[1] The meaning of "where reasons for a judgment are not indicated in the judgment," which is an absolute grounds for appeal under Article 424 (1) 6 of the Civil Procedure Act, and the purport of the law requiring entry of reasons for a judgment

[2] Purport of the “predetermined amount of damages” under Article 398 of the Civil Act, and in the event of liquidated damages at the time of the contract, whether the damages exceeding the predetermined amount may be separately claimed (negative)

[3] The meaning of "in cases where the estimated amount of damages is unreasonably excessive" under Article 398 (2) of the Civil Code, and whether it is necessary to examine and determine the actual amount of damages in determining whether the estimated amount of damages is unreasonably excessive (negative)

[4] The case holding that it is unlawful for the court below to reduce the estimated amount of compensation for damages to a lower amount than ordinary damages that the court below acknowledged

[1] Article 424(1)6 of the Civil Procedure Act / [2] Article 398 of the Civil Act / [3] Article 398(2) of the Civil Act / [4] Article 398(2) of the Civil Procedure Act

[1] Supreme Court Decision 92Da5770 delivered on March 3, 1995 (Gong1995Sang, 1550), Supreme Court Decision 2001Da81245 delivered on May 28, 2004 (Gong2004Ha, 1050), Supreme Court Decision 2004Da62597 Delivered on May 26, 2006 (Gong2006Ha, 1145) / [2/3] Supreme Court Decision 92Da41719 delivered on April 23, 1993 (Gong193Ha, 1528) / [3] Supreme Court Decision 95Da3658 delivered on November 10, 195 (Gong195Ha, 395Ha, 207Da325427 delivered on May 26, 207)

(1) A person who intends to obtain permission from the head of a Si/Gun/Gu may obtain permission from the head of a Si/Gun/Gu

Seoul Metropolitan Government Metropolitan Government Urban Railroad Corporation (Attorney Jeong-soo, Counsel for defendant)

Seoul High Court Decision 2006Na64964 decided January 26, 2007

The part of the lower judgment against the Defendant is reversed, and that part of the case is remanded to the Seoul High Court. The Plaintiff’s appeal is dismissed.

Each ground of appeal is examined.

1. Plaintiff’s ground of appeal

A. As to the grounds of appeal Nos. 1 and 2

Article 424 (1) 6 of the Civil Procedure Act does not state the grounds for a judgment, which is an absolute grounds for appeal under Article 424 (1) 6 of the Civil Procedure Act, refers to cases where the reasons for the judgment are not entirely stated, or part of the reasons is omitted, or where it is unclear how the court recognizes the facts and interpreted and applied the laws and regulations, and thereby it is unclear whether the court has reached the order (see, e.g., Supreme Court Decision 2001Da81245, May 28, 2004). The purport of the law allowing the court to state the reasons for the judgment is to verify facts and the selection, application, and the rationality and objectivity of the theory of prosecution conducted in the trial process in order to ensure that the decision process is not unreasonable or subjective by applying the laws and regulations acknowledged by evidence.

In light of the above legal principles and records, the court below recognized the facts and circumstances as stated in its decision after compiling the adopted evidence, and based on this, it is justified to determine that the defendant's ordinary damages incurred by the termination of the contract of this case due to the termination of the contract of this case was equivalent to the advertising fee for the above two months after the contract of this case was terminated for a considerable period of time expected to normally be required in order to conclude the advertisement agency contract with the follow-up advertising agency. There is no violation of the rule of experience or lack of reason, as otherwise alleged in the ground

B. Ground of appeal No. 3

Although the court below acknowledged that the defendant's ordinary damages due to the termination of the contract of this case amounting to KRW 1,53,563,563,536, which is the amount equivalent to the advertising fees for the two-month period, the plaintiff asserts that the amount of the estimated damages, which is the amount equivalent to the damages for the previous two-month period, was reduced to KRW 1,50,000,000,000,000,000,000,000,000,000,000,000,00,00

However, as seen below in the judgment on the Defendant’s grounds of appeal, the court below’s determination on the reduction of the estimated amount of damages of this case is erroneous in the misapprehension of legal principles or incomplete hearing.

C. Regarding ground of appeal No. 4

According to the records, the plaintiff asserted in the court below that the advertising agency contract of this case constitutes a long-term continuing contract as stipulated in Article 50 (3) of the Enforcement Decree of the Act on Contracts to Which the State is a Party, with the plaintiff's statement in the brief dated November 20, 2006, the plaintiff has a duty to return the annual contract deposit amount to the defendant, and the court below did not make any particular decision.

