2017Da233429 Guarantee obligations

A Stock Company

Attorney Jeong-ho et al., Counsel for the defendant

B Mutual Aid Association

Law Firm LLC, Attorney Lee Dong-won

Attorney Kwon Yong-hoon, Justice Kim Jong-ho, Lee Dong-ho, and Lee Dong-ho

Seoul High Court Decision 2016Na2071103 Decided May 12, 2017

March 14, 2019

Of the judgment below, the part on the claim for deposit corresponding to the credit sales claim Nos. 2 through 5 is reversed, and that part of the case is remanded to the Seoul High Court. The remaining appeals are dismissed.

1. Case summary

Review of the reasoning of the lower judgment and the record reveals the following facts.

A. The Plaintiff and C&C Co., Ltd. (hereinafter referred to as “C”) contracted a new construction of a private house by D&D Co., Ltd. (hereinafter referred to as “project owner”). According to the general terms and conditions of the construction contract applicable to the said contract, C should pay to the subcontractor an amount equivalent to the portion that C performed by the subcontractor within 15 days when receiving the price of the work.

C On July 25, 2014, the instant subcontract agreement stipulates that “(1) payment period: (2) payment period for the portion completed: (3) payment of the incidental civil works during the construction period from July 25, 2014 to November 29, 2014; (2) payment period is determined as KRW 663,300,000 for the subcontract (hereinafter “instant subcontract”). Article 6(b) of the instant subcontract agreement stipulates that “The payment period” is based on the payment period for the portion completed: January 1; (2) payment method; (3) payment method: cash rate and bill rate”.

B. On July 31, 2014, pursuant to Article 13-2 of the former Fair Transactions in Subcontracting Act (amended by Act No. 12709, May 28, 2014; hereinafter “subcontract”), the Defendant’s payment guarantee C entered into a contract for the payment guarantee of subcontract consideration with the Defendant for the instant subcontract (hereinafter “instant subcontract”) and issued a payment guarantee letter to the Plaintiff on July 31, 2014. The foregoing guarantee letter provides that ① the contract execution date shall be November 29, 2014; ② the amount guaranteed shall be KRW 621,843,750, ③ the guarantee period shall be from July 25, 2014 to February 27, 2015. Article 1 of the term of payment guarantee attached to the guarantee document provides that “where C fails to pay the payment obligation of the instant subcontract consideration to the Plaintiff, the payment period shall be determined within the warranty period stipulated within the terms and conditions (Article 5).”

C. From July 31, 2014 to March 12, 2015, the Plaintiff, while performing the Plaintiff’s subcontract and receiving progress payment, issued a tax invoice and claimed for payment for progress payment on six occasions pursuant to the instant subcontract, and C at the maturity of six months after the date of issuance of each tax invoice to pay for the first to the first to the fifth to the first to the fifth to the end payment. C issued credit sales bonds with the amount calculated by subtracting the employment insurance premium to be borne by the Plaintiff from the total amount of the tax invoice supplied and the tax amount to the Plaintiff, and made the Plaintiff obtain a loan equivalent to the amount of credit sales bonds from E (hereinafter “E”) as collateral.

The credit sales claim issued to pay the first progress payment on February 2, 2015 was repaid, but each credit sales claim issued to pay the second to the fifth progress payment was not repaid. On the other hand, in relation to the sixth progress payment, C did not take any measures to pay it.

D. Plaintiff’s claim for deposit and the instant lawsuit

On April 1, 2015, the Plaintiff, based on the instant guarantee agreement, filed a claim against the Defendant for the payment of the deposit amount corresponding to the second to fifth credit sales credit loans, and the sixth progress payment not paid by C, which the Plaintiff owed to E. However, on April 28, 2015, the Defendant refused to pay the deposit to the Plaintiff on the ground that “the second to fifth credit loans are due after the maturity period, and the sixth progress payment was due to construction after the execution date, and thus, the Defendant is not liable for the guarantee to the Defendant.” Accordingly, the Plaintiff filed the instant lawsuit against the Defendant claiming the payment of the deposit amount. As to the grounds of appeal on the claim for the deposit amount corresponding to the second to the second to fifth credit loans.”

