Whether Article 640 of the Civil Act applies to the lease of a commercial building subject to the Commercial Building Lease Protection Act (affirmative)

Article 10(1) of the Commercial Building Lease Protection Act, Article 640 of the Civil Act

Pungsan Development, Inc.

Defendant

Incheon District Court Decision 2011Na22894 Decided June 13, 2012

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

The grounds of appeal are examined.

1. As to the grounds of appeal Nos. 1, 2, 3, and 5

The defendant's grounds of appeal on this part are merely to criticize the selection of evidences and the recognition of facts which belong to the exclusive jurisdiction of the court below, or there is no specific and explicit grounds of appeal as to which part of the court below's decision is in violation of the law, and thus, it cannot be a legitimate ground of

2. As to the fourth ground for appeal

The purpose of the Commercial Building Lease Protection Act is to ensure the stability of the economic life of the people by prescribing exceptions to the Civil Act concerning the lease of commercial buildings, so the Civil Act is excluded from the application of the matters provided for in the above Act concerning the lease of commercial buildings.

However, Article 10(1) of the Commercial Building Lease Protection Act provides, “Where a lessee requests the renewal of a contract between six months and one month before the expiration of the lease term, the lessee shall not refuse it without justifiable grounds: Provided, That this shall not apply to any of the following cases.” As an exception, Article 10(1) of the Commercial Building Lease Protection Act provides, “Where a lessee delays the payment of rent to the amount equivalent to the rent for the third period, the lessee shall not be subject to delay.”

The purport of the above provision is to grant a right to request renewal of a contract to a lessee of a commercial building so that he/she can recover the premium or facility investment cost, but in cases where the lessee is in arrears with the amount equivalent to the rent for the three-year period during the existence of the previous lease, it is difficult to maintain the lease relationship based on the trust between the parties, and thus, it is difficult for the lessor to refuse the request for renewal of the lease, thereby allowing the lessee to extend the contract relationship by the unilateral will of the lessee to such a case.

Meanwhile, Article 640 of the Civil Act provides, “The lease of a building or any other structure may terminate the lease if the deferred amount of the rent for the lessee reaches the amount of two years of rent.” This purport is to require the lessee to faithfully perform the obligation to pay the rent by stipulating the grounds on which the lessor may terminate the lease for the reason of the delinquency in the lease (see Supreme Court Decision 62Da496, Oct. 11, 1962). Therefore, the lessor may resolve the contract immediately without maintaining the contractual relationship between the lessee and the lessee who has lost trust by exercising the right to terminate the lease even before the expiration of the lease term.

As such, the lessor’s right to refuse the request for renewal under the Commercial Building Lease Protection Act is different from the right to cancel the contract and the time and effect of its exercise, and the termination of the contract under Article 10(1) of the Commercial Building Lease Protection Act does not separately provide for the termination of the contract under Article 640 of the Civil Act. Thus, Article 10(1)1 of the Commercial Building Lease Protection Act does not constitute a special case for Article 640 of the Civil Act.

Therefore, Article 640 of the Civil Code is applied to the lease of a commercial building subject to the Commercial Building Lease Protection Act, and even a lessor of a commercial building may terminate the lease contract when the annual rent of the lessee exceeds the two-term rents.

The court below held that the lease contract of this case was lawfully terminated due to the exercise of the plaintiff's right to terminate the lease contract of this case since the defendant's delayed payment amounted to two rents. The judgment of the court below is just in accordance with the above legal principles, and there is no error of law such as misunderstanding of legal principles as to the termination of the lease contract of commercial buildings

3. Conclusion

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.

Justices Jo Hee-de (Presiding Justice)