Meanwhile, the provision on the adjustment of the contract amount due to price fluctuations under the State Contracts Act is to prevent any string of performing a contract by price fluctuations unexpected at the time of the contract, or failure to properly perform the obligation pursuant to the content thereof, thereby hindering the achievement of the purpose of a public contract. In addition, given the characteristics of a public contract funded by tax, if the price of all kinds of items or items constituting the contract amount sharply increases or drops at a certain period after the contract is concluded, it means that a contracting officer, etc. will not have the contractor reflect the details of the adjustment of the contract amount in a public contract, thereby preventing any waste of the budget and unfairly benefiting

Therefore, unless it is contrary to the purport of the above provision, a contracting officer, etc. may enter into an agreement with the other party to the contract to exclude the application of the provision on the adjustment of the contract amount according to price fluctuation, taking into account the specific characteristics of individual contracts, trends of prices and supply and demand of goods necessary for performing the contract, exchange rate fluctuations, policy needs, reasonable distribution of risks resulting from economic fluctuations, etc. This is also true in light of the fact that the other party to the contract may rather incur unexpected losses if the State, etc. requests the adjustment of the contract amount on the grounds of price decline after making a special agreement excluding the application of the above provision in a public contract and taking measures to avoid the risk of price fluctuation, such as exchange hedging, etc., even though the other party to the contract trusted the special agreement excluding the application of the above provision,

Considering the above nature of a public contract and the content and legislative intent of the provision on the adjustment of the contract amount due to price fluctuation under the State Contracts Act, the above provision merely provides for the matters to be observed by the contracting officer, etc. so that the State, etc. can process the contractual relationship with a private person fairly, rationally, and efficiently, and cannot be deemed as prohibiting or restricting the State, etc.’s imposition of special terms and conditions effective only between the contracting parties based on an agreement with the counter-party. The validity of such terms and conditions of a private autonomy and freedom

However, Article 4 of the Enforcement Decree of the Act on Contracts to Which the State is a Party (hereinafter “Enforcement Decree of the State Contract Act”) provides that “A contracting officer shall not enter into a contract, which unfairly limits the contractual interests of the other party provided for in the State Contracts Act and the relevant Acts and subordinate statutes, or specify any special agreement or condition that unfairly limits the contractual interests of the other party to the contract.” Thus, no special agreement is effective. Here, any special agreement unreasonably limits the contractual interests of the other party and thus it is insufficient to say that the other party to the contract is somewhat disadvantageous to the other party in order to make it null and void in violation of Article 4 of the Enforcement Decree of the State Contracts Act. It is insufficient to find that the State, etc. unfairly puts any disadvantage to the other party by prescribing a special agreement contrary to equity against the legitimate interests and reasonable expectations of the other party to the contract. Whether a special agreement unreasonably limits the contractual interests of the other party to the contract should be determined by taking into account all the circumstances such as

[Dissenting Opinion by Justice Ko Young-han and Justice Kim Jae-hyung] The State Contracts Act provides for clear provisions regarding the requirements and effects of the adjustment of the contract amount according to price or exchange fluctuation. When the prices of various items, etc. constituting the contract amount sharply rise due to price or exchange fluctuation after the conclusion of a public contract, the other party is likely to be unable to achieve the purpose of the contract or to perform the contract insufficiently due to economic difficulties. On the other hand, when the above prices of items, etc. sharply drop due to price or exchange fluctuation, due to the nature of public contracts funded by taxes, the budget of the State or public institutions may be excessively excessive execution. In order to ensure that the intended purpose of the contract is to be achieved through price or exchange fluctuation and to achieve the public interest purpose of executing an adequate budget, the provision was introduced to impose on the contracting officer a duty to adjust the contract amount by reflecting the price fluctuation of all items, etc. constituting the contract amount at a certain time after the conclusion of the contract,

There may also be cases where it is more efficient to allocate in advance the risks arising from price or exchange fluctuation in the form of an agreement at the time of entering into a public contract. However, Article 19 of the State Contracts Act grants legislative options that are more desirable to enforce adjustment than allowing such an agreement. If such legislation is contrary to the Constitution or is extremely exceptional without being unconstitutional, the State and the other party must comply therewith.

The contract price adjustment under this provision shall be applied only when it satisfies the legal requirements that “if it is necessary to adjust the contract amount due to price or exchange fluctuation,” and the requirements are clearly prescribed in the Enforcement Decree and the Enforcement Rule in accordance with the delegation of the Act. Therefore, there is a device that can avoid unreasonable consequences surrounding the adjustment of the contract amount through the interpretation and application of the above requirements and the detailed regulations in the Enforcement Decree and the Enforcement Rule.

Such provision constitutes a mandatory provision or a provision of validity as it limits the principle of private autonomy and freedom of contract regarding public contracts. Therefore, the State and the other party who are a party to a public contract shall adjust the contract amount in order to distribute the risk of loss due to price or exchange fluctuation in a fair and equitable manner after the conclusion of the public contract, and the agreement excluding this is invalid.

This conclusion is not only clearly revealed in the language and text of the provision of the law, but also reasonable in light of the character of the public contract and the State Contracts Act, the legislative intent known in the legislative process, and the structure and purpose of the provision of the law.

1. As to the grounds of appeal Nos. 1 and 2

A. Article 19 of the former Act on Contracts to Which the State is a Party (amended by Act No. 11547, Dec. 18, 2012; hereinafter “State Contract Act”) provides that “The head or contracting officer of each central government agency shall adjust the contract amount as prescribed by the Presidential Decree if it is necessary to adjust the contract amount due to price fluctuation, design modification or other modification of the terms of the contract after concluding the contract that imposes a burden on the National Treasury.” Accordingly, Article 64(1) of the former Enforcement Decree of the Act on Contracts to which the State is a Party (amended by Presidential Decree No. 20720, Feb. 29, 2008) provides that “The former Enforcement Decree of the Act on Contracts to Which the State is a Party shall apply at least 90 days after the date of execution of the contract at which the State becomes liable pursuant to Article 19 of the Act on Contracts to Which the State is a Party, and at the same time, at the rate of 10 percent or more of the contract amount shall be adjusted as prescribed by the Ordinance of the Ministry of Finance and Economy.”

