[1] In a case where the penalty for delay under the former Budget and Accounts Act is excessive, whether the reduction under Article 398 (2) of the Civil Code shall be made (affirmative)

[2] The legal nature of each contract deposit and liquidated damages for the performance of contract under the contract

[3] The case holding that where the penalty for delay is determined to be calculated by multiplying the total amount of the contract by the rate of the penalty for delay, the excessive amount shall not be the rate of the penalty for delay but the total amount of the penalty

[1] Article 94 of the former Budget and Accounts Act (amended by Act No. 4868 of Jan. 5, 1995), Article 129 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 14710 of Jul. 6, 1995), Article 75 subparagraph 1 of the former Rules on the Management of Contract Affairs (amended by Ordinance No. 511 of Jul. 6, 1995) provide for matters necessary for the handling of contractual affairs to be observed by the relevant public officials in contractual relations between the State and the private person. In addition, the essential contents are nothing more than the internal rules of the State, and the provisions of the law and the principles of the law are applied as they are, unless there are special provisions in the law, so long as the provisions on compensation for delay in the law are deemed to be liquidated damages, the court may reduce the estimated amount to a more reasonable extent pursuant to Article 398 (2) of the Civil Act.

[2] Where there is an agreement between the contract performance deposit and the liquidated damages, it is reasonable to see that the contract performance deposit has the nature of penalty for breach of contract or penalty, and that the liquidated damages for delay shall be deemed as the liquidated damages.

[3] In cases where the calculation of liquidated damages is determined by multiplying the total amount of the contract by the liquidated damages rate, according to Article 398(2) of the Civil Code, where the estimated amount of liquidated damages is unreasonably excessive, the court may reduce the estimated amount of liquidated damages, and it is interpreted that the estimated amount of liquidated damages refer to the total amount of liquidated damages under the language and text. Thus, the issue of excessive liquidated damages shall be determined based on the total amount of liquidated damages.

[1] Article 398(2) of the Civil Code, Article 94 of the former Budget and Accounts Act (amended by Act No. 4868 of Jan. 5, 1995), Article 129 of the former Budget and Accounts Act (amended by Presidential Decree No. 14710 of Jul. 6, 1995), Article 75 subparag. 1 of the former Rules on the Management of Contract Affairs (amended by Ordinance of the Prime Minister No. 511 of Jul. 6, 1995) / [2] Article 398(2) of the Civil Code / [3] Article 398(2) of the Civil Code

[2] [3] Supreme Court Decision 95Da28526 delivered on December 12, 1995 (Gong1996Sang, 370) / [2] Supreme Court Decision 88Da6273, 88Da6280 delivered on July 25, 1989 (Gong1989, 1281) Supreme Court Decision 88Da25601 delivered on October 10, 1989 (Gong1989, 1658), Supreme Court Decision 95Da18376 delivered on September 5, 1995 (Gong195Ha, 3353) / [3] Supreme Court Decision 92Da41719 delivered on April 23, 1993 (Gong193Ha, 1953Ha, 1953)

The administrator of the reorganization Korea Co., Ltd. (Law Firm Han-dong Law Office, Attorney Park Jong-hee, Counsel for the plaintiff-appellant)

Republic of Korea (Attorney Go Young-deok, Counsel for defendant-appellant)

Seoul High Court Decision 94Na29401 delivered on January 19, 1995

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

The grounds of appeal are examined.

1. Summary of the judgment below

According to the reasoning of the judgment below, the court below comprehensively based on the following facts: (a) concluded a contract with the defendant for the delivery of one of the above 1,420,00,000,000 underwater exploration wire to the defendant on June 20, 1989; (b) constructed the above 1,420,000,000 won until August 19, 1990; (c) constructed the 55,00,000,000 won for comfortable transmission line until October 22, 1990 to deliver it to the defendant; (d) concluded that each of the delayed delayed payment damages should be paid to the defendant at the rate of 1.5 percent of the daily vessel price per 1989; (e) reported the above 20-day increase in the amount of damages for delay to the defendant on June 29, 192; and (e) reported the above 30-day increase in the amount of damages for delay to the defendant on the 20-day damages for delay of the above 290-day 293 days.

