Hanyang Technical Corporation (Attorney Han-soo et al., Counsel for defendant-appellant)

C. C.C. (Law Firm K.S., Attorneys Lee Jae-hwan, Counsel for the plaintiff-appellant)

August 27, 2015

Seoul Central District Court Decision 2014Gahap53563 Decided October 29, 2014

1. The defendant's appeal is dismissed.

2. The costs of appeal shall be borne by the Defendant.

1. Purport of claim

The defendant shall pay to the plaintiff 50 million won with 20% interest per annum from the next day of service of a copy of the complaint of this case to the day of complete payment.

2. Purport of appeal

The judgment of the first instance is revoked. The plaintiff's claim is dismissed.

1. Quotation of the first instance judgment

The reasoning for the court's explanation concerning this case is as follows. Article 3 (1) 1 of the last sentence of Article 4 of the judgment of the court of first instance provides that "Article 3 (2) 1 of the Civil Procedure Act" shall be dismissed as "Article 3 (2) 1 of the judgment of the court of first instance," and Articles 6, 14 through 7 of the 6-1 of the 6-1 of the 7-1 of the 7-1 of the 9-1 of the 9-19-1 of the 9-1 of the 9-1 of the 9-19-1 of the 9-277777 of the

B. The assertion of non-performance of conditions

The Defendant asserts that the instant business agreement between the Plaintiff and the Defendant, the instant loan agreement between the Defendant and the financial institution, and the trust agreement between the Defendant, Co., Ltd. (hereinafter “Coco asset trust”) and the Defendant’s trust agreement are concluded in order to achieve the common purpose of implementing the instant business. As such, the instant business agreement ought to be deemed as a contract under the condition of suspension, which is a condition suspending the entry into force of the said loan agreement and trust agreement. The said loan agreement became null and void due to the failure to perform the prior terms of the loan, and the said trust agreement became null and void, and the said trust agreement became null and void as the result becomes null and void due to the failure to complete the trust registration of the instant real estate

On the other hand, even if all of the terms of the instant business agreement were examined, there is no ground to view that the instant business agreement takes effect on the condition that the said loan agreement or trust agreement remains effective.

In addition, in full view of the statements in the evidence Eul evidence Nos. 5 and 8 above, the project of this case is merely that the defendant extended KRW 5.3 billion from financial institutions and repaid all the secured debt of the existing collateral security right established on the real estate of this case, and entrusted the real estate of this case without restricted real right to the Komcco Asset Trust, and the construction of the real estate of this case was promoted as a contract cycle to the plaintiff or the person designated by the plaintiff, and it is recognized that the construction of the real estate of this case was made at the same place as the business agreement of this case, loan contract and trust contract of this case was concluded at the same date. However, this circumstance is merely that each of the above contracts was concluded to a certain degree under the joint objective of promoting the project of this case, and therefore, it cannot be deemed that the effect of the above loan contract and trust contract of this

Furthermore, even if there are such conditions of suspension, it is reasonable to view that the Defendant cannot assert the non-performance of such conditions, as it is because the Defendant voluntarily renounced to receive a loan and did not perform the conditions prior to the execution of a loan. Accordingly, the Defendant’s assertion is groundless.

E. Claim for revocation of mistake

The Defendant did not know to the Plaintiff that the instant business agreement includes the content of setting priority interest of KRW 1.1 billion in the Plaintiff, and concluded the instant business agreement with the belief of Nonparty 1’s horse and the mistake that the said agreement does not take effect until the loan was executed by a financial institution. As such, the Defendant asserts that the instant business agreement was cancelled by the delivery of the preparatory document dated January 22, 2015.

First, we examine whether the Defendant was unaware of the contents of the right to benefit. Inasmuch as Nonparty 2, who arranged the agreement of this case for the Defendant, was merely aware of the content of the agreement of this case on December 2, 2013, which was the day before the conclusion of the agreement of this case, the Defendant’s establishment of the right to benefit under Article 5(4) and (5) of the agreement of this case, which was sent by e-mail to Nonparty 3, the representative director of the Defendant, was acknowledged as above. However, considering the following facts, it is reasonable to view that the Defendant did not know of the content of the agreement of this case’s establishment of the right to benefit under Article 12 of the agreement of this case and Nonparty 1’s testimony of the witness of this case, it is reasonable to conclude the agreement of this case on December 17, 2013, and that the Defendant did not know of the content of the agreement of this case’s establishment of the right to benefit benefit after consultation with the Plaintiff.