However, the State Contracts Act does not provide for the validity of a contract concluded with any other content.

B. A contract to which the State is a party or a public corporation subject to the application of the Act on the Management of Public Institutions (hereinafter “public contract”) is a contract under the private law entered into by the State or a public corporation (hereinafter “State, etc.”) on an equal footing with the other party as the subject of private economy, and its essential content does not differ from a contract between private persons. Thus, except as otherwise provided in law, a contract shall be entered into on equal terms by mutual agreement between the parties, and the parties shall, in principle, perform the terms and conditions of the contract in good faith (see Supreme Court Decision 2001Da33604, Dec. 11, 2001).

Meanwhile, the provision on the adjustment of the contract amount due to price fluctuations under the State Contracts Act is to prevent any string of performing a contract by price fluctuations unexpected at the time of the contract, or failure to properly perform the obligation pursuant to the content thereof, thereby hindering the achievement of the purpose of a public contract. In addition, given the characteristics of a public contract funded by tax, if the price of all kinds of items or items constituting the contract amount sharply increases or drops at a certain period after the contract is concluded, it means that a contracting officer, etc. will not have the contractor reflect the details of the adjustment of the contract amount in a public contract, thereby preventing any waste of the budget and unfairly benefiting

Therefore, unless it is contrary to the purport of the above provision, a contracting officer, etc. shall be deemed that an agreement can be reached with the other party to the contract excluding the application of the provision on the adjustment of the contract amount according to price fluctuation, taking into account the specific characteristics of individual contracts, trends in prices and supply and demand of the goods necessary for performing the contract, exchange rate fluctuations, policy needs, and reasonable distribution of risks resulting from economic fluctuations. This is also true in light of the fact that the other party to the contract may incur unexpected losses if the State, etc. requests the reduction of the contract amount on the grounds of price decline, even though the other party to the contract took measures to avoid the risk of price fluctuation, such as reliance and exchange hedging, after making a special agreement excluding the application of the above provision in a public contract.

Considering the above nature of a public contract and the content and legislative intent of the provision on the adjustment of the contract amount due to price fluctuation under the State Contracts Act, the above provision merely provides for the matters to be observed by the contracting officer, etc. so that the State, etc. can process the contractual relationship with a private person fairly, rationally, and efficiently, and cannot be deemed as prohibiting or restricting the State, etc.’s imposition of special terms and conditions effective only between the contracting parties based on an agreement with the counter-party. The validity of such terms and conditions of a private autonomy and freedom

However, Article 4 of the Enforcement Decree of the State Contracts Act provides, “A contracting officer shall not enter into a contract, which unfairly limits the contractual interests of the other party provided for in the State Contracts Act and the relevant Acts and subordinate statutes, or specify any special agreement or condition that unfairly limits the contractual interests of the other party.” Thus, any special agreement that unreasonably limits the contractual interests of the other party in a public contract is null and void. In this context, it is insufficient to say that the special agreement is somewhat disadvantageous to the other party in order for the other party to become invalid as it unfairly limits the contractual interests of the other party. It is insufficient to say that the State, etc. to provide for a special agreement contrary to the principle of equity against the legitimate interests and reasonable expectations of the other party to the contract, thereby unfairly puts disadvantage to the other party to the contract. Whether the special agreement unreasonably limits the contractual interests of the other party to the contract should be determined by taking into account all the circumstances such as the content and degree of disadvantage that may arise to the other party to the contract, possibility of disadvantage, impact on the entire contract, the process of concluding the contract between the parties, and regulations (see Supreme Court Decisions 206Da.

C. In light of the following facts, the lower court determined that Article 15 of the Special Conditions for the Construction Contract of this case (Ⅱ) that did not adjust the contract amount even in the case of price fluctuation, including exchange fluctuation (hereinafter “the instant special agreement”) did not seem to be in violation of the definition or equity by excluding the legislative intent under Article 19 of the State Contracts Act or by significantly losing reasonableness in light of transaction practices, and thus, it cannot be deemed that the content of the instant special condition is not recognized in the event that there is any content unreasonably restricting the contractual interests of the contractor under the accounting rules, the Acts and subordinate statutes related to construction, and this condition.”

(1) On April 16, 2007, the Plaintiffs entered into the instant contract that concluded a contract for the construction of an integrated energy facility (hereinafter “instant construction”).

(2) The instant special agreement included in the contents of the instant contract provides that “The amount related to the portion contracted with an overseas company (hereinafter “overseas supply portion”) out of the tender cost is a fixed amount that takes into account the price fluctuation during the contract period and does not require the adjustment of the contract amount due to price adjustment, and thus, the bidder shall prepare the bid amount in consideration of price fluctuation (exchange fluctuation, etc.) that may arise during the contract period prior to the bid, and shall not file a civil or criminal objection against the fixed amount of the contract amount for overseas supply.” The foregoing content was equally indicated in the tender guide distributed to participating companies, including the Plaintiffs, at the site site conference held six months prior to the conclusion of the instant contract.

(3) The Plaintiffs, as a group of construction companies with extensive experience in concluding a long-term contract for large-scale facility works, concluded the instant contract with the knowledge of the terms and conditions of the contract, including the above terms and conditions, after examining the bidding guide distributed by the Defendant

(4) Around June 2007, the Plaintiffs purchased a master-morine from mentor (SIEMNS) and paid Sweden 274,530,117 meta with the purchase price. Around January 2008, 2008, the Plaintiffs purchased a master-morine from S.M. (S.M) as a foreign company, and paid 623,278,000 UN for the purchase price.

(5) As the exchange rate increase due to the global financial crisis that occurred in 2008, Plaintiff Gyeongnam Company requested the adjustment of the contract amount under the instant contract on May 7, 2009, but was rejected on the ground of the instant special agreement.

(6) As to the instant construction project, the estimated purchase price and installation price of the foreign supply volume, fixed at the contract price, did not exceed 1/4 of the total contract price, and the contract price adjustment has been made on several occasions according to price fluctuations.

