[1] The case where the obligation to return advance payment is not included in the scope of joint liability borne by each member of the joint contractor to the project owner

[2] Where a guarantee insurance contract has been concluded separately in addition to a guarantee contract for the same obligation to return an advance payment, whether the liability to pay a guarantee deposit to the guarantor's guarantee creditor is limited by the insurer's obligation to pay insurance proceeds under an insurance contract (negative)

[3] In a case where a contractor has to return advance payment during the Do due to the cancellation, termination, etc. of a contract for construction works, whether advance payment is naturally appropriated for the pre-paid construction cost without any separate declaration of offset (affirmative) and the standard for calculating the content of pre-paid construction cost to be appropriated for advance payment

[1] Even if the members of a joint contractor jointly and severally liable for the performance of the obligations under the contract against the project owner, if the contents of the contract do not explicitly stipulate the obligations of other members with regard to the obligation to return advance payment, and if the contract is a document to be submitted by the contractor as a security for the repayment of advance payment, and its collateral is limited to the insurer's guarantee insurance policy or construction mutual aid association's guarantee letter, etc., the scope of each member of the joint contractor's liability does not extend to the obligation to return advance payment, barring any special circumstance, the member of the joint contractor shall not be liable for the obligation to return advance payment of other

[2] Unless there is any special agreement on the sole ground that the contractor, while entering into a contract for work with the contractor, entered into a guarantee agreement for the guarantee of the obligation to return the advance and entered into the guarantee insurance contract for the repayment of the advance with any other insurer, the guarantor’s deposit to be paid to the guarantee creditor is not limited by the insurer’s obligation to pay insurance money under the other insurer’s insurance contract.

[3] In light of the nature of advance payment in the contract for construction work, if a contractor had the reason to return advance payment while the contract for construction work was rescinded or terminated after the advance payment was made, such advance payment is naturally appropriated for the construction work cost corresponding to the nature of the advance payment until the time when the contract was rescinded or terminated, barring any special circumstances. However, in the case of guarantee contract for the return of advance payment, the guarantor guarantees the principal obligor’s performance of the obligation to return advance payment. Thus, the existence and scope of the cause for the payment of advance payment should be determined based on the contents of the contract that is the object of the relevant guarantee. Thus, how to determine the content of advance payment should be in accordance with the contract agreement between the parties to the contract.

[1] Articles 105 and 413 of the Civil Act / [2] Articles 428 and 429 of the Civil Act / [3] Articles 105, 492, and 664 of the Civil Act

[1] Supreme Court Decision 2001Da61623 Decided January 25, 2002 (Gong2002Sang, 570) Supreme Court Decision 2001Da14337 Decided August 23, 2002, Supreme Court Decision 2004Da12561 Decided July 8, 2004 / [3] Supreme Court Decision 99Da5519 Decided December 7, 199 (Gong2000Sang, 148) Supreme Court Decision 201Da49395 Decided September 23, 2003

Cheongnam-do (Attorney Han-hee, Counsel for the defendant-appellant)

Construction Financial Cooperative (Attorney Im-soo et al., Counsel for the plaintiff-appellant)

Changduk C&C

Seoul High Court Decision 2001Na6857 delivered on October 30, 2002

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

1. We examine the grounds of appeal by the Defendant and the Intervenor joining the Defendant.

A. As to the grounds of appeal Nos. 1, 3, and 4

Even if the members of a joint contractor are jointly and severally liable for the performance of the contractual obligation to the project owner, if the contents of the contract do not expressly stipulate the obligations of other members with respect to the obligation to return advance payment, and if the contract is a document to be submitted by the contractor as a security for the repayment obligation, and its collateral is sufficient, such as the insurer's guaranty insurance policy or the construction mutual aid association's guarantee letter, etc., the scope of each member of the joint contractor's liability does not extend to the obligation to return advance payment, barring any special circumstance, the member of the joint contractor shall not be liable for the other members' obligation to return advance payment (see Supreme Court Decisions 2001Da61623, Jan. 25, 2002; 2001Da14337, Aug. 23, 2002, etc.).

The court below, based on its adopted evidence, found that the plaintiff was awarded a contract for the construction of ○ High School Teachers on three occasions to non-party comprehensive construction company (hereinafter referred to as "non-party comprehensive construction company") and senior comprehensive construction company (hereinafter referred to as "sub-party comprehensive construction"), and that the above contract was a joint contract for the construction of ○ High School Teachers. The above contract was selected as the representative of 'joint execution method'. While the non-party joint supply and demand the plaintiff to pay the advance, the non-party joint supply and demand the plaintiff not to receive the advance payment, the plaintiff paid the advance payment only for the non-party joint supply and demand that the non-party joint supply and demand company will return the advance payment to the plaintiff, the non-party joint supply and demand company and the non-party joint supply and demand company will be liable for the return of the advance payment to the plaintiff, the non-party joint supply and demand company and the non-party joint supply and demand company will be liable for the return of the advance payment to the plaintiff, the non-party joint supply and demand company will not return the advance payment.

In light of the above legal principles and records, the above fact-finding and decision of the court below is just and there is no error of law such as misconception of facts or incomplete hearing due to violation of the rules of evidence, misunderstanding of legal principles as to the validity of advance payment, and misunderstanding of legal principles as to the good faith principle, as otherwise alleged in the ground of appeal.