A. The judgment of the court below

The lower court determined that, in full view of the following circumstances: (a) there was no evidence supporting that there was an agreement on the specific timing and method of payment in the instant subcontract regarding the payment for progress payment; (b) however, the Plaintiff’s claim for progress payment is only known that C issued credit sales bonds with maturity six months after the date of the claim, and that it would allow C to receive a loan on security of credit sales claims; and (c) there was no allegation of default in C until the Plaintiff demanded the payment for progress payment, or there was no notification of the occurrence of the occurrence of the guaranteed accident, the lower court concluded that an agreement was concluded between the Plaintiff and C to receive progress payment using the loan on security of credit sales claims after about one month from the date of the

Accordingly, the lower court determined that: (a) the date of payment for the second to fifth progress payment is the maturity of each second to fifth loan; and in that case, the date of payment for the second to fifth progress payment shall expire after the expiration of the guarantee period of this case; and (b) the Defendant did not have any liability to guarantee the second to fifth progress payment pursuant to Articles 1 and 3 subparag. 5 of the Guarantee Clause.

B. Judgment of the Supreme Court

(1) Where the content of a contract is written in writing between the parties to the contract as a disposal document and the objective meaning of the text is clear, barring special circumstances, the existence and content of the declaration of intent shall be recognized as the content of the text. However, where the objective meaning of the text is not clearly revealed, it shall be comprehensively considered such factors as the motive and background leading up to the conclusion of the contract, the purpose and genuine intent to be achieved by the parties to the contract, and transaction practices, and shall be in accordance with logical and empirical rules, and common sense of social norms and transaction norms so as to be in line

The contents of a contract should be reasonably interpreted (see, e.g., Supreme Court Decision 95Da6465, May 23, 1995). Meanwhile, inasmuch as a subcontractor in a subcontract receives unfair treatment from a principal contractor, there are many cases where the subcontractor unilaterally accepts the subcontract regardless of his/her will due to the financial situation relatively vulnerable, negotiating power, and concerns over the discontinuance of transactions, etc., even if the subcontractor receives unfair treatment from the principal contractor, it should be careful to recognize that there was an agreement between the subcontractor and the principal contractor on the contents of the contract, based on the circumstance that the subcontractor did not raise any objection to the measures or actions of the principal contractor unfavorable

(2) However, Article 6 (2) of the subcontract of this case provides that the payment of progress payment shall be subject to the "Terms and Conditions for Payment of Claim", while the rate of cash and bill was not determined separately, and Article 53-2 (1) of the General Conditions applicable to the contract between the ordering person and C provides that "C shall pay to the subcontractor in cash the amount equivalent to the part executed by the subcontractor within 15 days if the subcontractor receives the advance payment from the ordering person." The contents of each of the terms and conditions mentioned above are as follows: (a) the situation where the subcontractor is bound to be employed in the course of the performance of the subcontract; (b) the motive and circumstances leading up to the establishment of the warranty period under the contract of this case; (c) the parties’ genuine intent and transaction practices; (d) the Plaintiff and C shall pay progress payment once a month; and (e) it is reasonable to interpret that it agreed to pay it within 15 days from the date when C receives the payment for the portion in question from the ordering person. Nevertheless, the lower court erred and adversely affected the conclusion of the judgment.

3. As to the ground of appeal on the claim of deposit equivalent to the sixth progress payment

According to the reasoning of the lower judgment, the lower court determined that it was difficult to view the portion executed by the Plaintiff prior to the contract execution date stipulated in the instant guarantee agreement for the sixth progress payment, in light of the circumstances stated in its reasoning.

Examining the relevant legal principles and records, the lower court did not err in its judgment by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the legal doctrine on guarantee liability, without failing to exhaust all necessary deliberations, contrary to what is alleged in

4. Conclusion

Therefore, among the judgment of the court below, the part on the claim for deposit corresponding to the credit sales loan in the second to fifth credit sales loan is reversed, and that part of the case is remanded to the court below for further proceedings consistent with this Opinion. The remaining appeal is dismissed. It is so decided as per Disposition by the assent of

2. Judgment of the presiding judge

Chief Justice Kim Jong-il

Justices Lee Dong-won

Justices Kim Gin-soo