, 2007, with respect to the part of which maturity comes between May 2007 and June of the same year (the maximum settlement amount to KRW 10 million), and entered into the instant counterclaim to the Defendant. In return, the Plaintiff paid a premium of 2.60,000 won to the Defendant. The Defendant entered into the instant contract with the Plaintiff on May 8, 2007, and accordingly, paid a premium to the Defendant.

Of the premium to be paid to the Plaintiff, 2.60,000 U.S. dollars 2.80,000 U.S. dollars, 2.60,000 U.S. dollars offset the premium pursuant to the opposite transaction in this case, and

7) The instant contract is a currency option contract under which the terms and conditions of the Plaintiff’s exchange rate of 1,250 put options (the exchange rate of 1,250 won) and the exchange rate of 1,200 won (the exchange rate of 1,250 won), which are eight months during the entire contract term of the contract, are divided into Amph EI EI EI EI Enicher for 16 months, and Bmpy Ky’s for 16 months. Ampt is a currency option contract under which the terms and conditions of the Plaintiff’s exchange rate of 1,250 (the exchange rate of 1,250 won) and the exchange rate of 1,200 (the exchange rate of 1,250 won) are not fulfilled when the market exchange rate of melted during the observation period, but the Plaintiff is able to receive a certain amount of exchange rate without any other obligation under the Defendant’s exchange rate of 20 (the Defendant’s exchange rate of exchange rate).

④ From May 2007 to December 2007, the Plaintiff, upon the fulfillment of the melting condition, must pay 2 million to 5 million to the nearnam Bank, including the contract amount of a currency option contract and a forward exchange contract, when the Defendant exercises a call option. However, from January 2008 to April 2009, the Defendant’s call option, which is Bpt, was exercised, was only 2 million to the nearest 2 million won per month.

① On the other hand, the Defendant, while granting a loan to the Plaintiff on April 2007, received a report on the current status of business operation, including sales, export size, business strategies, and exchange risk management status, and examined the validity of the instant contract based thereon.

① During the process of entering into the instant contract, G, an employee of the Defendant, explained to the Plaintiff’s employees, such as D, about the terms and conditions of the contract and how to reorganize the contract, and sent e-mail, which includes the following: “When the exchange rate drops temporarily as it is now, I will be able to continue to pay for the instant contract: “I will have a big burden on the instant contract. I will have designing the most safe structure.”

(3) Examining the foregoing factual basis in light of the legal principles as seen earlier, in light of the following, the Plaintiff’s conclusion of the instant contract, and the Defendant actively solicited the Plaintiff to give excessive risk to a currency option contract, thereby violating the suitability principle, and cannot be readily concluded that the Defendant violated its duty to explain by failing to explain necessary during the process of concluding the contract

① The Plaintiff managed the exchange risk of foreign exchange flowing into export upon entering into a currency option contract, a currency option contract, and a gift exchange contract prior to the conclusion of the instant contract, and in 2007, the Plaintiff experienced actual losses as a consequence of fulfillment of the melting condition in the currency option contract, and received proposals stating the Defendant’s explanation on the content of the instant contract several times in the process of concluding the instant contract and the possibility of additional increase in exchange rates. Considering that the Plaintiff was well aware of the structure and risk of the instant contract, and furthermore, at the same time, was sufficiently aware of the risk of actual losses due to increase in exchange rates without holding foreign exchange goods. Furthermore, insofar as the Defendant was aware of the management status of the Plaintiff’s sales, export scale, etc. through a report on business status prepared at the time of entering into the instant contract, it is difficult to deem that the Defendant failed to conduct necessary investigation solely on the basis that the pertinent business status was submitted for reasons different from