(7) The Defendant presented the scope of the suppliers of the Blue and Slue and Slue under the Special Conditions for the Construction Contract (Ⅱ) of the instant contract, and did not specify the settlement currency. However, the Plaintiffs did not take measures to avoid exchange risk even though they concluded a sales contract with Sweden Cluden and Japan as a settlement currency with a foreign company.

D. Examining the aforementioned legal principles and records, the lower court did not err by misapprehending the legal doctrine on the validity of the provision on the contract price adjustment due to price fluctuation under the State Contracts Act and the interpretation of the general terms and conditions of the said contract.

2. Regarding ground of appeal No. 3

A. In light of the following circumstances, the lower court determined that the instant special agreement cannot be deemed as a terms and conditions which unreasonably unfavorable to the Plaintiffs.

(1) Whether the instant contract is unfair shall be determined at the time of conclusion of the contract.

(2) On April 16, 2007, the date when the instant contract was concluded, it was unlikely to expect a rapid increase in the exchange rate of Croat and UNFCCC due to the global financial crisis around 2008.

(3) In the event of decline in exchange rates, the Plaintiffs could rather gain profits equivalent to exchange gains.

B. Examining the record in accordance with the relevant legal doctrine, the lower court did not err in its judgment by misapprehending the legal doctrine regarding unfair terms and conditions, or by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules.

3. Regarding ground of appeal No. 4

The lower court determined that, even if the Plaintiff suffered damages due to changes in exchange rates in the direction and width different from that of the Plaintiffs following the conclusion of the instant contract, maintaining the validity of the instant contract cannot be deemed as going against the good faith principle.

Examining the record in accordance with the relevant legal principles, the lower court did not err by misapprehending the legal doctrine on the reduction of the contract amount on the grounds of change in circumstances.

4. Conclusion

Therefore, all appeals are dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices, except for a dissenting opinion by Justice Ko Young-han and Justice Kim Jae-hyung on the first and second grounds for appeal No. 2, and a concurrence with the Majority by Justice Kim Chang-suk and Justice Jo Hee-de.

5. Dissenting Opinion by Justice Ko Young-han and Justice Kim Jae-hyung as to the grounds of appeal Nos. 1 and 2

A. The Majority Opinion’s purport is that even if the State and the other party to the contract enter into an agreement contrary to the provisions of the State Contracts Act on the adjustment of the contract amount according to price or exchange fluctuation, it cannot be deemed null and void unless it unfairly limits the other party’s interest. However, such view is without merit as it clearly violates the statutes that the State enacted to comply with by itself, and it cannot be found the grounds therefor. The detailed reasons are

B. An increase in laws and regulations that impose certain obligations on the parties to a juristic act, such as a contract, or prohibit certain acts. In cases where such laws and regulations expressly stipulate the validity of a juristic act in violation, determination of the existence or invalidity of the juristic act should be made in accordance with the relevant provisions. If any law provides that a juristic act in violation of the relevant provision is null and void or the relevant provision provides that it is an effective provision

In a case where the validity of a juristic act violating any prohibition provision is not clearly determined, the validity of the juristic act shall be determined by comprehensively taking into account various circumstances, such as legislative background and purport of the provision, protected legal interest, importance of the violation, whether the party intended to violate the provision of the Act, whether the violation has an intent to violate the provision of the Act, the impact of the violation on the party to the juristic act or a third party, the social, economic, and ethical assessment of the violation, and the attitude of the law on similar or closely related acts. In particular, in a case where the juristic act was performed in violation of the statutes governing both parties to the juristic act, barring special exceptional circumstances, such juristic act shall be deemed null and void. In a case where the law regulating both parties violates the law, the validity of the juristic act shall be determined in consideration of transaction safety and protection of the other party

There should be no inconsistency in legal order. If one is prohibited by law and permitted by the other, it is difficult for the judiciary to determine the validity of a juristic act in violation of the law as the offender. If the law imposes a certain obligation or prohibit a certain act, and thus becomes effective, it can be said that it is the self-concept of the legal order. Such phenomenon ought to be prevented, barring any other reason to be specifically recognized. Accordingly, in cases where it is difficult to determine in light of the aforementioned various circumstances in the process of determining the validity of a juristic act in violation of the law, in principle, to deny its validity, thereby ensuring the unity and consistency of the legal order, as the last bru

C. The State Contracts Act was enacted for the purpose of facilitating the performance of contractual affairs by providing for basic matters regarding contracts to which the State is a party (Article 1 of the Act). This is intended to establish and implement a fair and efficient public contract system. Article 19 of the State Contracts Act provides, “The head of each central government agency or the public official in charge of contracts shall adjust the contract amount in accordance with the Presidential Decree, if it is necessary to adjust the contract amount due to price fluctuation, design modification, or any other modification to the terms and conditions of the contract after concluding a contract that imposes a burden on the National Treasury due to price fluctuation, manufacturing, services, or other price fluctuation, design modification, or any other modification to the terms and conditions of the contract.” Accordingly, the former part of Article 64(1) of the Enforcement Decree of the State Contracts Act provides, “The head of each central government agency or the public official in charge of contracts shall adjust the contract amount in accordance with the Ordinance of the Ministry of Finance and Economy, at the same time after 90 days from the date on which the contract becomes a burden on the National Treasury pursuant to Article 19 of the State Contracts Act.”

Meanwhile, Article 64(7) of the Enforcement Decree of the State Contracts Act provides that “The head of each central government agency or the public official in charge of contracts shall adjust the contract amount when the requirements for the adjustment of the contract amount under paragraph (1) are met due to exchange fluctuation,” which was newly established on December 31, 2008.

