In a case where Party A, a local government, concluded an entrustment agreement with Party B for the operation of facilities, such as medical care centers, and agreed to receive corporate contributions, etc. from Party B, but the entrustment agreement is terminated due to the expiration of the period or termination of the agreement, the case holding that Party B’s liability to pay corporate contributions, etc. ceases to exist when the agreement becomes effective as above

In a case where Party A made an agreement with Party B to entrust the operation of the medical care center and welfare center facilities to the corporation, and the entrustment agreement is terminated due to the expiration of the period of validity or termination of the agreement, the case holding that Party B’s obligation to pay the corporation contributions or the fund transferred to the corporation only for the period of operation of the said facilities is extinguished, in light of all the circumstances, if Party B’s obligation to pay the corporation contributions or the fund transferred to the corporation is not effective due to the expiration of the period of operation of the said facilities

Article 105 of the Civil Act

Yongsan-gu Seoul Metropolitan Government (Attorney Han-hwan, Counsel for defendant)

National University of Education (Law Firm Sejong, Attorney Jeong Jong-soo, Counsel for defendant-appellant)

May 18, 2011

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

As to the Plaintiff KRW 458,50,000 and KRW 50,000 among them, the Defendant shall pay 5% per annum from January 1, 2008 to the service date of the duplicate of each of the instant complaint from January 1, 2009 and from January 1, 2010 to the service date of the duplicate of each of the instant complaint, from November 1, 2010 to the service date of the duplicate of each of the instant complaint, from November 1, 2010 to the service date of the duplicate of the application for modification of the purport and cause of the instant claim from November 1, 2010 to the delivery date of the duplicate of the application for modification of the purport and cause of the claim, and from the next day to the day of full payment to the day of full payment, 20% per annum.

1. Agreement on the entrustment of the medical care center and welfare center in this case;

A. On October 30, 2007, the Plaintiff entrusted the operation of the public medical care center for the elderly in Yongsan-gu established by the Plaintiff to the Defendant (hereinafter “instant medical care center”) as follows (hereinafter “instant medical care center agreement”).

An entrustment agreement on the operation of the Gu Medical Care Center for Older Persons;

Article 3 (Period of Entrustment)

(1) The period of entrustment shall be from October 30, 2007 to October 29, 2010 (three years).

(2) Where the defendant intends to renew an agreement upon the expiration of the entrustment period, he/she shall file an application with the plaintiff six months prior to the expiration

Article 8 (Subsidization, etc. of Operating Expenses)

(1) The Plaintiff shall subsidize operating expenses according to the standards for subsidization by the National Treasury and the Seoul Metropolitan Government, and the Defendant shall collect actual expenses and operate them within the extent prescribed in Article 6, but shall, in principle, be operated with the corporation contributions (the annual operating expenses of 120,000 won from 208 to 360,000 won) and other support payments presented at the time of application for consignment by the medical care center.

Article 13 (Termination, etc. of Agreement)

1. When any of the following grounds arises, the Plaintiff may terminate this Agreement. In such cases, the Plaintiff shall give the Defendant an opportunity to state his/her opinion:

1. Where the defendant fails to fulfill or violates the obligations and terms of agreement under Article 8;

2. When the defendant is deemed incapable of performing his/her business objectives.

3. When a ground that the plaintiff is unable to continue the entrusted operation for public interest arises.

4. When the operation cannot be continued due to other force majeure such as natural disasters.

(2) When the plaintiff intends to terminate an agreement pursuant to paragraph (1) 1, he/she shall notify the defendant of the reason in writing three months prior to the termination.

B. The Defendant paid to the Plaintiff KRW 20,000,000 for the first half of the year 2008, and KRW 50,000,000 for the second half of the year 2008. The medical care center of this case occurred in 120,940,800 for the first half of the year 2008, and KRW 160,571,329 for the first half of the year 2008 and used as operating expenses carried over to the Plaintiff.

C. On April 12, 2010, May 3, 2010, the Plaintiff notified the Defendant to the effect that the Plaintiff would not make an agreement to renew the operation of the instant medical care center to the Plaintiff on June 8, 2010, and that the instant medical care center agreement would terminate on October 29, 2010, and the Defendant would normally operate the instant medical care center from July 2008 to October 29, 2010.

D. On July 28, 2009, the Plaintiff entered into an agreement with the Defendant on the consignment of the management and operation of the Public Service Center for Persons with Disabilities established by the Plaintiff (hereinafter “instant welfare center”) as follows (hereinafter “instant agreement”).

The agreement on the entrusted operation of the Yongsan-gu Seoul Metropolitan Government Integrated Welfare Center for the Disabled.

