[1] In a case where the rate of damages for delay against the delay of the monetary obligation is separately agreed, whether the liquidated damages under Article 398 of the Civil Act are subject to reduction (affirmative)

[2] The meaning of “in cases where the estimated amount of compensation for damages under Article 398(2) of the Civil Act is “in cases where the estimated amount of compensation for damages is unreasonably excessive”

[1] If the rate of damages for delay against the delay of the monetary obligation is separately agreed, it is a kind of liquidated damages, which is subject to reduction under Article 398(2) of the Civil Code.

[2] Article 398(2) of the Civil Act provides that the court may reduce the estimated amount of compensation for damages in an improper or excessive manner. Here, "unfairly excessive case" means cases where the payment of the estimated amount of compensation for damages is deemed to result in the loss of fairness by imposing unfair pressure on the debtor in the position of the economically weak in light of the general social concept, taking into account all the circumstances such as the status of the creditor and the debtor, the purpose and content of the contract, the motive scheduled to compensate for damages, the estimated ratio of the estimated amount of damages to the amount of debts, the estimated amount of damages, the estimated amount of damages, and the transaction practices at the time of the application of the above provision. Meanwhile, in order to determine whether the estimated amount of compensation for damages is unreasonably excessive and the scope of reasonable reduction, the court shall take into account all the above circumstances arising between them as at the time of the closing of arguments at the fact-finding court, i.e., the fact-finding of the grounds for reduction or the determination of its ratio is a matter belonging to the exclusive jurisdiction of the fact-finding court unless

[1] Articles 397(1) and 398(1) and (2) of the Civil Act / [2] Article 398(2) of the Civil Act, Article 432 of the Civil Procedure Act

[1] [2] Supreme Court Decision 99Da38637 delivered on July 28, 200 (Gong200Ha, 1929) / [2] Supreme Court Decision 92Da36212 delivered on January 15, 1993 (Gong193Sang, 702) Supreme Court Decision 97Da15371 delivered on July 25, 1997 (Gong1997Ha, 2698) Supreme Court Decision 2007Da59493 Delivered on December 13, 2007

Hyundai Construction Co., Ltd. (Law Firm Gaw, Attorneys Lee Gyeong-hwan et al., Counsel for the plaintiff-appellant)

Defendant

Seoul High Court Decision 2016Na2040963 decided November 24, 2016

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

1. Where a separate agreement is made on the rate of damages for delay against a pecuniary obligation, such agreement is a kind of liquidated damages subject to reduction under Article 398(2) of the Civil Act. Article 398(2) of the Civil Act provides that where the estimated amount of damages for delay is unreasonable and excessive, the court may reduce it as inappropriate. Here, “unfair and excessive” refers to cases where it is deemed that the payment of the estimated amount would result in the loss of fairness by giving unreasonable pressure to debtors who are economically weak in light of the general social concept, including the status of creditors and debtors, the purpose and content of the contract, the motive behind the liquidated amount of damages, the estimated amount of damages, the ratio of estimated amount of damages, the estimated amount of damages, the estimated amount of damages, the transaction practices at the time, etc. In addition, in order to determine whether the estimated amount of damages for delay is unreasonably excessive and the scope of reasonable reduction is determined based on the above provision’s application, i.e., when a court makes the said determination at the time of closing the arguments at the fact-finding court.

2. According to the reasoning of the judgment below, since it is difficult to view that there is no ground to claim the cancellation or cancellation of the sales contract until the judgment in the relevant lawsuit became final and conclusive, the court below determined that the agreement to pay damages for delay in accordance with the overdue interest rate for the accounts payable is unreasonably excessive, and it is reasonable to reduce the damages for delay as of October 27, 2016, which is the closing date of the argument in the judgment of the court below, on the following grounds: (a) there is sufficient ground to view that the overdue interest rate for the above period may result in the loss of fairness by imposing unfair pressure on the buyers; and (b) there is no justifiable ground for the Defendant and other buyers after the judgment in the relevant lawsuit is final and conclusive; and (c) since the overdue interest rate for the contract is ordinarily set within the extent that there is no ground to reduce the overdue interest rate for the sales contract; and (d) it is reasonable to reduce the damages for delay as of October 27, 2016.

In light of the above legal principles and records, the above determination by the court below is just, and contrary to the allegations in the grounds of appeal, there were no errors by misapprehending the legal principles regarding reduction of the amount of damages calculated, or by exceeding the bounds of the principle of free evaluation

3. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Park Poe-dae (Presiding Justice)