1. The plaintiff's appeal is dismissed.

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

Purport of claim and appeal

Judgment of the first instance.

1. The plaintiff's assertion

A. On June 20, 2015, the Plaintiff awarded a contract for the work price of KRW 16,500,000 for the interior work of the first floor in Gwanak-gu in Seoul Special Metropolitan City (hereinafter “instant construction contract”) to the co-defendant C (hereinafter “C”) of the first instance court, a representative of the Defendant as the director of D (hereinafter “C”) and paid KRW 13,200,000 as the construction price until July 6, 2015.

B. However, C discontinued construction with only a part of the construction work. Ultimately, the Plaintiff terminated the instant construction contract through the certification of the content of August 6, 2015.

C. The Plaintiff additionally disbursed KRW 14,035,563 for completion of the instant construction project, and the amount of business losses during the period of the additional construction project reaches KRW 3,700,000. Thus, if the Plaintiff deducts the remainder of KRW 3,300,000, the Plaintiff’s losses incurred due to the termination of the instant construction contract (i.e., KRW 14,435,563 (i., KRW 14,035,563), KRW 3,700,000 (=3,300,000).

Since the Defendant, as a representative of D and C’s mother, permitted C to conduct business using the Defendant’s name, the Defendant is liable to compensate the Plaintiff for the Plaintiff’s damages arising from the termination of the instant construction contract pursuant to Article 24 of the Commercial Act.

2. Determination

A. Article 24 of the Commercial Act provides, “A person who permits another person to run his/her business using his/her name or trade name shall be jointly and severally liable with another person for payment to a third person who trades his/her own name or trade name misleading that person as the business owner.”

However, the liability of the nominal lender under Article 24 of the Commercial Act is to protect a third party who trades by misunderstanding the nominal owner as an employer, and thus, the other party to the transaction is not liable if he knew of the fact of the nominal name or gross negligence on the part of the other party (see Supreme Court Decision 91Da18309, Nov. 12, 1991).

According to the records of evidence Nos. 1 and 2 returned to the instant case, the Defendant’s business registration certificate was issued to the Plaintiff and C.