[1] In a case where a contract bond is agreed to be liquidated damages, whether an obligee can claim the amount of liquidated damages if it is proved only by the fact of nonperformance (affirmative)

[2] The meaning of "in cases where the estimated amount of damages under Article 398 (2) of the Civil Code is unreasonably excessive," and the method of determining such amount

[1] Where there is an estimate of the amount of damages due to nonperformance, the obligee may claim the amount of damages without proving the occurrence of damages and the amount of damages if he/she proves only the fact of default.

[2] In order for a court to reduce the amount of damages in an unduly excessive amount under Article 398 of the Civil Code, it shall be deemed that the payment of the estimated amount of damages would result in the loss of fairness by imposing unfair pressure on the debtor who is in the position of the economically weak, as a result of considering the economic status of the creditor and the debtor, the purpose and content of the contract, the scheduled amount of damages, the developments leading up to the scheduled amount of damages, the ratio of the estimated amount of damages to the amount of debts, the expected amount of damages, the transaction practices at the time

[1] Article 398(1) and (4) of the Civil Act / [2] Article 398(1) and (2) of the Civil Act

[1] Supreme Court Decision 74Da296 delivered on March 25, 1975 (Gong1975, 8407), Supreme Court Decision 87Da8053 delivered on May 10, 198 (Gong198, 951), Supreme Court Decision 90Da8053 delivered on January 11, 1991 (Gong1991, 720) / [2] Supreme Court Decision 92Da41719 delivered on April 23, 1993 (Gong193Ha, 1528), Supreme Court Decision 95Da42393 delivered on February 27, 196 (Gong196, 1100), Supreme Court Decision 9Da39794 delivered on June 10, 197 (Gong1997Da1953979 delivered on September 195, 197)

Dongbu Construction Co., Ltd. (Law Firm Barun, Attorney Jeong Ho-ho, Counsel for defendant-appellant)

Specialized Construction Financial Cooperative (Law Firm East, Attorney Kim Jong-ray, Counsel for the defendant-appellant)

Seoul High Court Decision 2000Na333 delivered on August 17, 2000

The part of the lower judgment against the Plaintiff is reversed, and that part of the case is remanded to the Seoul High Court. The Defendant’s supplementary appeal is dismissed.

1. Plaintiff’s ground of appeal

A. Basic facts acknowledged by the court below

(1) On July 21, 1997, the Plaintiff entered into a subcontract agreement with the non-party 1,265,000,000 won (the supply price of KRW 1,150,000,000 + value-added tax of KRW 115,00,000), the construction period from July 21, 1997 to May 31, 1998, with respect to the part of the joint redevelopment project performed by the Plaintiff (hereinafter “instant construction project”) among the joint redevelopment project executed by the Plaintiff (hereinafter “the instant subcontract agreement”).

(2) In concluding the instant subcontract, the Plaintiff and the Nonparty Company agreed to pay the Plaintiff the contract bond equivalent to 10% of the construction cost, and the contract bond shall be reverted to the Plaintiff in the event the contract is terminated or terminated due to the cause attributable to the Nonparty Company.

(3) On July 18, 1997, the non-party company entered into a subcontract performance guarantee contract with the non-party company to guarantee the obligation to pay the above contract deposit to the plaintiff between the defendant and the non-party company, and issued a contract guarantee amount of KRW 126,50,000 from the defendant, and issued it to the plaintiff in lieu of the payment of the above contract deposit.

(4) However, while the construction of this case was in progress, the non-party company could no longer proceed with the construction of this case. On March 20, 1998, the non-party company issued a written waiver of the construction of this case to the plaintiff. On April 16, 1998, the plaintiff sent to the non-party company a written notification that the contract of this case should be terminated on April 25, 1998. The plaintiff sent to the non-party company a written notification stating that the contract of this case will be terminated on the remainder of the construction of this case (including value-added tax 102,00,000,000) and the construction period will be 1,122,000,000 won (value-added tax 1,00,000) and July 31, 1998.

(5) After that, upon completion of the above construction on July 31, 1998, the construction of this case was completed, the Plaintiff settled the progress payment amount of the non-party company at the time of termination of the subcontract of this case at KRW 343,200,000.

B. The judgment of the court below

The court below determined that the Plaintiff’s claim that the contract bond of this case was not unfairly excessive as the estimated amount of compensation for delay due to the non-party company’s default was 44,275,000 won, and that there was no other material to find that there was a special loss other than the above liquidated damages, and that there was no other material to find that there was a considerable loss other than the above liquidated damages, and that the estimated amount of compensation for delay was unfairly excessive and reduced to 50,500,000 won. If the Plaintiff’s payment for delay paid to the non-party company and the construction cost paid to the non-party company, the amount of 200,200,000 won was more than the originally agreed construction cost, and thus the Plaintiff suffered losses, it is difficult to consider that the contract bond of this case was unreasonable as the estimated amount of compensation for delay, and there was no difference between the Plaintiff’s construction cost and the non-party company’s construction cost, which had been concluded with the non-party company as the basis of the subcontract agreement with the non-party company.