In other words, the plaintiff's delay in the construction of the ship of this case is a lot of causes for the labor-management regulations, and the defense materials ordered by the reorganization company from the position that the defendant should not become bankrupt shall be exempted from the compensation for delay equivalent to about 65.3 billion won at the defense industry council for the exemption from the compensation for delay, on the ground that there is no provision in relation to the construction contract of the ship of this case which is government-funded materials, and later, the ship of this case shall be excluded from the exemption from the exemption from the exemption from the exemption from the exemption from the exemption from the exemption from the exemption from the exemption from the exemption from the exemption from the exemption from the exemption from the exemption from the exemption from the exemption from the exemption from the exemption from the exemption from the exemption from the exemption from the exemption from the exemption from the liability for delay. In light of the fact that the plaintiff's delay in the construction of the ship of this case at the loan council of the relevant government agencies after being aware of it later, the amount of the compensation for delay of 1,432,500 won was accepted from the entrustment rate of the construction work of this case.

2. On the first ground for appeal

According to the provisions of Article 94 of the former Budget and Accounts Act (amended by Act No. 4868 of Jan. 5, 1995), Article 129 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 14710 of Jul. 6, 1995), Article 75 subparagraph 1 of the Rules on the Management of Contract Affairs (amended by Ordinance No. 511 of Jul. 6, 1995), where the other party to a contract delays the contractual obligations, the head of a central government agency or a public official delegated by him/her shall pay in cash the other party the amount calculated by multiplying the contract amount by 1.5/1,00 by the rate of 1.5/1,00 of the contract amount for the manufacture and purchase of the goods and the number of delayed days. This provision provides for matters necessary for the handling of contractual affairs to be observed by the relevant public official in a contractual relationship between the State and a private person, as well as the internal regulations of the State and the private person, and where the above provisions concerning liquidated damages are deemed to be applied by law.

In addition, if there is an agreement between the contract deposit and the liquidated damages for delay in performing the contract, the contract performance deposit has the nature of penalty for breach of contract or penalty, and it is reasonable to see the liquidated damages for delay as the liquidated damages (see Supreme Court Decisions 88Meu25601, Oct. 10, 1989; 88Meu6273, Jul. 25, 1989; 94Da32986, Sept. 30, 1994, etc.).

In this view, the court below is just in holding that the contract for shipbuilding of this case was entered into and agreed to include the contract deposit and the compensation for delay stipulated in the relevant Acts and subordinate statutes, such as the former Budget and Accounts Act, in the shipbuilding contract of this case, and therefore, the compensation for delay of this case shall be deemed to have the scheduled nature of compensation for damages, and it shall be reduced in accordance with Article 398 (2) of the Civil Act. There is no error in the misapprehension of legal principles

There is no reason to discuss this issue.

3. On the second and third points

Whether the estimated amount of compensation for delay is unreasonable or not shall be determined depending on whether the amount of compensation for delay exceeds the extent that the general public can understand, taking into account all the circumstances, such as the parties to the contract, the purpose and contents of the contract, the motive for the scheduled amount of compensation for delay, actual damages and the estimated amount of compensation for delay, comparison with the transaction practices and economic conditions at that time (see Supreme Court Decision 95Da28526, Dec. 12, 1995). According to the records, the court below acknowledged the occurrence of compensation for delay as mentioned in paragraph (1) above, and found that the reduced amount of compensation for delay is unreasonable as it is in accordance with the criteria for determination mentioned above, and there is no error of misapprehending the legal principles on the reduction of the amount of compensation for delay and the compensation for delay, as argued in the lawsuit (see Supreme Court Decision 63Da919, May 26, 1964, which cited the lawsuit).

In addition, if the theory of the lawsuit is agreed to calculate the liquidated damages by multiplying the total contract amount by the liquidated damages, as in this case, whether the rate of the liquidated damages for delay is excessive shall be determined in itself, and the rate of the liquidated damages for delay itself shall not be determined based on the total amount of the liquidated damages for delay only on the ground that the total amount of the liquidated damages has increased as the number of delayed days has increased. However, according to Article 398(2) of the Civil Act, where the estimated amount of the liquidated damages for delay is unreasonably excessive, the court may reduce the estimated amount of the liquidated damages appropriately, and the estimated amount of the liquidated damages for such time means the total amount of the estimated liquidated damages. Thus, the determination of the excessive amount of the liquidated damages for delay corresponding to the liquidated damages for delay shall be made based on

All arguments are without merit.

4. Therefore, the appeal is dismissed, and all 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 Ahn Yong-sik (Presiding Justice)