Methods of interpreting the contract clauses to which the State is a party;

Article 11 of the Act on Contracts to Which the State is a Party; Article 105 of the Civil Act

Plaintiff (Law Firm Young, Attorney Kim In-soo, Counsel for the plaintiff-appellant)

Korea

Seoul Central District Court Decision 201Na28532 Decided January 12, 2012

The judgment of the court below is reversed, and the case is remanded to the Seoul Central District Court Panel Division.

We examine the grounds of appeal.

1. According to the reasoning of the judgment below, after compiling the adopted evidence, the court below acknowledged the facts as stated in its reasoning, and established the general conditions that "a contracting officer may enter into a contract by setting special conditions, if necessary for the proper implementation of the contract in addition to the matters stipulated in the Acts and subordinate statutes concerning contracts to which the State is a Party, goods-related Acts and subordinate statutes, and the contract general terms and conditions" (Article 3(2)), and at the same time, "the special conditions shall not be deemed effective in cases where any restriction on the contractual interests of the other party to the contract under the Acts and subordinate statutes concerning which the State is a Party is prescribed in special conditions" (Article 3(3)). Meanwhile, in the Enforcement Decree of the State Contracts Act and the Enforcement Rule of the State Contracts Act, the court below determined that the amount calculated by multiplying the amount calculated at the rate of 1.5/100 of the contract amount by the number of days in case of purchase of the same goods as this case, separately from the compensation for delay calculated as above, "management loss" is restricted by the Plaintiff's special provisions 37(3).

In addition, in light of the general conditions as well as the grounds for the conclusion of special conditions, the scope or limitation thereof, it is reasonable to deem that the general conditions prevail, and in interpreting Article 3(1) of the Special Conditions providing that “other contract documents shall be governed by the special conditions”, “other contract documents” shall be included in the general conditions, and if such special conditions different from the general conditions prevails with the general conditions, Article 3(1) of the aforementioned special conditions shall be deemed null and void pursuant to Article 3(3) of the General Conditions, combined with Article 7(3) of the Special Conditions on COS management Loss, which limits the interest of the other party to the contract as stipulated in the relevant Acts and subordinate statutes or the general conditions, and thus, it shall be deemed null and void pursuant to Article 3(1) of the Enforcement Decree of the State Contracts Act, and Article 4 of the Enforcement Decree of the State Contracts Act shall not be amended to the date of enactment in 195, which restricts the other party’s interest without the consideration of the general conditions’s claim to be null and void.

2. However, the above determination by the court below is difficult to accept.

A. A contract to which the State is a party is not different from a contract between private persons, and thus, except as otherwise provided in the Act and subordinate statutes, the provisions of the law and the principles of the law are applied as they are. If the content of the contract is clearly revealed to exclude the provisions of the State Contracts Act, or is not contradictory thereto, it shall be interpreted to supplement or specify the provisions of the State Contracts Act, i.e., the content of the relevant provision of the State Contracts Act, in order

B. However, Article 4 of the former Enforcement Decree of the Act on Contracts to Which the State is a Party (wholly amended by Presidential Decree No. 21480, May 6, 2009; hereinafter “Enforcement Decree of the State Contract Act”) provides that “the head of each central government agency or a public official delegated or entrusted by him/her (hereinafter “public official in charge of contracting”) shall not unfairly restrict the contractual interests of the other party provided for in the Act, this Decree, and the relevant Acts and subordinate statutes, or set any special terms or conditions, upon entering into a contract.” Article 3(2) of the General Conditions for the purchase of goods provides that “a public official in charge of contracting may enter into a contract by setting the special conditions for the purchase of goods, if necessary for the proper performance of the contract, other than those stipulated in the Act on Contracts to which the State is a Party, the Enforcement Decree of the Act on Contracts to which the State is a Party, and the other party’s contractual interests are restricted under the said special conditions” and Article 4(3) of the State Contracts Act provides that the purchase of goods shall not be effective.

C. Meanwhile, the special terms and conditions of a purchase contract are concluded for the appropriate implementation of the contract in addition to the general terms and conditions of the contract stipulated in the relevant Acts and subordinate statutes or the general conditions of the purchase contract under Article 3(2) of the general conditions of the purchase contract. Thus, if interpreting that the “general conditions” is excluded from the “other contract documents” under Article 3(1) of the special conditions of the purchase contract, there is a risk of excluding the “general conditions” for the purpose of stipulating the special conditions of the purchase contract, and the nature of the contract to which the State is a party does not differ from the contract between the private parties, there is no reason to exclude the “other contract documents” under Article 3(1)

D. Therefore, the court below should have deliberated and judged whether Article 7(3) of the Special Conditions of this case unfairly limits the contractual interest of the contracting party, and then should have determined whether to reject the defendant's assertion based on the result of the deliberation. However, the court below erred by misapprehending the legal principles on the interpretation of Article 3(3) of the General Conditions of this case, which affected the conclusion of the judgment.

E. Furthermore, since the agreement on liquidated damages for delay may be made several times on one contract, whether the liquidated damages for delay are unfairly excessive shall be determined on the basis of the total liquidated damages calculated on the basis of the agreed rate of liquidated damages for delay.

3. Conclusion

Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee In-bok (Presiding Justice)