However, “Long-term Continuous Contracts” under the Act on Contracts to which the State is a Party is “Long-Term Contracts” (Article 21 of the above Act) and “a contract which needs continuous existence for several years or requires several years to be performed due to its nature, such as the supply of rent, transportation, storage, electricity, gas, and water,” and “a contract which requires several years of performance” (Article 21 of the above Act). In accordance with the Enforcement Decree of the above Act, the method of concluding the contract, the payment and return of the contract deposit, the warranty period, and the payment method of the warranty bond. In light of the evidence and records duly admitted by the court below, the advertising agency contract of this case is deemed a general contract with three years of contract term, and it does not constitute a long-term contract contract as provided in the above Act, and thus, the above assertion by the plaintiff of this case is ultimately rejected. Accordingly, the omission of judgment by the court below does not affect

2. As to the Defendant’s ground of appeal

A. According to the judgment below, the court below acknowledged the following facts and circumstances as stated in its reasoning, including that the ordinary damages incurred to the defendant due to the termination of the contract of this case due to the termination of the contract of this case is equivalent to KRW 1,533,563,536, which is an advertising fee for two months, after the termination of the contract of this case, and that the defendant would normally be required to enter into the advertisement agency contract with the subsequent advertising agent, for a considerable period of time that is expected to be ordinarily required to enter into the advertisement agency contract of this case. The court below determined that the amount of KRW 2,459,360,730 of the contract of this case should be excessively excessive to vest the defendant as the estimated amount for compensation for damages

B. Under Article 398 of the Civil Act, an estimate of the amount of damages as provided for in Article 398 of the same Act is set for the purpose of reducing the difficulty in proving the amount of damages and preventing disputes beforehand to resolve the legal relationship. In the event of liquidated damages at the time of a contract, as well as ordinary damages incurred by nonperformance and special damages, and even if the obligee’s damages exceed the estimated amount of damages, the obligee may not separately claim an excessive amount of damages. In addition, Article 398(2) of the Civil Act provides that where the estimated amount of damages is unreasonably excessive, the court may reasonably reduce the estimated amount of damages. In this context, the term “unfair excessive amount” means that the obligee and obligor’s status, purpose and contents of the contract, the estimated amount of damages, the ratio of estimated amount of damages to the amount of debts, the estimated amount of damages, the amount of damages at the time of the contract, and the actual amount of damages to be paid should be determined based on the concept of general society, referring to cases where it is deemed that there is a need to determine the actual amount of damages to be 200 or 40.

C. According to the evidence and records admitted by the court below, the plaintiff examined the bidding conditions and contents in the competitive bidding on the subway 5 stations and the advertising agency in the tea, which the defendant implemented, in advance, and concluded the contract of this case after receiving a successful bid in response to the bidding. The contract of this case constitutes liquidated damages, and the contract of this case is set at 10% of the total contract amount which can be called as general transaction practices. The contract of this case as the contract contract of this case, the contract of this case must be appropriated for expenses for vicarious execution of removal of advertisements and other damages claims, as well as advertising fees, delinquent amount, overdue amount, unpaid electricity charges and taxes, etc. When the contract of this case is terminated, and after the contract of this case was terminated on December 24, 1997, the defendant was actually at least six months after the contract of this case, and the contract of this case was terminated on July 16, 1998. In addition to the new advertising agency contract of this case, the contract amount of this case was ordinarily reduced to 360 million won, more than the new advertising contract of this case's.

In light of the above circumstances and the above legal principles, the court below should determine whether to allow the plaintiff to pay the whole amount of the contract bond of this case to the defendant in relation to the termination of the contract of this case, which is equivalent to the estimated amount of compensation for damages, by giving unfair pressure to the plaintiff in the position of the economically weak, in light of all the circumstances such as the status of the plaintiff and the defendant, the purpose and contents of the contract of this case, the motive for determining the contract bond amount of this case, the ratio of the contract bond amount to the total contract amount, the defendant's expected damages and actual damages caused by the termination of the contract of this case which appears in the record, and the transaction practices and economic conditions at the time, etc.

3. Therefore, without further review of the Defendant’s remaining grounds of appeal, the part against the Defendant among the judgment below against the Defendant is reversed and remanded to the court below for further proceedings consistent with this Opinion. The Plaintiff’s appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Nung-hwan (Presiding Justice)