Article 4 (Period of Entrustment)

(1) The period of entrustment of a welfare center under this Convention shall be from July 28, 2009 to July 27, 2012 (three years).

(2) Where the defendant intends to renew an agreement upon the expiration of the entrustment period, he/she shall file an application with the plaintiff six months prior to the expiration

Article 9 (Provision and Execution of Project Costs)

1. The Plaintiff shall pay the expenses incurred in this project (hereinafter referred to as “project expenses”) to the Defendant quarterly, and the amount shall be determined by the Plaintiff in consideration of the Plaintiff’s budget and the Defendant’s

(2) The defendant shall use project costs according to the purpose and use determined by the plaintiff, and shall manage and execute them in compliance with relevant Acts and subordinate statutes, such as the Budget and Accounts, the Local Finance Act, the Seoul Metropolitan Government Subsidy Management Ordinance, the Yongsan-gu Seoul Metropolitan Government

(3) The defendant shall open a separate account to manage project expenses and appoint a person in charge of accounting.

(4) The defendant shall implement 2.1 million won as a whole from a corporation, which was presented in the original business plan in connection with the operation of the welfare center without fail within the entrustment period.

Article 13 (Termination, etc. of Agreements)

(1) When a plaintiff or defendant intends to terminate or cancel an entrustment agreement in the middle of the commissioning agreement (hereinafter referred to as "cancellation, etc."), he/she shall notify the other party of the reasons therefor not later than two months prior to the scheduled date of termination,

(2) The plaintiff may terminate the agreement, etc. in any of the following cases:

1. Where the defendant fails to implement or violates the agreement;

2. Where the Plaintiff acknowledges that the Defendant is incapable of running its business.

3. Where a ground arises where the entrustment of public interest cannot be continued to the defendant.

4. Where a natural disaster or other force majeure occurs.

(3) When the plaintiff intends to terminate the agreement on the grounds of paragraph (2) 1 and 2, he shall give the defendant an opportunity to state his opinion in advance.

(4) Where an agreement is terminated due to any cause or event set forth in subparagraphs 1 through 2 of paragraph (2), the defendant may not claim damages, etc. from the plaintiff.

E. The Defendant paid to the Plaintiff KRW 41,450,000,000 on October 5, 2009, and KRW 11,450,000 from April 19, 201 to July 28, 2010. The transferred money paid to the Plaintiff was used for the initial operating expenses of the instant welfare center, the special bonus of the employees of the welfare center, and the production of souvenirs for the Disabled Person’s Day.

F. On August 30, 2010, the Defendant notified the Plaintiff of the termination of the instant entrustment agreement with the instant welfare center, and accordingly, the instant entrustment agreement with the welfare center was terminated on October 31, 2010, and the Defendant normally operated the instant welfare center from July 28, 2008 to October 31, 2010, and the Plaintiff notified the Defendant of the payment of transferred money to a corporation under the instant entrustment agreement with the welfare center on January 21, 201.

[Reasons for Recognition] Uncontentious Facts, Gap's evidence 2 through 9, Eul's evidence 1, 2, 3, and 8 (including virtual numbers), and the inquiry results to the head of Yongsan-gu, the purport of the whole pleadings

2. The plaintiff's assertion

The Defendant is obligated to pay the Plaintiff the unpaid amount of 290,00,000 won for the unpaid amount of corporation contributions, and the unpaid amount of 168,50,000 won for the transferred amount of corporation and the delayed payment damages for each of the above amounts, as stipulated in Article 9(4) of the entrustment agreement of the Welfare Center, as stipulated in Article 8(1) of the entrustment agreement of the instant medical center.

3. Determination

The above-mentioned facts and the evidence cited in the above-mentioned circumstance, i.e., (i) the agreement was terminated due to the expiration of the period when the defendant normally operated the medical care center during the agreed period. In the case of the welfare center of this case, the defendant normally operated the medical care center until the termination of two months prior to the termination notice by the defendant under Article 13(1) of the instant entrustment agreement; (ii) the medical care center of this case can terminate the agreement on the grounds of termination under Article 13(1)1 of the instant entrustment agreement. In the case of the welfare center of this case, the plaintiff could terminate the agreement by notification of termination two months prior to the date of termination pursuant to Article 13(1) of the instant entrustment agreement; and (ii) the defendant's duty to pay the medical care fees of this case or transferred money to the medical care center of this case can not be terminated due to the reasons for termination under Article 13(2)1 of the instant entrustment agreement, and thus, it is difficult for the defendant to interpret the agreement or transferred money to the medical care center of this case.

4. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

Judges Kim fixed-soo (Presiding Judge)