B. Regarding ground of appeal No. 2

Unless otherwise expressly agreed, the contractor who received advance payment and entered into a guarantee insurance contract with any other insurer as to the guarantee obligation for the return of advance payment and separately agreed upon the guarantee insurance contract with any other insurer. According to the records, the defendant, when entering into a guarantee contract for Sam Jong case and the advance payment, only agreed to guarantee the amount equivalent to the advance payment to be returned to the plaintiff who is the guarantee creditor, within the scope of the guarantee deposit stated in the guarantee contract, and it is not recognized that the defendant agreed to share the liability according to the ratio of the deposit and the insurance amount stipulated in the guarantee insurance contract entered into with the guarantee insurance company with the third party. Thus, the defendant, a third party guarantor, under the above legal principles, assumes that the plaintiff has the same obligation to return the advance payment to the plaintiff within the scope not exceeding the guarantee amount, and there is no error in the misapprehension of legal principles as to the return of advance payment and the amount already paid to the plaintiff, and there is no error in the misapprehension of legal principles as to the remaining amount of advance payment and the amount already paid to the plaintiff.

C. Ex officio determination on damages for delay

The portion of "interest rate prescribed by Presidential Decree" in the main sentence of Article 3 (1) of the Act on Special Cases concerning Expedition, etc. of Legal Proceedings before the amendment (amended by Act No. 6868 of May 10, 2003) was decided as unconstitutional on April 24, 2003, and thereafter the amended provisions of the above Act and the main sentence of Article 3 (1) of the Act on Special Cases concerning Expedition, etc. of Legal Proceedings (amended by Presidential Decree No. 17981 of May 29, 2003) provide that the statutory interest rate applicable after June 1, 2003 shall be 20% per annum for cases pending at the court at the time of the enforcement of the above amended Act. Thus, the court below erred by applying the above amended Act to the amount cited by the court below at the rate of interest rate of 15% per annum from September 23, 1998 before the enforcement of the above amended Act to May 31, 2003.

2. The plaintiff's grounds of appeal are examined.

The court below rejected the Plaintiff’s assertion that, with regard to the Plaintiff’s assertion that the advance payment should be settled after deducting KRW 139,609,600, which the Plaintiff is obligated to pay directly to the subcontractor as the pre-payment for the pre-payment for the pre-payment for the pre-payment for the pre-payment for the pre-payment for the pre-payment for the pre-payment for the pre-payment for the pre-payment for the pre-payment for the pre-payment for the pre-payment for the pre-payment for the pre-payment for the pre-payment for the pre-payment for the pre-payment, the pre-payment is the pre-payment for the pre-payment for the pre-payment to the contractor without difficulties in securing materials and paying wages. In light of the fact that the pre-payment for the pre-payment is the pre-payment for the pre-payment for the pre-payment for the pre-payment for the pre-payment for the reasons that the pre-payment was rescinded or terminated, or that the pre-payment was made for breach of the terms and conditions of the pre-payment for the pre-payment.

However, we cannot accept the above judgment of the court below for the following reasons.

In light of the nature of advance payment in a construction contract, if a contractor had to return advance payment while the contract was rescinded or terminated after the advance payment was made, barring any special circumstance, it is determined by the court below that advance payment should be appropriated as a matter of course for the construction work amount equivalent to the amount of the advance payment up to the time such advance payment was made even without the declaration of set-off. However, in the case of a guarantee contract for return of advance payment, the guarantor guarantees the performance of the principal obligor's obligation to return advance payment, and the existence and scope of the cause for the payment of such advance payment should be determined based on the terms of the contract for the relevant guarantee. Therefore, how to determine the details of the advance payment subject to advance payment should be in accordance with the agreement between the parties to the contract.

According to the records of this case, Article 43 (1) of the General Conditions of the Construction Contract between the plaintiff and the non-party to the contract for the second construction project of this case provides that "if the other party to the contract becomes unable to pay the subcontractor the subcontract price due to bankruptcy, dishonor, etc., the other party to the contract shall be deemed to have requested the subcontractor to pay the price." Article 44 (5) provides that "if the other party to the contract has cancelled or terminated the contract under paragraph (1), the other party to the contract shall pay the balance of the pre-paid payment in addition to the agreed amount of the pre-paid payment." In this case, if the other party to the contract has settled the balance of the pre-paid payment under Paragraph (1) of this Article, the non-paid payment shall be set off in the pre-paid payment under the general conditions of the construction contract of this case."

Therefore, the court below should have deliberated on whether the subcontract price of the plaintiff's assertion of the second construction is the amount that the plaintiff should pay to the sewage supplier in accordance with Article 43 (1) of the General Conditions of the Construction Contract. Based on this, the court below should have calculated the scope of advance payment to be returned to the plaintiff according to the contract of this case as to the method of settlement of advance payment. However, the court below rejected the plaintiff's assertion that the plaintiff's direct payment should be deducted from the advance payment of the third-party non-settlement advance payment. This judgment below erred by misapprehending the legal principles on the method of settlement of advance payment, which affected the conclusion of the judgment. Thus, the ground of appeal pointing this out is with merit.

3. Conclusion

Therefore, the part of the judgment below against the defendant regarding the part against the plaintiff and damages for delay shall be reversed, and this part of the case shall be remanded to the court below. It is so decided as per Disposition by the assent of all participating Justices

Justices Ko Hyun-chul (Presiding Justice)