[1] In a case where continuous termination of a contract is recognized, and where a certain size of facilities is required for the performance of a contract, and where a continuous supply contract is anticipated for a relatively long-term transaction, the standard for determining whether there is a significant reason to expect the continued existence of the

[2] In a case where the issue was whether the urban gas supply contract entered into with the urban gas company Gap, which entered into with the urban gas company Eul, was lawfully terminated by the council of occupants' representatives, the case holding that the judgment below erred by misapprehending the legal principles as to the continuous termination of the contract, even though it is difficult to recognize the termination of the contract on the grounds that the existence of the contract was not expected due to

[1] A continuous contract is based on the trust relationship between the parties. When the trust relationship, which forms the basis of the contract, is destroyed due to the party’s unfair conduct, etc. during the contract in question, and there is a serious reason to expect the continuance of the contract, the other party may terminate the contract to the future. On the other hand, in the case of continuous termination of the contract in question, where a certain size of facilities is required for the continuous performance of the contract, and a continuous supply contract is expected for a relatively long period of time, whether there is a serious reason for not expecting the existence of the contract should be determined by comprehensively taking into account all the circumstances such as the circumstance leading up to the conclusion of the contract, the relationship between the supplier and the consumer, the degree of facilities installed by the supplier for the performance of the contract, the possibility of restoring

[2] The case holding that the judgment below erred in the misapprehension of legal principles as to continuous termination of a contract, although it is difficult to recognize termination of a contract on the grounds that the contract would not continue to exist for a considerable period of time, considering the following: (a) in the case where the council of occupants' representatives entered into with the urban gas company A for the purpose of destroying the trust relationship between the parties to the contract; (b) in order to secure the trust that the company would supply urban gas to the apartment for a considerable period of time after the contract; (c) in order to provide the urban gas pipeline construction to the outside boundary of the apartment immediately after the contract; and (d) in order to support the council of occupants' representatives, the maintenance project cost in the apartment complex was paid to the council of occupants' representatives; and (e) Gap's council of occupants' representatives also gives the company B with trust in the fact that the contract would continue to exist for a considerable period of time by preparing a written consent to use the site with the consent

[1] Article 543 of the Civil Code / [2] Article 543 of the Civil Code

[1] Supreme Court Decision 2010Da48165 Decided October 14, 2010

Jeju City Gas Co., Ltd. (Law Firm Maumo, Attorneys Go Sung-sung et al., Counsel for defendant-appellant

The council of occupants' representatives of the relative forest apartment (Attorney Kang Jong-hun, Counsel for defendant-appellant)

Gwangju High Court ( Jeju) Decision 2010Na417 decided June 29, 2011

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

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. As to the continuous termination of a contract

A. A continuous contract is based on the trust relationship between the parties. When the trust relationship, which forms the basis of the contract, is destroyed due to the party’s unfair conduct during the contract in question, and there is a serious reason to expect the continuance of the contract, the other party may terminate the contract in question to the future (see, e.g., Supreme Court Decision 2010Da48165, Oct. 14, 2010). Meanwhile, whether there is any serious reason for the continuous termination of the contract in question, which requires facilities of a certain size for the performance of the contract during the continuous contract in question, and is not expected to continue the contract for a relatively long time, should be determined by comprehensively taking into account all the circumstances such as the circumstance leading up to the conclusion of the contract, the relationship between the supplier and the user, the content of the supply contract, the degree of facilities installed by the supplier for the performance of the contract, possibility of restoring installed facilities, the degree of implementation of the contract, and the process leading

B. In the instant case, the Plaintiff unilaterally rescinded the instant contract on the ground that the Defendant unilaterally rejected the instant contract, and sought compensation for damages equivalent to the cost of installing the gas pipeline due to nonperformance, as well as for damages equivalent to the operating profit that could have been accrued if the Plaintiff performed the instant contract.

The court below rejected the plaintiff's claim on the ground that it is difficult to recognize the defendant's non-performance of obligation, etc. asserted by the plaintiff, since the contract of this case was lawfully terminated by the defendant's termination on the ground that the trust relationship between the parties

C. However, examining the records in light of the above legal principles, it is difficult to accept such judgment of the court below for the following reasons.

First, the lower court cited as the main ground for termination that the instant apartment 317 occupants of the instant apartment site in the vicinity of the site to be installed with an exclusive pressure apparatus for the supply of urban gas are unable to install a static pressure apparatus by opposing the installation of static pressure apparatus due to the increase in risk of explosion. However, as long as the gas supply contract was an essential device for the supply of urban gas, the Defendant, as a consumer, should bear the burden of installing static pressure apparatus on the instant apartment site. In concluding the instant apartment site, the Defendant, upon entering into the instant contract, agreed to prepare a written consent to the Plaintiff to install static pressure apparatus on the instant apartment site and agreed to pay the Plaintiff KRW 20 million to the Defendant for the use of the site, and such content was resolved by the Defendant’s council of occupants’ representatives prior to entering into the contract. Therefore, the Defendant was liable to purchase 317 dong occupants in the vicinity of the prospective site to oppose the installation of static pressure apparatus, and

