In a case where a cause causing the obligor’s automatic claim to the transferor of a claim exists prior to the transfer, and where the automatic claim exists concurrently with the assigned claim, whether the obligor may assert a defense of simultaneous performance even if the automatic claim has been realized after the requisites for setting up the assignment of claim were met (affirmative), and whether the obligor may set up a defense against the assignee by set-off (affirmative)

A claim by assignment of a claim may be assigned to the assignee while maintaining its identity, and the obligor may set up against the assignee with the grounds arising from the transfer until he/she receives the notice of transfer (Article 451(2) of the Civil Act). Therefore, in cases where there exists an automatic claim arising from the obligor’s automatic claim against the transferor prior to the transfer and the automatic claim is in a simultaneous performance relationship with the assigned claim, the obligor may assert a defense right of simultaneous performance even if the notice of transfer reaches the obligor and the automatic claim has occurred after the obligor satisfies the requirements for setting up against the assignment of the claim, and therefore, the obligor may set up against the assignee by offsetting

Articles 451(2), 492, and 536 of the Civil Act

A.N. Co., Ltd. (Attorney Lee Jae-soo, Counsel for the defendant-appellant)

Scare Construction Co., Ltd.

Seoul High Court Decision 2014Na14278 decided October 24, 2014

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

A claim by assignment of a claim may be assigned to the assignee while maintaining its identity, and the obligor may set up against the assignee with the grounds arising from the assignment until he/she receives the notice of transfer (Article 451(2) of the Civil Act). Therefore, in cases where there exists a ground on which the automatic claim occurred to the assignee prior to the transfer and the automatic claim is in a simultaneous performance relationship with the assigned claim, the obligor may assert a defense right of simultaneous performance even if the notice of transfer reaches the obligor, and the obligor may set up against the assignee by offsetting the claim.

In addition, if there is a defect in the object completed by the contract for work, the contractor may claim the contractor for the repair of the defect, and the contractor may claim damages in lieu of or together with the repair of the defect. Except in extenuating circumstances, these claims are in the simultaneous performance relationship with the contractor's contract price claim pursuant to Article 667 (3) of the Civil Code (see Supreme Court Decision 91Da33056 delivered on December 10, 191, etc.).

For the reasons indicated in its holding, the lower court determined as follows: (1) based on the fact that Article 11 and Article 19 of the subcontract of this case provide that the warranty bond may be deducted and offset against the completed construction cost at the time of completion of the contract or at the time of termination of the contract, the obligation to pay the warranty bond to the Defendant and the Defendant’s obligation to pay the warranty bond to the Defendant M&S Co., Ltd. are concurrent performance; and (2) Even if the Defendant’s obligation to pay the warranty bond to the IMM Co., Ltd, transferred the warranty bond to the Plaintiff and notified the transfer thereof, the Defendant’s obligation to pay the warranty bond to the IMM Co., Ltd., on the ground of the above warranty bond, the Defendant, the assignee, can exercise a defense of simultaneous performance as to the Plaintiff’s claim for the payment of the warranty bond

Examining the reasoning of the lower judgment in light of the evidence duly admitted, the lower court’s determination is based on the aforementioned legal doctrine. In so doing, contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine regarding offset against passive claims and interpretation of disposal documents, or by failing to state the grounds therefor.

Therefore, the appeal is 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 on the bench.

Justices Ko Young-han (Presiding Justice)