In a case where under the special condition of the purchase contract of goods to which the State is a party, “where an inspection request is made within the delivery period and passed the inspection, the date of request for inspection shall be deemed the delivery date, and where an inspection is requested within the delivery period and the inspection is passed and the inspection is completed after the delivery period, the period required for the delivery inspection and inspection shall not be included in the number of delayed days”, the case holding that in order for the above inspection request to be valid, it shall be deemed that there was an effective inspection request only when the actual shipment of the goods is prior to or at least simultaneously, and where the request for inspection is made without the actual introduction of the goods

In a case where under the special condition of the purchase contract of goods to which the State is a party, “where a request for inspection is made within the delivery period and passed the inspection, the date of request for inspection shall be deemed the delivery date, and where a request for inspection is made within the delivery period and the inspection is passed and the inspection is completed after the delivery period, the period required for the delivery inspection and inspection shall not be included in the number of delayed days”, the case holding that, in full view of the statutes on the contract to which the State is a party and the relevant contract provisions, the counter-party cannot be deemed to have fulfilled his duty of carrying the goods only by completing preparation for carrying the goods into the delivery place within the delivery period and requesting the inspection, and therefore, the request for inspection stipulated under the above special condition should be deemed to have been made in the inspection place prior or at least simultaneously, and where the request for inspection is made without carrying the goods into the actual place, it shall be deemed that there was an effective inspection request only when the goods

Article 105 of the Civil Act; Article 14(1) of the Act on Contracts to Which the State is a Party; Article 55(1) of the former Enforcement Decree of the Act on Contracts to Which the State is a Party (amended by Presidential Decree No. 20720, Feb. 29, 2008)

Hando Energy Co., Ltd.

Korea

Seoul Central District Court Decision 2009Na31160 Decided January 20, 2010

The judgment of the court below is reversed, and the case is remanded to the Seoul Central District Court Panel Division.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

A. According to the reasoning of the judgment below, the court below acknowledged that the plaintiff entered into a purchase contract with the defendant and the Air Force President of the Republic of Korea (hereinafter "the contract of this case") for the purchase of the three-day flag (hereinafter "the contract of this case") and filed an application for arbitration with the Korea Commercial Arbitration Board on the ground that the plaintiff did not receive the goods from the defendant. The Korea Commercial Arbitration Board on September 10, 2008 "the defendant (the Republic of Korea) shall pay to the plaintiff the amount of KRW 113,473,849 and the amount calculated at the rate of 20% per annum from September 11, 2008 to the full payment date to the defendant (hereinafter "the principal of the arbitration award of this case"). The defendant shall pay to the plaintiff the amount of KRW 104,171,200 on September 25, 2008, 200 for compulsory execution of this case and damages for delay, 2017 won and damages for delay, 207 16, 29717 and 27

In addition, the court below rejected the defendant's assertion that the plaintiff's request for inspection of the three-day season supplied by the plaintiff is offset against the plaintiff's arbitral award claim as of February 29, 2008 because it was made on February 12, 2008 after the delivery deadline and completed the final inspection on February 29, 2008, under Article 10 (2) 1 (c) of the Special Conditions for the Purchase of Goods (Manufacture) Contract (hereinafter "Special Conditions"), which is the contents of the contract of this case, the claim of KRW 10,302,640 for delay calculated under Article 10 (2) 1 (c) of the Special Conditions for the Purchase of Goods (hereinafter "Special Conditions"), which is the subject of the contract of this case, the public prosecutor of the contract of this case must be prior to the public official in charge of the contract of this case in performing the contract of this case who is a party to the contract of this case, and thus, the plaintiff's request for inspection should not be made lawfully by the public official in charge of this case.

B. However, the court below's rejection of the defendant's allegation of offset on the above grounds is not acceptable in the following point.

