The judgment below

The part against the Defendant is reversed, and that part of the case is remanded to the Seoul High Court.

The grounds of appeal are examined.

The Defendant’s guarantee of payment of subcontract consideration is similar in its nature to the surety insurance, which is conducted for the mutual interest of the members of the association (see, e.g., Supreme Court Decision 2008Da88221, Jul. 9, 2009). Meanwhile, according to Article 644 of the Commercial Act, if an insured event cannot occur at the time of the insurance contract, the insurance contract is null and void unless both parties to the insurance contract and the insured were unaware of it.

Since a guarantee insurance contract has the essence of an insurance contract as an insurance contract, at least, the existence of an insurance accident at the time of the contract must not be determined in order to effectively establish the contract. If the principal contract of a guarantee insurance contract is null and void as a false declaration of agreement, such guarantee insurance contract is null and void since it constitutes a case where an insurance accident cannot occur.

The reason why a guarantee insurance contract is null and void is because it fails to meet the unique requirements as an insurance contract. Thus, the insurer of a guarantee insurance contract may claim the invalidation of a guarantee insurance contract against a third party who did not know the circumstances that the principal contract is a false conspiracy.

(See Supreme Court Decision 2009Da81623 Decided April 15, 2010. The lower court rejected the Defendant’s assertion that the instant subcontract payment guarantee agreement was concluded as the main contract for the second subcontract, and the secondary subcontract modification agreement was invalid as the secondary subcontract modification agreement was null and void. As to the Defendant’s assertion that the subcontract payment guarantee agreement also becomes null and void, the Plaintiff, a trustee in bankruptcy, constitutes a bona fide third party who is not able to oppose the invalidity of the false bid, and rejected the Defendant’s assertion without further determination as to whether the secondary subcontract modification agreement was a false one.

However, the above determination by the court below is for the following reasons.