C. Judgment of the Supreme Court

However, we cannot accept the judgment of the court below for the following reasons.

(1) If there is an estimate of the amount of damages due to nonperformance, the obligee can claim the amount of damages without proving the occurrence of damages and the amount of damages (see, e.g., Supreme Court Decisions 74Da296, Mar. 25, 1975; 90Da8053, Jan. 11, 1991). Thus, in the instant case where the contract deposit was agreed to be the amount of damages as liquidated damages, the obligee did not bear the burden of proving the causation between the amount of damages suffered by the Plaintiff and the non-party company’s non-performance of obligations, but the court below’s determination as above is erroneous in the misapprehension of the burden of proving the causation between the amount of damages and the causal relationship between the amount of damages and the non-party company

(2) On the day following the renunciation of construction work by the non-party company, the court below found that the plaintiff colored another business operator with respect to the remaining pressing construction cost of KRW 1 billion and concluded a subcontract and calculated the number of delayed days due to the non-party company's non-party company's non-performance of construction from that date on the premise that the other business operator should continue construction work on the same day, and it should be considered as 35 days in light of the empirical rule, and thus, the court below's measures are unlawful in this regard.

(3) In order for a court to reduce the estimated amount of damages to be unfairly excessive, it shall be deemed that the payment of the estimated amount of damages would result in the loss of fairness by unfairly pressure on the debtor who is in the position of the economically weak, as a result of taking into account the economic status of the creditor and debtor, the purpose and content of the contract, the developments leading up to the scheduled amount of damages, the ratio of the estimated amount of damages to the amount of debts, the expected amount of damages, the transaction practices at the time, economic conditions, etc. (see Supreme Court Decision 92Da41719, Apr. 23, 1993).

The court below found the following facts: (a) the non-party company entered into the instant subcontract and went into a construction project equivalent to KRW 343,200,000, which is equivalent to KRW 30% of the initial supply price; and (b) the non-party company subsequently renounced the instant construction project; and (c) confirmed that there was no unpaid wage related to the instant construction project until that time, the non-party company entered into a written waiver of construction that the non-party company promised to pay the unpaid wage directly from the progress payment amount of the non-party company; (b) the non-party company suspended the construction without implementing the instant subcontract; and (c) the non-party company was presumed to have been presumed to have been 44,275,00 won, which is equivalent to the compensation for delay for 35 days.

However, the ground of paragraph (1) is not the reason for reducing the estimated amount of damages of this case. (2) The court below calculated liquidated damages and calculated the number of delayed days in spring, and there is no proof by the defendant as to special circumstances such as the non-party company's default of obligation to pay damages or the amount of damages is very low. Rather, according to the records, in order to complete the construction of this case as originally scheduled, it was necessary for the plaintiff to have another business operator perform the construction work as soon as possible than the scheduled construction speed of the contract between the plaintiff and the non-party company, and for that purpose, the demand for paying the remaining construction costs more than the original construction cost is inevitable (for example, holiday work allowances, night work allowances, etc., for reduction of construction period), and it can be seen that 10% of the estimated amount of subcontract damages of this case should be determined as a down payment contract, which is a general business practice of this case.

Therefore, it is difficult to view that the estimated amount of damages of this case is to be such a degree that the Plaintiff would lose fairness by imposing unfair pressure.

(4) Ultimately, in the instant case where there is no proof by the Defendant on special circumstances such as the non-party company’s default of obligation that the Plaintiff did not cause damages or that the amount of damages is very low, it is difficult to view that the estimated amount of damages, which is 10% of the subcontract price, would be the extent that the Plaintiff would lose fairness by unfairly pressure. However, the lower court erred by misapprehending the legal doctrine on the reduction of the estimated amount of damages, thereby adversely affecting the conclusion of the judgment. The Plaintiff’s ground of appeal assigning this error is with merit.

2. As to the Defendant’s grounds of incidental appeal

The Defendant’s ground of incidental appeal that the number of delayed days for which Nonparty Company is liable to pay liquidated damages should be 25 days is without merit in light of the foregoing.

3. Therefore, the part of the lower judgment against the Plaintiff is reversed, and that part of the case is remanded to the lower court for further proceedings consistent with this Opinion. The Defendant’s supplementary appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Son Ji-yol (Presiding Justice)