As can be seen, the State Contracts Act provides for clear provisions regarding the requirements and effects of the adjustment of the contract amount according to price or exchange fluctuation. If the price of various items, etc. constituting the contract amount sharply rise due to price or exchange fluctuation after the conclusion of a public contract, the other party is likely to be unable to achieve the purpose of the contract by suspending or renounceing the performance of the contract due to economic difficulties or to perform the contract insufficiently. On the other hand, when the price of the above items, etc. sharply drops due to price or exchange fluctuation, due to the nature of a public contract funded by tax, the budget of the State or a public institution may be executed excessively and excessively. In order to ensure that the purpose of the contract is not to achieve through price or exchange fluctuation and to achieve the public interest purpose of executing an adequate budget, a provision was introduced to impose on the public official in charge of contracts a duty to adjust the contract amount by reflecting the price fluctuation of all items, etc

There may also be cases where it is more efficient to allocate in advance the risks arising from price or exchange fluctuation in the form of an agreement at the time of entering into a public contract. However, Article 19 of the State Contracts Act grants legislative options that are more desirable to enforce adjustment than allowing such an agreement. If such legislation is contrary to the Constitution or is extremely exceptional without being unconstitutional, the State and the other party must comply therewith.

The contract price adjustment under this provision shall be applied only when it satisfies the legal requirements that “if it is necessary to adjust the contract amount due to price or exchange fluctuation,” and the requirements are clearly prescribed in the Enforcement Decree and the Enforcement Rule in accordance with the delegation of the Act. Therefore, there is a device that can avoid unreasonable consequences surrounding the adjustment of the contract amount through the interpretation and application of the above requirements and the detailed regulations in the Enforcement Decree and the Enforcement Rule.

Such provision constitutes a mandatory provision or a provision of validity as it limits the principle of private autonomy and freedom of contract regarding public contracts. Therefore, the State and the other party who are a party to a public contract shall adjust the contract amount in order to distribute the risk of loss due to price or exchange fluctuation in a fair and equitable manner after the conclusion of the public contract, and the agreement excluding it shall be deemed null and void.

This conclusion is reasonable not only in light of the language and text of the legal provision, but also of the nature of the public contract and the State Contracts Act, the legislative intent known in the legislative process, and the structure and purpose of the legal provision.

(1) The starting point of statutory interpretation is the interpretation of the language and text. Interpretation differently from the language and text of the statute is permissible in exceptional cases. In particular, if the language and text of the statute consists of a relatively clear concept, in principle, any other interpretation method is no longer necessary or limited (see Supreme Court Decision 2006Da81035, Apr. 23, 2009, etc.).

As seen above, the State Contracts Act provides that “a contract amount shall be adjusted according to price or exchange fluctuation.” The meaning of “a contract amount may be adjusted” is the same as “a contract amount must be adjusted.” The meaning of “a contract amount may be adjusted” is to the same meaning as “a contract amount may be determined in the language and text, i.e., the meaning of “may be adjusted.” In addition, the meaning of “a contract amount adjustment” goes beyond the possible meaning of the words and text, and the meaning of “a contract amount adjustment.” In this regard, the term “a contract amount adjustment” is determined in the meaning of “a contract’s effect” as well as “a contract amount adjustment” as the invalidation and invalidation. In light of the language and text of the State Contracts Act, it is apparent that an administrative law prohibits an individual or organization from performing a certain act and does not specify the validity of the offense. Therefore, it is not likely to interpret otherwise. The nature, structure, legislative intent, and purpose of the State Contracts Act also does not have any grounds to protect fundamental rights and interests.

(2) The public contract itself belongs to the area of private law and, in principle, the provisions of private law apply to its establishment, implementation, and extinction. However, it cannot be said that a public contract is substantially identical to a contract between private persons or that the State, etc. is in the same position as a private person in a public contract. Unlike a contract between private persons under private law, the financial resources related to a public contract are appropriated from the citizens as taxes that are forced to collect from the public. Nevertheless, since the public official in charge of contracts does not always have the motive of “the conclusion of a best-faith contract,” it is not always

In cases where the State, etc. is a party to a contract, unlike a contract between private persons, the term of the contract is an important factor to consider the general public’s interest, such as ensuring soundness, quality, and safety as a result of performing the contract, as long as the term of the contract does not reduce the cost (see Supreme Court Decision 2013Da23617, Nov. 10, 2016). In real sense, the other party to a public contract tends to reduce the content of the contract and enter into a contract even if the content of the contract is lost equity or unreasonable, because the other party to a public contract does not bear any risk of receiving the price, unlike a contract between private persons. In addition, given that the economic and social impact of which the other party to a public contract is to be

As such, since public contracts are distinct from contracts under private law, the State Contracts Act’s main purpose to regulate public contracts is to maintain the public nature from the conclusion of the contract to the establishment and realization of the terms and conditions of the contract, and ultimately realize the public interest. Accordingly, the State Contracts Act and subordinate statutes are established on the premise that the State Contracts Act directly applies to public contracts to properly limit and control the discretion of the public officials in charge of contracts by supplementing the contract law. Accordingly, deeming the provision of the contract amount adjustment according to price fluctuation as a matter of course to be applied to the contracts to be

(3) The provisions of the State Contracts Act mainly regulate the method and procedure of public contracts, and the terms and conditions to be included in public contracts. However, “the provision on the adjustment of contract amount according to price fluctuation, etc.” is distinct from other provisions in that it directly regulates the terms and conditions of a contract to be modified while granting obligations to the “head of a central government agency or a public official in charge of contracts” to partly adjust the terms and conditions of a public contract that has already been concluded. This is to take into account the difference between the transaction status of the State and the contracting party in a public contract and the possibility of abuse thereof. This is a provision for the maintenance and security of public nature in the course of the performance and realization of a contract by partially amending the civil law doctrine. Accordingly, the agreement that circumvents the provisions of statutes that set forth the role of the head of a central government agency, etc. as a public interest adjustment agent for the change of contract amount or excludes such provisions

(4) The primary offender of the State Contracts Act is the public official in charge of contracts of the State, etc. The head of a central government agency or a public official in charge of contracts does not necessarily recognize the freedom of contract, but rather is bound by the law enacted by the National Assembly in accordance with the democratic principle. The State Contracts Act imposes an obligation on the public official in charge of contracts to adjust the contractual relationship between the State and the contracting party according to price and exchange fluctuation. Even if the State or a public official has such legal obligation, a special agreement that completely excludes the obligation itself in advance is contrary to the principle of democracy and the rule of law, rather than simply taking measures contrary thereto. It goes against the principle of democracy and the rule of law. A court with the judicial power of the State has the duty to interpret and apply the Act

The Supreme Court has often denied the validity of a contract even where an individual or company entered into a contract in violation of administrative regulations. The Supreme Court has held that a real estate agent's contract concluded in violation of administrative regulations is null and void to the extent that it exceeds the prescribed limit under the contract of brokerage (see, e.g., Supreme Court en banc Decision 2005Da32159, Dec. 20, 207) and the Enforcement Rules of the same Act, which set the limit of real estate brokerage commission (wholly amended by Act No. 7638, Jul. 29, 2005) and the former Real Estate Brokerage Act (wholly amended by Act No. 7638, Jul. 29, 2005).

