The representative director's effect of external transactions and burden of proof without a resolution of the board of directors.

Even if the representative director of a corporation does not undergo a resolution of the board of directors with respect to external transactions, such resolution of the board of directors is merely an internal decision-making of the corporation, and if the other party to the transaction knew or could have known that there was no such resolution of the board of directors, the transaction shall be effective. In such cases, the party to the transaction must assert and prove that the other party to the transaction knew or could have known that there was no resolution of the board of directors

Articles 209(2) and 389(3) of the Commercial Act; Article 261 of the Civil Procedure Act

Supreme Court Decision 94Da39253 delivered on October 28, 1994 (Gong1994Ha, 3124 delivered on April 11, 1995) 94Da33903 delivered on June 25, 1993 (Gong1995Sang, 1835)

Choung Bank (Attorney Osung-sung et al., Counsel for the plaintiff-appellant)

Gangwon General Construction Co., Ltd. (Attorney Yoon Young-young, Counsel for the plaintiff-appellant)

Seoul Civil District Court Decision 94Na6955 delivered on July 21, 1994

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

The defendant's attorney's grounds of appeal are examined.

Even if the representative director of a corporation does not undergo a resolution of the board of directors with respect to external transactions, the resolution of the board of directors is merely an internal decision-making of the company, and if the other party to the transaction knew or could have known that there was no such resolution of the board of directors, the transaction is effective. In this case, the party to the transaction should assert and prove that the other party to the transaction knew or could have known that the resolution of the board of directors was not made (see Supreme Court Decisions 94Da39253 delivered on October 28, 1994; 93Da1391 delivered on June 25, 1993, etc.).

According to the reasoning of the judgment of the court below and the court of first instance cited by the court below, the court below confirmed that the non-party 1, the representative director of the defendant, was a joint and several surety for the loan of this case borne by the plaintiff on June 8, 1992, and the non-party 1, as the representative director of the defendant, knew or could have known that the plaintiff did not have a resolution of the board of directors at the time of conducting the joint and several surety of this case as the defendant's representative director, and thus the non-party 1's act of joint and several surety of this case was not effective against the defendant. The non-party 1's act of joint and several surety of this case is not recognized, but it is insufficient to find that the plaintiff was aware or could have known at the time of the joint and several surety of this case, and there is no other evidence to find this differently. In comparison with the records, the court below's above fact-finding and judgment are justified, and it is not erroneous in the misapprehension of legal principles as to the effect of the representative director's

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 Park Jong-ho (Presiding Justice)