[1] The scope of and limitation on the guarantor's liability for a continuous guarantee agreement

[2] The case holding that a continuous guarantee contract has limited liability for joint and several sureties between an obligee and an obligor in principle

[1] In principle, the surety is liable for the full amount of the principal obligation at the time of payment. However, in a case where the guarantor has anticipated or could have anticipated the amount of the principal obligation at the time of guarantee, the surety’s liability may be limited to the expected extent. However, the obligee may limit the surety’s liability to the reasonable extent only in a case where there are circumstances contrary to the good faith principle, such as where the obligee was unaware of the fact that the status of the principal obligor’s assets significantly deteriorated or that the obligee was unaware of it due to gross negligence, such as intentionally expanding the transaction size without any notification or intention.

[2] The case limiting the liability of the joint and several sureties within the scope of the sales contract, in case where the sales contract is concluded in principle within the limit of physical security and the contract period is extended on a yearly basis by a creditor, and the size of the transaction for the debtor who is in arrears with the sales proceeds is rapidly expanded, or where the contract is not terminated or the joint and several sureties do not provide additional security and notify such fact to the joint and several sureties

[1] Articles 2 and 428 of the Civil Act / [2] Articles 2 and 428 of the Civil Act

[1] [2] Supreme Court Decision 84Da453 delivered on October 10, 1984 (Gong1984, 1795), Supreme Court Decision 91Da26348 delivered on April 28, 1992 (Gong1992, 1692), Supreme Court Decision 94Da42129 delivered on December 22, 1995 (Gong196Sang, 473)

El branch Electric Co., Ltd. (Attorney Hah Ho-kon, Counsel for the defendant-appellant)

Defendant

Daegu High Court Decision 97Na2208 delivered on November 28, 1997

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

The grounds of appeal are examined.

In principle, the guarantor shall be liable for the full amount of the principal obligation at the time of performance of the guarantee. However, if the guarantor has anticipated or could have anticipated the amount of the principal obligation at the time of the guarantee, the liability for the guarantee may be limited to the expected extent. However, the liability of the guarantor may be limited to the reasonable extent only in cases where there are circumstances contrary to the good faith principle, such as where the creditor was unaware of the fact that the status of the principal obligor’s assets has significantly deteriorated or that the obligee was unaware of it due to gross negligence, and where the obligee was not aware of the fact that the status of the principal obligor’s assets has substantially deteriorated or that he was not aware of it due to gross negligence, etc., without any notice or intention (see, e.g., Supreme Court Decisions 84Da453, Oct. 10, 1984; 91Da26348, Apr. 28, 192; 94Da42129, Dec. 22, 1995).

According to the reasoning of the judgment below, the court below acknowledged the facts as stated in its reasoning. The plaintiff, in principle, made a transaction within the limit of physical security with the non-party and agreed to extend the contract period on a yearly basis, and the non-party continues to make a transaction more than 200,000,000 won, which is the limit of the original principle, due to a sudden increase in the debt amount, in the situation where the payment of the purchase price under the sales contract of this case was delayed, and did not terminate the sales contract of this case or take measures such as additional provision of security, and eventually, the amount of the debt amount was eventually caused to KRW 628,190,817, and the plaintiff did not notify the defendant of the above facts. Thus, the defendant's joint and several liability is reasonable in light of the legal principles and the facts that the defendant had known of the change in the contents and scale of the sales contract of this case, the defendant's lack of notification to the defendant and the increase in the debt amount, and thus, the court below's ground of appeal can be accepted.

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

Justices Jeong Jong-ho (Presiding Justice)