If the State directly violates the provisions of the State Contracts Act by making an agreement to completely exclude or avoid the application of the provisions of the State Contracts Act in advance, the validity of the contract should be denied more easily than when the individual or company concludes the contract in violation of the administrative regulations. This is because the illegality of the contracting officer’s taking measures contrary to the legislative body that regulates the contents of the public contract in order to achieve the fairness and fairness of the public contract is more serious.

(5) Article 92 of the former Enforcement Decree of the Budget and Accounts Act (amended by Presidential Decree No. 8524, Apr. 1, 197) was first stipulated in Article 95-2 of the former Enforcement Decree of the Budget and Accounts Act (amended by Presidential Decree No. 4102, Mar. 31, 1989). The former Budget and Accounts Act (amended by Act No. 4102, Jan. 5, 1995; Presidential Decree of the State Contracts Act enacted on Jan. 5, 1995 and the State Contracts Act enacted on July 6, 199

According to the reasons for the proposal indicated in the legislative data of the Budget and Accounts Act, the above provision is introduced to protect small and medium business operators and contracting parties. Article 95-2 of the Enforcement Decree of the Budget and Accounts Act was first made in the form of discretionary regulation by providing that “it may be paid by adjusting the contract amount.” However, Article 95-2 of the Enforcement Decree of the Budget and Accounts Act, amended by Presidential Decree No. 11081 on March 28, 1983, amended by the Presidential Decree No. 11081 on March 28, 1983, changed the language in the form of imposing compulsory obligation without any room for discretion on the ground that “the party’s initial contract amount shall be adjusted” and changed the text in the form

Examining these legislative history, the provision on the adjustment of the contract amount according to price fluctuation, etc. is a mandatory provision that imposes an obligation to adjust the contract amount according to price fluctuation, etc., without any room for discretion, on the public officials in charge of contracts who meet certain requirements. The main purpose is to protect the contractual counterpart

(6) Article 64(7) of the Enforcement Decree of the State Contracts Act newly established a provision that the contract amount shall be adjusted in cases where the requirements for the adjustment of the contract amount are met due to exchange fluctuation. This provision is intended to clarify the occurrence of the obligation to adjust the contract amount even in cases where the requirements for the adjustment of the contract amount are met due to exchange fluctuation, as it includes the price fluctuation caused by exchange fluctuation in the case of taking materials, etc. from a foreign country and supplying goods. If it is possible to adjust the contract amount due to price fluctuation arising from exchange fluctuation, “the contract amount may be adjusted” or would not have any provision

In particular, Article 2 of the Addenda to the Enforcement Decree of the State Contracts Act must be noted as follows: “The amended provisions of Article 64(7) provide that “The provisions of the Act on Contracts to Which the State is a Party shall also apply to a contract in effect at the time this Decree enters into force, and the requirements for the adjustment of the contract amount are met due to exchange fluctuation before this Decree enters into force.” In the event of a control provision or a voluntary provision that does not affect the validity of this contract under Article 64(7) of the Act, the supplementary provisions of the Act would be null and void. In light of the foregoing, “the provision on the adjustment of the contract amount according to price or exchange fluctuation (including two different provisions)” as provided in the above two

(7) In the event of price fluctuations that are difficult for the contracting party to predict, requiring the contracting party to perform the original contract amount to assume losses may result in suspension of performance or insolvency of the performance of the contract, such as incomplete performance, by waiver of the contract performance. It may be difficult to expect that such suspension of performance of a public contract or insolvency may lead to the public purpose to be achieved through the contract, or that more social costs may be borne to achieve the purpose of the contract.

The provision on the contract amount adjustment according to price fluctuation, etc. is not affected by whether the state or contracting party has prepared for price fluctuation or has taken individual measures to avoid the risk of loss due to price fluctuation, such as exchange hedging, thereby allowing the contractual relationship to be modified so that the contract can be implemented in a stable manner without interruption of the contract by reasonably adjusting the contract amount according to price fluctuation.

According to the Majority that the provision on the contract price adjustment according to price fluctuation, etc. is merely a regulation provision, a public official in charge of contracts may add a special clause that excludes such adjustment at any time at any time when price increase is anticipated. Furthermore, in the reality that a contracting officer can unilaterally determine the content of a contract in a superior position in a transaction, and the contracting officer is bound to accept or refuse a contract itself that includes such content, it is more strong to induce the contracting party to enter into a special agreement excluding the adjustment of the contract amount according to price fluctuation, etc. by allowing the State to avoid the adjustment of the contract amount through statutory interpretation. The Majority Opinion, unlike the legislative intent, creates a result of revolving the State to the prior amendment by Presidential Decree on March 28

(8) From the standpoint of the State or a public institution, when the price decline due to the nature of a public contract funded by tax rate decline, etc., it is necessary to lower the contract amount with the corresponding content. In such a case, if the contract amount is to be maintained as it is, it would result in an unreasonable and excessive execution of excessive budget even though it is apparent that the contracting party would be able to procure materials, etc. at a lower level. Therefore, the contracting officer is obliged to adjust the contract amount according to such price fluctuation, etc., and is not allowed to waive the adjustment of the contract amount or make an agreement at a fixed price in violation

According to the Majority Opinion, it is unreasonable to allow a contracting officer to waive the adjustment of the contract amount in violation of the provision on the adjustment of the contract amount according to price fluctuation, etc.

