[1] The scope of joint and several sureties of a contract for construction works

[2] Where the joint and several sureties concludes a joint and several sureties agreement to perform the subcontractor's obligations under the subcontract agreement, and the Credit Guarantee Fund also concludes a credit guarantee entrustment agreement to secure the subcontractor's contract performance guarantee, the case holding that the Korea Credit Guarantee Fund and the joint and several sureties are in the position of a joint guarantor as to the monetary liability due to the subcontract for the subcontractor in relation to the subcontractor

[1] According to Article 52 of the Enforcement Decree of the Act on Contracts to Which a Party is a Party, where the head of a central government agency or a public official in charge of contracts intends to conclude a contract for construction, he/she shall have one or more joint and several sureties who guarantee the other party to the contract's performance of the contract. The liability to guarantee the joint and several sureties of the contract for construction works is limited to the execution guarantee unless there are special circumstances. However, the liability to guarantee the joint and several sureties of the contract for construction works must be determined by the interpretation of a legal act according to specific cases individually by taking into account various kinds of guarantee documents, contents of the contract, details of the contract

[2] The case holding that where the joint and several sureties entered into a joint and several sureties agreement to perform the subcontractor's obligation under the subcontract agreement, and the Credit Guarantee Fund also entered into a credit guarantee entrustment agreement to secure the subcontractor's contract performance guarantee, the Credit Guarantee Fund and the joint and several sureties are in the position of joint guarantor as to the monetary liability due to the subcontractor's subcontract in relation to the subcontractor's relationship with the subcontractor, and therefore the Credit Guarantee Fund can exercise the right to indemnity against the subcontractor under Article 448 of the Civil Act in case where the subcontractor fulfills the obligation of compensation due

[1] Article 52 of the Enforcement Decree of the Government Contracts Act, Article 448 of the Civil Code / [2] Article 52 of the Enforcement Decree of the Government Contracts Act, Article 448 of the Civil Code

[1] Supreme Court Decision 99Da20773 decided Oct. 8, 1999 (Gong1999Ha, 2295)

Han Ho-il, Inc. (Law Firm Ho & Min, Attorneys Han-gil, Counsel for the plaintiff-appellant)

(Attorney Yu Byung-il et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2003Na9522 delivered on September 17, 2003

The judgment below is reversed and the case is remanded to Seoul High Court.

1. The facts established by the court below are as follows.

(a) Large Asia Construction Co., Ltd. (hereinafter referred to as "large Asia Construction Co., Ltd.") established on April 2, 2001 (hereinafter referred to as "TTTex") 1, 416,500,000, 200, 300,000, 30,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,00,000,00,000,00,00,00.

B. Upon entering into each subcontract, the Plaintiff jointly and severally guaranteed the obligation under the subcontract agreement with the Large Asian Leisure Industry and the Haxex as a joint and several surety between the Large Asian Construction and Authorized Construction.

C. HyTex entered into the instant credit guarantee entrustment agreement with the Defendant for the payment of the contract performance deposit equivalent to 10% of the total construction cost, and around that time, issued a credit guarantee agreement with the Defendant, and delivered it to the Large Asia Construction Co., Ltd., a subcontractor.

D. After that, the Hytex Bab and the Kata Leisure Industry had been terminated in its entirety due to its financial standing that the said subcontract was unable to meet the obligations of the construction works under the subcontract.

2. Based on the above factual basis, the court below determined that, in light of the fact that the guarantee certificate issued by the guarantee organization of the Korea Credit Guarantee Fund, etc. as a means of payment of contract deposit in the instant subcontract agreement is selectively defined in cash and selective, it is reasonable to view that the intent of the parties concerned is equal to the cash payment of the contract deposit for the execution of contract by the Korea Credit Guarantee Fund, etc. and that the contract deposit is to be treated as securely secured by the contract deposit. Thus, so long as Htteteteteteteteteteteteteteteteteteteteteteteteteteex entered into a credit guarantee entrustment contract with the defendant to secure the payment of the contract deposit, and delivered a credit guarantee certificate issued by the defendant for the

3. However, it is difficult to accept the above judgment of the court below for the following reasons.

According to Article 52 of the Enforcement Decree of the Act on Contracts to Which the State is a Party, where the head of a central government agency or a public official in charge of contracts intends to conclude a contract for construction, he/she shall have one or more joint and several suretiess who guarantee the other party to the contract's performance of the contract. The liability for the guarantee of the joint and several sureties of the contract for construction works of the government agency is limited to the execution guarantee unless there are special circumstances. However, the liability for the guarantee of the joint and several sureties of the contract for construction works should be determined by the interpretation of legal act individually in consideration of various kinds of guarantee documents, contents of the contract, details of the

As determined by the court below, the plaintiff entered into a joint and several surety contract with the Danex Leisure Industry and the Hateex Industry jointly and severally with the subcontractor to perform the obligation under the subcontract agreement on construction and recognized construction. Since the subcontract was terminated due to the nonperformance of the Hateex Hyb and the Kate Leisure Industry, the plaintiff bears the obligation to guarantee the subcontractor as to the monetary obligation such as the Hateex Hyb and the liability for damages to the subcontractor. Meanwhile, the defendant also bears the obligation to guarantee the subcontractor in accordance with the credit guarantee contract. Thus, in relation to the subcontractor, the defendant and the plaintiff are in the position of joint guarantor as to the monetary obligation due to the Hate Tech Hyex's subcontract on the subcontractor. Accordingly, the defendant can exercise the right to indemnity against the plaintiff in accordance with Article 448 of the Civil Code.

Nevertheless, the court below erred in the misapprehension of legal principles as to the liability of the joint guarantor in the contract for construction works, which affected the conclusion of the judgment, and thus, the ground of appeal pointing this out has merit.

4. Therefore, the lower judgment is reversed, and the case is remanded to the lower court. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Jack-dam (Presiding Justice)