The Plaintiff prepared a plan to avoid the expected loss in the future without paying actual expenses to the Defendant, while continuing the loss in the existing exchange hedge transaction, and entered into the instant opposite transaction and the instant contract. If the Plaintiff did not engage in the instant opposite transaction, there is a possibility that the amount to be settled in May and June 2007 would amount to a maximum of 10 million won, and thus, it cannot be deemed unfair to enter into the instant contract that can be settled with a flexible amount anticipated to be avoided and expected to flow into the future through the instant opposite transaction. Meanwhile, in light of the developments leading up to the conclusion of the instant contract, it is deemed that it is sufficiently possible for the Plaintiff to directly pay the premium in cash after selecting only the instant opposite transaction. Furthermore, it cannot be concluded that the Defendant has a duty to prepare and provide another plan to pay the premium to the Plaintiff in lieu of the premium of the instant opposite transaction. Furthermore, it cannot be concluded that the Defendant paid the difference in cash to the Plaintiff more unfavorable than the Plaintiff in cash.

In determining the content of a contract, it may be possible for the Plaintiff to exchange profits and risks for each contract period. The Plaintiff could be exempted from its duty by taking advantage of profits from put option exercise within a certain scope unless the green conditions are fulfilled, and upon the fulfillment of the green-out conditions, the entire period of put-in options can have been extinguished, and even though the period of put-in options reaches twice the AP, it is merely a result reflecting the premium of the opposite transaction that the Plaintiff should pay. Even if the Defendant’s call options were exercised in BP, it is difficult to view that the structure or period of the instant contract was unfairly unfavorable to the Plaintiff, in light of the fact that the Plaintiff could settle the amount of paid-in loss due to the termination of the existing contract with the Gyeongnam Bank even if the Defendant’s call options were exercised in the BPP,

④ In some sections of the contract of this case, the sum of the settlement amount of emulation of the contract of this case and the existing contract with the Gyeongnam Bank exceeded the expected amount of emulation by the plaintiff. However, as seen earlier, the plaintiff actively demanded the conclusion of the opposite transaction of this case and the contract of this case with the Gyeongnam Bank with the intent to avoid the loss of the existing contract with the Gyeongnam Bank, and the defendant also had the defendant aware of it by sufficiently explaining the risk. Thus, even if the above risk was realized, it cannot be said that the defendant

⑤ As to the structure and risk of monetary options products, including the instant contract several times, the Defendant explained to the Plaintiff the data indicated in the profit and loss scenario according to exchange rate fluctuation. In the process of concluding the instant contract, it is reasonable to deem that the Defendant, even if considering that the Defendant’s employee had a critical prospect on exchange rate fluctuation in the process of concluding the instant contract, provided that the transaction terms and conditions are determined by reflecting the premium of the opposite transaction, and that the amount to be sold on the settlement date is in excess of the foreign exchange inflow, the Plaintiff notified the risk of exchange rate increase. The Plaintiff experienced the achievement of green conditions and the loss of transaction in the existing transaction entered into with Gyeongnam Bank, and that the risk of the currency option contract to be concluded by transferring the loss of the existing contract can be sufficiently known if the Plaintiff understood the basic structure and risk of exchange rate fluctuation.

(6) On the records, the defendant demanded the plaintiff to refuse to perform the obligation under the contract of this case, and there is no reason to deem that the defendant failed to respond appropriately or neglected this situation despite the defendant's request for the reduction of losses, even though there was a clear measure to reduce losses to the defendant, and thus, the defendant cannot be deemed to have neglected the obligation to protect ex post customers. Nevertheless, the court below held that the defendant violated the suitability principle and the duty to explain during the process of concluding the contract of this case. Thus, the court below erred by misapprehending the legal principles on suitability, the duty to explain, and the duty to protect ex post facto customers, which affected the conclusion of the judgment. The defendant's ground of appeal pointing this out is with merit.

3. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal by the Plaintiff as to comparative negligence and the scope of damages, the part concerning the claim for damages among the judgment of the court below is reversed, and this part of the case is remanded to the court below for further proceedings consistent with this Opinion. The appeal regarding the claim for return of unjust enrichment by the Plaintiff is dismissed. It is so decided as per Disposition by the assent