(9) A State agency authoritative interpretation that the provision on the adjustment of the contract amount according to price fluctuation is a mandatory provision. The Ministry of Strategy and Finance, in a construction contract entered into by a State agency, provides that the adjustment of the contract amount due to price fluctuation is the obligation of the ordering agency and the contracting party, and thus determining a special agreement excluding the adjustment of the contract amount due to price fluctuation between the contracting parties is in violation of the statutory provisions (see Supreme Court Decision 41301-622, Jun. 19, 2007). In addition, the calculation of the price subject to price fluctuation covers all the items or the items that have to be performed after the base date for the adjustment of the contract amount. As such, the special agreement excluding certain items from the calculation of price fluctuation was invalid (see Supreme Court Decision 41301-131, Jun. 19, 2007). The latter interpretation was made with the same content as the Public Procurement Service. Many contracting parties entering into a public

The Majority Opinion is likely to cause confusion by giving an unexpected shock to the public contract market order, which has been settled for more than 30 years (in the case of exchange rate fluctuations, 9 years) through faithful interpretation to the legal provisions.

(10) Supreme Court Decision 2003Da318 Decided August 22, 2003 ruled that a fixed contract amount is subject to an agreement between the parties, and thus, cannot be deemed null and void as it violates Article 19 of the State Contracts Act. However, in a case where the State receives a loan from the International Bank for Reconstruction and Development (hereinafter “IBD”) from the International Bank for Foreign Investment and Development (hereinafter “IBD”) and determines the terms of a contract based on the standard tender document for IBD issuance including a fixed contract amount, when concluding an international tender contract with the financial resources, the State determines that Article 7 and Article 11 of the former Enforcement Decree of the State Contracts Act does not apply to a fixed contract for foreign capital purchase (amended by Presidential Decree No. 15187, Dec. 31, 1996). Therefore, the former Enforcement Decree of the State Contracts Act recognizes that the provision on special exception to a contract for foreign capital purchase is no longer effective if it is advantageous or broad to the Government.

(11) Article 4 of the Enforcement Decree of the State Contracts Act provides that “A contracting officer shall not, upon entering into a contract, make any special agreement or condition that unreasonably limits the contractual interests of the other party to the contract provided for in the State Contracts Act and the relevant statutes.” In cases where any special agreement or condition stipulated in a public contract is unreasonably restricted to the contractual interests of the other party,

The above provision has the nature of a general law and has the nature of a special law. If the provision on the adjustment of the contract amount according to price fluctuation, etc. is agreed to exclude it even if it satisfies the requirements set forth in the provision on the adjustment of contract amount according to price fluctuation, such special agreement shall be null and void and the legal effect shall be given pursuant to this provision. Of course, even if it does not meet such requirements, the special agreement

If a public official in charge of contracts by the State, etc. excluded a contracting party from the application of the provision on the contract amount adjustment due to price fluctuation, etc. through a tender guide, etc., it can by itself be deemed that the State, etc. abuse its superior position and unreasonably limits the contractual interest and reasonable expectations of the contracting party with respect to the adjustment of the contract amount according to price fluctuation, etc. as prescribed by Article 19 of the State Contracts Act and Article

D. We examine the judgment of the court below in light of the aforementioned legal principles. The court below determined that Article 15 of the Special Conditions for the Construction Contract of this case (II) that did not adjust the contract amount even in case of price fluctuation, including exchange fluctuation, on the ground that Article 19 of the State Contracts Act was merely a provision on the management of contract affairs to be observed by the relevant public officials under a contractual relationship between the State and a private person. Such judgment below erred by misapprehending the legal principles on the validity of the provision on the contract amount adjustment in accordance with price fluctuation, etc. under the State Contracts Act, thereby adversely affecting the conclusion of the judgment. Therefore, without examining

For the foregoing reasons, we express our concurrence with the Majority Opinion.

6. Concurrence with the Majority by Justice Kim Chang-suk

A. Article 19 of the State Contracts Act provides for the provision on the adjustment of the contract amount due to price fluctuation, providing that “If it is necessary to adjust the contract amount due to price fluctuation, design modification, or any other modification to the terms and conditions of the contract after concluding the contract for construction, manufacture, service, or any other contract that imposes a burden on the National Treasury, the head or contracting officer of each central government agency shall adjust the contract

However, “water price fluctuation”, which is the cause of the contract price adjustment, should be deemed to include not only the increase in prices of various items or items constituting the contract amount but also the decrease. As such, the aforementioned provision can be seen to include not only the increase in prices that are beneficial to the other party, but also the degree of reduction that would be disadvantageous to the other party. Therefore, the main purpose of the provision on the contract price adjustment due to price fluctuation under the State Contracts Act is not to protect the other party, but rather to prevent the non-performance of the contractual obligation that may arise by taking advantage of the other party’s performance of the contractual obligation under the initially agreed contract amount, thereby hindering the achievement of the purpose of the public contract, and at the same time, the need of the State, etc. to save the budget by reducing the contract amount in the case of price fall. This also supports the provision that “if it is necessary to adjust the contract amount” due to price fluctuations. This also supports the provision that only stipulates “the head or contracting officer of a central government agency” as a criminal under Article 19 of the State Contracts Act, and Article 19 of the State Contracts Act is not effective.

In addition, Article 5(1) of the State Contracts Act provides that “a contract shall be concluded on an equal footing by mutual agreement.” This is understood as emphasizing that a contract to which the State, etc. is a party is a private contract that is concluded under the agreement of the parties, and that the State, etc. shall not enter into a superior contract from the standpoint of the other party due to the matters to be observed by the contracting officer, etc.

Therefore, Article 19 of the State Contracts Act cannot be interpreted as a provision to protect the other party to the contract. Ultimately, it is difficult to see that there is a ground to interpret the said provision as a mandatory provision having a direct effect on the other party to the contract. Even if the protection of the other party to the contract may have become a legislative motive, it cannot be interpreted differently in light of the content of Article 19 of the State Contracts Act as well as the content and structure of the entire provision of

Nevertheless, if Article 19 of the State Contracts Act is interpreted as a mandatory provision having a direct effect on the other party to the contract, it would be to allow the State, etc. to intervene in and exercise the right to control the price when certain requirements are met in the private contractual relationship that is “in an equal position by the agreement of the parties,” and this would cause the following constitutional problems.