Article 14(1) of the Act on Contracts to Which the State is a Party (hereinafter “State Contract Act”) imposes on a public official in charge of contracts a duty to verify whether the other party to the contract has completed the performance of all or part of the contract, or to delegate the contract to a public official under his/her jurisdiction. Accordingly, Article 55(1) of the former Enforcement Decree of the Act on Contracts to which the State is a Party (amended by Presidential Decree No. 20720, Feb. 29, 2008; hereinafter “Enforcement Decree of the State Contract Act”) provides that the public prosecutor under Article 14(1) of the State Contracts Act shall complete the contract within 14 days from the date on which the other party to the contract is notified of the completion of the contract.

In addition, according to the records, Article 12(1) of the General Conditions for Goods Purchase (manufacture) Contract (hereinafter “General Conditions”) which provides that “The contractor shall comply with the Korean Industrial Standards (including the Goods Distribution Standards under Article 5 of the Goods Distribution Promotion Act) under Article 24 of the Industrial Standardization Act by the delivery date stipulated in the contract and deliver the relevant goods to the place designated by the contracting officer unless there are any special reasons,” and Article 19(1) of the same Act provides that “When the contractor completes the contract, he/she shall notify the contracting officer of the completion in writing and undergo a necessary inspection.” Article 12(3) of the same Act provides that “The contracting officer shall, upon receipt of notice under paragraph (1), conduct an inspection to verify the performance of the contract in the presence of the other contracting officer within 14 days from the date of receipt, request the delivery of the relevant goods within 0 days from the delivery date stipulated in the contract.” Article 5(1) of the Special Conditions provides that “The contractor shall request the delivery of the goods within the designated time limit of the contract or within the designated place of delivery.”

In full view of all the provisions of the State Contracts Act and the Enforcement Decree of the State Contracts Act (hereinafter “State Contracts Act”) and the contract provisions related to the contract of this case, the Plaintiff was requested to inspect the goods at a place other than the delivery place, and the main sentence of Article 5(1) of the Special Conditions is not applied to this case, and the Plaintiff was obligated to request the Defendant to inspect the goods of this case at 40 copies of the Air Force, which is the delivery place, until December 31, 2007, after carrying them into the delivery place (hereinafter “the goods of this case”). Since the Defendant received the Plaintiff’s request for inspection, it cannot be said that the Plaintiff had the duty to carry them into the delivery place prior to the inspection procedure, and if it is interpreted against the proviso of Article 5(1) of the State Contracts Act, it cannot be said that the Defendant had the duty to carry them into the delivery place within the delivery time stipulated by the State Contracts Act, and thus, it cannot be said that the Defendant had the duty to carry them into the delivery place and the delivery place of the goods of this case.

As above, inasmuch as the Plaintiff is interpreted to have practically carried the instant goods into the place of delivery in order to undergo an inspection of the instant goods, it is reasonable to view that the Plaintiff requested an inspection within the delivery period and passed an inspection within the delivery period, and, after the delivery period, the Plaintiff failed to pass an inspection after the delivery period, the request for inspection as stipulated in Article 5 (4) 1 (a) of the Special Conditions that the delivery inspection and inspection shall be deemed the delivery date, and the period required for delivery and inspection shall not be included in the delivery date, and the request for inspection as stipulated in Article 10 (2) 1 (a) of the aforesaid Special Conditions (Subject to the application of the main sentence of Article 5 (1) of the Special Conditions, each of the above provisions is premised on the application of the main sentence of Article 5 (1) of the same condition) of the same Act, which requires the actual introduction of the goods to the place of inspection or at least at the same time, there is no special request for inspection to the Defendant at the same time when the request for inspection was made without actual introduction of the goods after the delivery period.

C. Nevertheless, the court below rejected the defendant's allegation of offset on the ground that the plaintiff under the contract of this case was not in need of actual delivery and the plaintiff was not liable for delay. The court below erred by misapprehending the legal principles as to the method of performance of obligation or the interpretation of contract, which affected the conclusion of the judgment. The defendant's ground of appeal pointing this out is with merit.

2. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, 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 Si-hwan (Presiding Justice)