Criteria for determining whether the estimated amount of damage compensation is unreasonably excessive, and the base point of time for determining whether the estimated amount of damage is unfairly excessive (=time of closing argument

In Article 398(2) of the Civil Act, the term “in cases where the estimated amount of damages is unreasonably excessive” means cases where the payment of the estimated amount of damages results 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, purpose and content of the contract, the motive behind the scheduled amount of damages, the estimated amount of damages, the ratio of the estimated amount of damages to the amount of debts, the expected amount of damages, and the transaction practices at the time, etc. In order to determine whether the estimated amount of damages is unreasonably excessive or not under the above provision, or the scope of reasonable reduction thereof, the court shall comprehensively take into account all the above circumstances that occurred between them as of the time of closing argument at

Article 398(2) of the Civil Act

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Han-sung, Attorneys Park Jae-young and 1 other, Counsel for plaintiff-appellant-appellant-appellant-appellant-appellant-appellant-Appellee)

[Defendant-Appellant] Jan Construction Co., Ltd., Counsel for defendant-appellant

National Agricultural Cooperative Federation (Attorney Jeong Jong-chul, Counsel for defendant-appellant)

Busan High Court Decision 91Na15959 delivered on July 10, 1992

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

We examine the grounds of appeal.

According to Article 398(2) of the Civil Act, where the estimated amount of compensation for damages is unreasonably excessive, the court may reduce it to a reasonable level. Here, “unfairly excessive case” means the case 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 for the amount of compensation for damages, the estimated ratio of the estimated amount of compensation for damages, the estimated amount of damages to the debt, the estimated amount of damages, and the transaction practices at the time, etc. (see Supreme Court Decision 90Da14478 delivered on March 27, 191). Meanwhile, in order to determine whether the estimated amount of compensation for damages is unreasonably excessive or within the reasonable scope of reduction, the court should make a concrete decision in detail, i.e., the court should take into account all the aforementioned circumstances as at the time of closing of the fact-finding

In light of all the circumstances as indicated in the reasoning, including the process leading up to the conclusion and cancellation of the instant construction contract between the Plaintiff and the Defendant, and the economic status of the Plaintiff company and the transaction relationship after the rescission of the said contract, the lower court determined that the damages amounting to the Plaintiffs’ nonperformance of obligation would be reasonable by reasonably reducing the said estimated amount to KRW 150,000,000 among them, since it is recognized that the damages amount due to the Plaintiffs’ nonperformance of obligation would be unfairly excessive. The lower court’s aforementioned determination is justifiable in accordance with the legal principles as seen earlier, and there is no error of law by misapprehending the legal principles, such as the theory of lawsuit. There is no ground for the argument.

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.