B. Article 10 of the Constitution provides that all citizens shall have the right to pursue happiness. The right to pursue happiness includes the right to freedom of action and the principle of private autonomy from the general right to freedom of action. In addition, Article 119(1) of the Constitution declares that the economic order of the Republic of Korea is based on the economic freedom and creative initiative of individuals and enterprises.”

The principle of private autonomy is the constitutional principle that forms the basis of market economy order. The freedom of contract, which is the principle of private autonomy, is the form revealed in the field of legal act, refers to the freedom to freely determine whether to conclude a contract, the other party to a contract, and the method and content of a contract as the parties’ free will. This is based on the belief in a market economy that it would be the most reasonable and efficient decision-making method to allow a party to enter into a contract in a case where a participant in the market finds a point where the parties agree with each other at the end of searching for the optimal contractual terms under free competition and modifying their terms and conditions. As such, the principle of self-responsibility that allows each other to enjoy or bear profits or disadvantages arising from their decision-making.

Of course, the principle of private autonomy or the principle of freedom of contract does not mean an unlimited absolute freedom, but may be restricted or restricted on the basis of public welfare or the concept of justice or equity. However, the State’s intervention under a market economy order should be used as a means of supplementing the economic efficiency when leaving economic activities only to the market, or resolving social problems derived therefrom by itself. The State’s intervention does not always ensure efficiency. In particular, if the State’s intervention in the freedom of contract is generally carried out through the method of specific and direct control of the relationship between payment and consideration, which is the essential part of the contract, even though there is no exceptional circumstance that is not justified in light of the public welfare or the concept of justice or equity, even if there is no exceptional circumstance that cannot be justified in light of the public welfare or the concept of equity, it is fundamentally denying the private autonomy, and thus, it cannot be easily justified under our constitutional order.

C. Since public contracts are basically private contracts, if parties to a contract set the price for goods or services by lowering various risk burdens, including the probability of price fluctuation, on an equal footing, and agreed to exclude the application of the provision on the contract amount adjustment due to price fluctuation under the State Contracts Act in the process, unlike other private contracts, there is no reason to deem the above agreement on the contract amount null and void solely on the ground that either party is the State, etc.

Therefore, the provision on the adjustment of the contract amount due to price fluctuation under the State Contracts Act ought to be deemed to be excluded from the application of the provision on the contract amount by agreement between the parties. Rather, the interpretation of the provision as a mandatory provision having a direct effect on the other party as stated in the Dissenting Opinion would always be null and void by the State, etc., regardless of the specific characteristics of individual contracts or the content of the agreement, etc. by uniformly applying the said provision irrespective of the specific characteristics of the contract, thereby taking into consideration the overall circumstances such as the purpose of the contract and

Article 64 of the Enforcement Decree of the State Contracts Act and Article 74 of the Enforcement Rule of the State Contracts Act stipulate that the contract amount shall be adjusted when the product adjustment rate or index adjustment rate has increased or decreased by 3/100 or more. If a single product is imported and purchased, the contract amount shall be adjusted if the fluctuation in exchange rate is at least 3%. 3% exchange rate, etc. at each time, the contract amount shall not be adjusted. If the contract amount shall be adjusted, and if the court should intervene, then the price adjustment by the parties shall be ultimately replaced by the court’s price determination. If the same date continues, there is no incentive to take measures to avoid risks or reduce costs, and thus, it is easy for the parties to a public contract to perform duties in an inefficient and inefficient manner different from the contract under private law with another transaction partner, other than the State, etc., which would result in the increase in financial burdens of the State, etc. and the weakening of corporate competitiveness, and ultimately distort the ability to distribute the resources ultimately, and may result in economic depression.

D. Even though a request for the protection of the other party to the contract and the realization of the contractual term in individual and specific cases does not follow the unconstitutional interpretation, as seen in the Majority Opinion, the control may be sufficiently satisfied based on the Supreme Court’s interpretation on Article 4 of the Enforcement Decree of the State Contracts Act, which provides, “A contracting officer shall not make a special agreement or set conditions unreasonably restricting the contractual interests of the other party to the contract as stipulated in the State Contracts Act and the relevant statutes in making

E. Since the Constitution is the basis for statutory interpretation as the highest norm, in a case where there are both the possibility of unconstitutional interpretation and constitutional interpretation with respect to any provision of law, the court has the duty to effectively maintain the legal provision as far as possible by excluding the unconstitutional interpretation, and by interpreting the constitutionality. However, the Dissenting Opinion clearly expresses that there is room for unconstitutional interpretation, and that it is followed by the Majority Opinion that is understood as the constitutional interpretation, as above, should be followed.

7. Concurrence with the Majority by Justice Jo Hee-de

A. (1) In a case where a juristic act was committed in violation of a provision on imposition of a certain obligation or prohibition of a certain act, whether the juristic act is null and void is determined by the interpretation of the provision as to the legal effect of the broad meaning of the pertinent provision. If there is a express provision on whether the juristic act is null and void, it must be followed as a matter of course, but if there is no express provision on whether the juristic act is null and void, it should be determined by considering the purpose and meaning of the provision on duty or prohibition (see Supreme Court Decision 2008Da75119, Dec. 23, 2010). In the absence of any express provision on the existence of a provision on the invalidity or invalidity of the juristic act, the issue of invalidity of the juristic act is left to the court’s judgment as a matter of interpretation of the pertinent Act. Even if a court determines that the juristic act is null and void, it is based on the legal interpretation authority given

The Supreme Court has maintained an attitude that does not uniformly deny the judicial effect of a juristic act in violation of the previous mandatory provision or prohibition provision. There are many cases in which the Supreme Court has recognized the judicial effect of the juristic act according to the interpretation of the pertinent provision (see Supreme Court Decisions 86Da1288, Feb. 10, 1987; 94Da28604, Oct. 28, 1994; 94Da38199, Aug. 23, 1996; 96Da36753, Aug. 26, 1997; 200Da20434, Jul. 28, 200; 200Da38817, Nov. 14, 2000; 200Da3817, Oct. 28, 2001; 200Da367537, Mar. 16, 2012).