In addition, the lower court also held that the Defendant’s representative and the Nonparty’s representative director, at the time of the conclusion of the instant contract, are grounds for the destruction of trust relationship between the Defendant and the Defendant. However, solely on the fact that the Nonparty and the Plaintiff’s representative director, who was the Defendant’s representative, were a person subject to punishment, cannot be readily concluded that the instant contract was unfair or unfair, and there is no other material that can be seen as such. Therefore, it is unreasonable to deem the

In addition, the lower court, based on the Defendant’s filing of a civil petition, deemed that the Plaintiff returned the instant apartment complex’s collective supply business on December 14, 2009. However, these circumstances were the grounds after the Defendant’s notice of termination on July 23, 2008, as well as the grounds after the Defendant’s notice of termination, and the Plaintiff temporarily supplied the existing LP gas to the instant apartment only before June 1, 2008, which was the date of the supply of urban gas supply. The Plaintiff appears to have returned the license for collective supply of LP gas to the competent authority due to the expiration of the existing LPgas supply contract due to the Defendant’s failure to install a static gas supply due to the expiration of the existing LPgas supply contract. According to these circumstances, the supply of urban gas, which was the original payment of the instant contract, may not affect the Plaintiff’s temporary supply even without the permission for collective supply of LPgas.

The lower court also cited as the grounds for not negotiating urban gas supply charges. However, in light of the fact that prior to the conclusion of the instant contract, the Defendant agreed to lower the supply of cost +274 won, which was previously supplied by the Plaintiff for five years more than five years, and that the Plaintiff continued to negotiate up to 18 times and to respond to the demand of the Defendant for the price adjustment, it is unreasonable to deem that no price negotiation has been conducted as the grounds for termination of the contract.

Other circumstances cited by the lower court as the grounds for termination are not reasonable to recognize that the original and the Defendant has a serious reason for not expecting the existence of the instant contract.

Rather, the instant contract did not have a fixed period of time, but the Plaintiff had a trust on the fact that urban gas will be supplied to the instant apartment for a considerable period of time after the instant contract was concluded. On the premise of such trust, the Plaintiff paid KRW 40 million to the Defendant in order to construct urban gas pipeline up to the external boundary of the instant apartment immediately after the instant contract, and to support the Defendant at the expense of the maintenance project in the apartment complex. Upon entering into the instant contract, the Defendant granted trust to the Plaintiff that the instant contract continues to continue for a considerable period of time through the act of preparing a written consent for site use, with the content that the Defendant consents to the installation of static pressure in the instant apartment site.

Considering such circumstances, it is difficult to deem that the termination of the instant contract is recognized solely on the grounds that the lower court rendered it difficult to expect the continued existence of the contract.

Nevertheless, after accepting the Defendant’s claim for termination of the contract, the lower court did not examine whether there was a Defendant’s nonperformance of obligation, such as the Defendant’s refusal to perform the contract and the termination of the contract. In so doing, the lower court erred by misapprehending the legal doctrine on continuous termination of the contract and failing to exhaust necessary deliberations, thereby adversely affecting the conclusion of the judgment. The allegation contained in

2. As to the occurrence of damages

A. The lower court rejected this part of the damages on the ground that it is difficult to view that the profit gained by the business of urban gas in the future with respect to damages equivalent to the lost operating profit claimed by the Plaintiff as damages with a causal link with the Defendant’s nonperformance, and that it is not recognized that future compensation for operating profit was lost, such as entering into a contract with another place without any nature of compensation for trust interest. The lower court determined that the damages equivalent to the cost of installing gas pipelines did not constitute unnecessary gas pipelines due to the instant contract, but rather was laid underground, and thus, did not cause any damages to the Plaintiff.

B. However, it is difficult to accept the above determination by the court below for the following reasons.

In light of the records, the Plaintiff does not seek damages for the loss of an opportunity to enter into a gas supply contract with another place due to the Defendant’s nonperformance, but rather seek damages equivalent to the operating profit that would have been accrued upon the implementation of the instant contract. The lower court’s determination rejecting this part of the Plaintiff’s assertion on a different premise is unreasonable.

In addition, if the Defendant’s default is recognized, it is clear in light of the empirical rule that the Plaintiff sustained damages equivalent to the profits that the Plaintiff could incur through the implementation of the instant contract, urban gas supply. Nevertheless, without any particular ground, the lower court did not exhaust all necessary deliberations as to necessary matters, such as the remaining amount of damages, which the Plaintiff concluded that it is difficult to deem that the damage equivalent to the lost operating profit, which the Plaintiff claims as a result of the Defendant’s default as damages caused by the Defendant’s nonperformance of obligation

3. Conclusion

Therefore, without examining the remaining grounds of appeal by the Plaintiff, 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 Park Poe-dae (Presiding Justice)