Next, according to the testimony of Nonparty 3, witness of the first instance trial, witness of the first instance trial, and witness of Nonparty 4, the defendant's representative director, the non-party 5 suggested to conclude a loan contract without sufficiently reviewing the contents of the loan contract at the time of entering into the loan contract with financial institutions, and that the non-party 1, who was present in the above place, has entered into the loan contract with the purport that the non-party 1 would be able to decide whether to actually execute the loan after signing the loan contract. However, the above facts alone are insufficient to conclude that the above loan contract and the business agreement of this case, which differs from the above loan contract, are effective only under the premise that the loan takes effect under the above loan takes effect, and there is no other evidence to acknowledge that the defendant made a mistake. Furthermore, even if the defendant made a mistake as to the effective conditions of the business agreement of this case, this is not only the mistake of motive, but also the representative director's position or experience of the defendant, etc., as seen earlier.

Therefore, this part of the argument premised on the defendant's mistake is without merit.

F. The assertion that the requirements for penalty are not satisfied

The Defendant asserts to the effect that, only when the instant business agreement was terminated due to a cause attributable to one of the parties, the Defendant may file a claim for penalty against breach of contract, and that the above cause refers to a case where the Defendant’s obligation to conclude a contract for construction works and the Plaintiff’s obligation to lend funds and guarantee payment, which are in a quid pro quo relationship, are violated. The Defendant asserts to the effect that the instant business itself was irrelevant to the formation of a contract for construction works as well as the Plaintiff’s obligation to provide loans

However, in light of the contents of Article 5 (1) through (3) of the instant business agreement, there is no ground to interpret the requirements for payment of penalty in a limited manner as alleged by the Defendant. Rather, under the instant business agreement, the Defendant has the obligation to secure ownership of the entire real estate of this case for the implementation of the instant business, and perform the cancellation and removal of legal and physical matters. To this end, the Defendant has the obligation to prepare funds to cancel the right to collateral security on the instant real estate by performing all the prior terms and conditions set out in the instant loan agreement with financial institutions. However, without fulfilling the above prior terms and conditions of the loan execution, the execution of the instant business was nonexistent and the execution of the instant business was no longer performed by waiver of the loan itself. The instant business agreement was legally rescinded by the Plaintiff’s declaration of intent of cancellation on the grounds of the above reasons attributable to the Defendant, and thus, the Defendant’s obligation to pay penalty was already rescinded. Accordingly, the Defendant’s allegation that there was no error in this process in the misapprehension of the Plaintiff’s obligation to pay the loans and its payment guarantee.

G. The assertion of excessive penalty

Finally, the defendant asserts that even though the plaintiff did not actually inflict any damage upon the cancellation of the business agreement of this case, it is excessive to impose a penalty of KRW 500 million on the defendant, such a penalty agreement is entirely or partially null and void against the public order and good morals.

(5) Since the above contract is established in order to secure the performance of an obligation and its contents differ from the estimated damages, it cannot be reduced by analogy of Article 398(2) of the Civil Act regarding the scheduled damages. However, if the agreed punishment is excessive compared to the interests of creditors who forced the obligation, part or it shall be null and void against public order and good morals (see Supreme Court Decisions 92Da46905, Mar. 23, 1993; 2005Da26277, Oct. 13, 2005, etc.). Thus, it is difficult to view that the plaintiff's claim for construction expenses incurred from the above new construction project to be incurred from the above 2, 3, and 13 through 17, etc. This case's new construction agreement is no more than 300,000,000 won, and thus, it is difficult to view that the above contract had no superior value to the plaintiff's claim for damages for the above construction expenses.

2. Conclusion

Therefore, the plaintiff's claim shall be accepted with the reasons, and the judgment of the court of first instance shall be justified with the conclusion, and the defendant's appeal is dismissed as it is without merit. It is so decided as per Disposition.

Judges Han Chang-hun (Presiding Judge)

Note 1) Part 8 of the judgment of the court of first instance, “A claim for revocation following deception”

Note 2) The fifth part of the judgment of the court of first instance on the ground of claim

Note 3) The accurate amount of computation is KRW 13,792,366,00 (=3,800,000 per square day x 3,629.57 square day).