(2) Article 19 of the State Contracts Act provides, “The head of each central government agency or the public official in charge of contracts shall adjust the contract amount, as prescribed by Presidential Decree, when it is necessary to adjust the contract amount due to price fluctuation, design modification, or any other modification to the terms of the contract after concluding a contract for construction, manufacture, service, or any other contract that imposes a burden on the National Treasury.” Even if the above provision is used instead of the phrase “may adjust”, such circumstance alone is difficult to deem that the agreement excluding the above provision is null and void. For example, Article 16 of the former Act on Fair Transactions in Subcontracting (amended by Act No. 4860 of January 5, 1995) provides, “Where an additional amount is paid from the ordering person for the same reason, such as design change, economic situation change, etc. after the principal contractor entrusted the manufacture, etc., if an additional expense is required for the completion of an object for the same reason, it shall be increased in proportion to the additional amount received.” However, notwithstanding the above provision, the Supreme Court recognized the validity of the above provision in private law (see Supreme Court Decision 2008Da.

(3) Article 4 of the Enforcement Decree of the State Contracts Act provides that “A contracting officer shall not, upon entering into a contract, attach any special terms or conditions that unreasonably restrict the contractual interests of the other party to the contract as stipulated in the State Contracts Act and the relevant statutes.” The said provision does not itself prohibit any special terms or conditions that restrict the contractual interests of the other party to the contract, but only prohibit any special terms or conditions that unreasonably restrict the contractual interests of the other party to the contract. The Supreme Court held that, when an agreement is entered into with any content different from the provisions of the State Contracts Act, the existence of a special terms or conditions that unreasonably restrict the contractual interests of the other party to the contract should be determined by taking into account all the circumstances, including the content and degree of disadvantage, possibility of disadvantage, impact on the entire contract, the process of concluding the contract between the parties, and the relevant statutes (see Supreme Court Decisions 2012Da15695, Dec. 27, 2012; 2015Da206270, 206287).

(4) In the instant case, it is extremely difficult for experts to predict the direction of the exchange rate fluctuation. As such, it is difficult for both parties at the time of an agreement to refuse the adjustment of the contract amount according to exchange rate fluctuation to understand who are favorable to all parties at the time of the conclusion of the agreement. Moreover, even if the exclusion agreement leads to imposing on the counter-party the risk of exchange fluctuation, there is a means to avoid the risk therefrom. As such, the counter-party to the agreement may enter into a contract by taking into account whether to use the means of avoidance and its cost, etc. In full view of these circumstances, even if the validity of the agreement excluding the application of the provision on the adjustment of the contract amount due to exchange rate fluctuation is recognized, it is difficult to deem that there is a high possibility that the contracting officer

B. (1) In a case where a subordinate statute delegates a specific matter to a subordinate statute, determination of the scope of delegation by the parent law or whether the subordinate statute complies with the limits of delegation should be made by comprehensively taking into account the legislative purpose and content of the pertinent provision, structure of the provision, and relationship with other provisions. The delegation provision itself clearly states the limits of delegation by using terms with which accurate contents can be identified, and even if the delegation provision itself exceeds the limits of its literal meaning, whether the contents of the subordinate statute are within the scope of prediction of the delegated contents from the mother law itself, and whether the contents of the subordinate statute can be evaluated as a new legislation beyond the stage of concreteizing the delegation by expanding or reducing the scope of the terms used in the delegation provision beyond the meaning of the terms used in the delegation provision (see Supreme Court en banc Decision 2011Du30878, Dec. 20, 2012; 2012Du23808, Aug. 20, 2015).

(2) Article 19 of the State Contracts Act specifies price fluctuations, design changes, and other changes in the terms and conditions of the contract as the grounds for the contract price adjustment, and delegates matters concerning the adjustment to the Presidential Decree. In addition, Articles 64(1) main sentence and 1, and 64(1)2 of the Enforcement Decree of the State Contracts Act provide for the standard for the contract price adjustment at the time the product adjustment rate or index adjustment rate has increased or decreased by at least 3/100 according to the delegation of the said provision, and Article 74 of the Enforcement Rule of the State Contracts Act provides for the method for calculating the product adjustment rate and index adjustment rate pursuant

In light of the form, content, structure, and purport of the foregoing provision, it is anticipated that the Enforcement Decree, which received the authorization under Article 19 of the State Contracts Act, would only relate to the standard and method for the adjustment of the contract amount according to price fluctuation, and does not seem to have been stipulated in the terms of the grounds for the adjustment of the contract amount due to exchange fluctuation. Moreover, it is difficult to provide the grounds for the adjustment of the contract amount due to exchange fluctuation in the form of a law, or it is inappropriate to provide for it in the form of a law

Therefore, Article 64(7) of the Enforcement Decree of the State Contracts Act provides, “The head of each central government agency or the public official in charge of contracts shall adjust the contract amount if the requirements for the adjustment of the contract amount under paragraph (1) are met due to exchange fluctuation.” It is difficult to recognize its effect or binding effect since it was performed without delegation by the mother’s law provision or exceeds the scope of delegation by the mother law provision.

(3) The Majority Opinion, without denying the validity of Article 64(7) of the Enforcement Decree of the State Contracts Act, deemed that the instant special agreement excluding the adjustment of the contract amount due to exchange fluctuation is valid. However, as seen above, Article 64(7) of the Enforcement Decree of the State Contracts Act is null and void, and the instant special agreement ought to be deemed null and void. In this regard, even if the lower court’s dismissal of the instant claim seeking the adjustment of the contract amount due to exchange fluctuation, it cannot be deemed that the lower

C. As above, I express my concurrence with the Majority Opinion.

Chief Justice Kim Jong-soo (Presiding Justice)