The meaning and validity of the so-called "general contract" in a long-term continuing construction contract under Article 21 of the former Act on Contracts to which the State is a Party, and Article 69 (2) of the Enforcement Decree of the Act on Contracts to which the State is

Article 21 of the former Act on Contracts to Which the State is a Party (Amended by Act No. 11377, Mar. 21, 2012); Article 69(2) of the Enforcement Decree of the Act on Contracts to which the State is a Party

Supreme Court en banc Decision 2014Da235189 Decided October 30, 2018 (Gong2018Ha, 2370)

Hyundai Construction Co., Ltd. and 13 others (Law Firm LLC, Attorneys Lee Dong-chul et al., Counsel for the plaintiff-appellant)

Gyeongnam Enterprise Co., Ltd. (Law Firm LLC, Attorneys Lee Jae-chul et al., Counsel for the plaintiff-appellant)

E. E. S. S.D. Development Corporation

Korea Rail Network Authority (Law Firm, Attorneys Choi Financial, et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2015Na2006713 decided July 15, 2016

The part of the lower judgment against the Defendant is reversed, and that part of the case is remanded to the Seoul High Court. All of the Plaintiffs’ appeals are dismissed. All of the Plaintiffs’ applications for taking over a lawsuit are dismissed. Costs incurred in taking over a lawsuit are borne by the applicants

The grounds of appeal are examined.

1. As to the Defendant’s ground of appeal

A. Ground of appeal Nos. 1 and 2

Article 21 of the former Act on Contracts to Which the State is a Party (amended by Act No. 11377, Mar. 21, 2012) and Article 69(2) of the Enforcement Decree of the Act on Contracts to which the State is a Party (hereinafter “Enforcement Decree of the Act on Contracts”) are concluded with a separate contract concerning total construction cost and total construction period, and a long-term continuing construction contract is not in the form of entering into a separate contract for each business year, and is not in the form of entering into a separate contract for total construction cost and total construction period, but in the form of an additional statement for total construction cost and total construction period. The agreement on total construction cost and total construction period additionally entered into at the time of entering into a contract for the first construction project is called as a “general contract.” Such general contract is a standard for temporarily utilizing the total construction cost, construction cost, construction period, etc., and the total scale of the contract should be deemed as the overall contract based on the overall contract. Therefore, the validity of a comprehensive contract is limited to determination of contract price, determination, contract performance, etc.

Nevertheless, the lower court, on the premise that the total construction period and the total construction price under the general contract are legally binding between the parties to a contract, deemed that the contract amount can be adjusted due to changes in the construction period under Article 66(1) of the Enforcement Decree of the State Contracts Act, even in cases where the total construction period and the total construction price under the general contract are extended without extending the construction period under the general contract, partly

The judgment below erred by misapprehending the legal principles as to the relationship between the general contract and the annual contract and the validity of the total construction period stipulated in the general contract, which affected the conclusion of the judgment. The ground of appeal assigning this error is with merit.

B. Ground of appeal Nos. 4 and 6

For the reasons indicated in its holding, the lower court determined that it is difficult to view that the Plaintiff renounced the right to claim indirect construction costs due to extension of the construction period, and that the calculation of the adjusted contract amount due to extension of the construction period under an annual contract does not necessarily require the standards for calculating actual cost under the Standards for Government Tender and Contract Execution under the Framework Act

Examining the reasoning of the lower judgment in light of the relevant legal doctrine and the record, the lower court did not err in its judgment by misapprehending the legal doctrine regarding the adjustment of the contract amount due to the waiver of indirect construction cost or extension of the construction period, or by failing to exhaust all necessary deliberations, thereby exceeding the bounds of the principle of free evaluation

2. Regarding the plaintiffs' grounds of appeal

A. Ground of appeal No.1

The lower court rejected the Plaintiffs’ assertion that, where the total construction period under the general contract is extended, the contract price adjustment can be made through an amendment to the general contract, but where the extension of the total construction period and the extension of the construction period under the annual contract overlap, it is possible only to adjust the annual contract price.

In light of the aforementioned legal principles, although it is inappropriate for the lower court to have determined that the contract amount can be adjusted even in cases where the total construction period was extended, the lower court’s conclusion rejecting the Plaintiffs’ assertion is justifiable. In so determining, the lower court did not err by misapprehending the legal doctrine on the grounds contrary to what is alleged in the grounds of appeal

B. Ground of appeal No. 2

According to each of the instant contracts, the lower court determined that the lower court could determine the reasonable amount of adjustment in a way that reduces the indirect construction costs incurred by the Plaintiffs at a certain ratio, taking into account all the circumstances, on the grounds that the principle that the contract amount for extension of a construction period should be adjusted according to the agreement between the parties and the extent that does not exceed the actual cost. In light of the relevant legal principles and records, the lower court did not err by misapprehending the legal doctrine on the adjustment of a contract amount, or by misapprehending the legal doctrine on the adjustment of a contract amount, etc. (However, as seen earlier, the lower court erred by misapprehending the legal doctrine on the adjustment of a contract amount, etc. (see, e.g., the lower court, immediately after remand

C. Ground of appeal No. 3

The lower court rejected the Plaintiffs’ claim seeking part of a construction section, on the ground that there is a lack of evidence to the effect that it is difficult to see that the appraisal result of an appraiser who did not include the measurement service cost and security service cost, etc. in the indirect construction cost is unreasonable, and that the advance payment and subcontract consideration for the three sections, the guarantee fee, the construction damage insurance premium for the nine sections, etc.

The allegation in the grounds of appeal disputing the determination of facts that led to the above judgment is nothing more than an error of the selection of evidence and the determination of probative value, which belong to the free trial of the fact-finding court, and it is difficult to accept. In addition, even if examining the reasoning of the judgment below in light of the records, some of the reasoning of the judgment below is not appropriate. However, contrary to what is alleged in the grounds of appeal, there is no error of misapprehending the legal principles regarding the nature of indirect construction cost and the calculation method

3. As to the application for taking over the lawsuit by the applicant for taking over the lawsuit

The Plaintiff 4’s administrator of the rehabilitation company, a rehabilitation company’s taking over the lawsuit of the Plaintiff Gyeong-nam Company, asserts that the rehabilitation procedure has been completed, and that the applicant for taking over the lawsuit of the Plaintiff Echid Co., Ltd. (former Industrial Development Co., Ltd.) succeeded to the rights and obligations related to the lawsuit of the instant case after the division and establishment from the said Plaintiff on May 2, 2018, and the application for taking over the lawsuit of the instant lawsuit was filed with the Supreme Court after the end of each appellate brief. However, if the court of final appeal declares a judgment without pleading at the same stage, the rehabilitation debtor or the newly incorporated company need not take over the lawsuit, and such application for taking over the lawsuit is not accepted (see, e.g., Supreme Court Decision 2013Da20106, Jan. 16, 2014).

4. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal by the defendant, the part against the defendant among the judgment below is reversed, and that part of the case is remanded to the court below for further proceedings consistent with this Opinion. The plaintiffs' appeals are all dismissed, and all of them are dismissed. It is so decided as per Disposition by the assent of all participating Justices.

Justices Park Jung-hwa (Presiding Justice)