2015Da44205 Return of Proceeds

Counseling Young-gu Master Limited Liability Company

A

Seoul High Court Decision 2013Na69370 Decided June 19, 2015

January 14, 2016

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. Where a contractual party prepares in writing a certain content of a contract as a disposal document, if the objective meaning of the text is clear, barring any special circumstance, the existence of a declaration of intent and its content should be recognized. In particular, in a case where the interpretation differently from the objective meaning of the text causes a serious impact on the legal relationship between the parties, it shall be more strictly construed (see, e.g., Supreme Court Decisions 2008Da46531, Nov. 13, 2008; 2010Da26769, Nov. 11, 2010).

2. The reasoning of the lower judgment and the evidence duly admitted reveal the following.

A. On June 23, 2011, the Plaintiff, a Chinese company, entered into a contract with the Defendant for the production of a master automatic assembly equipment (hereinafter “instant equipment”) (hereinafter “instant contract”).

B. (1) Article 1 of the contract (hereinafter referred to as "the contract of this case") prepared at the time of the conclusion of the contract of this case provides that "the purpose of this contract is to clarify the mutual rights and obligations between the plaintiff and the defendant in the manufacture of the facilities of this case and to manufacture the facilities of this case in a successful manner in accordance with the principle of trust and good faith. However, in order to reduce the unit price due to the cost of the production of the facilities, the defendant is responsible for the technical part (design Part), and the assembly and trial operation of finished products from the side to the completion of the contract, and the defendant shall be responsible for the work under his responsibility until the completion of the contract. The estimated amount out of the estimated amount shall be handled by sending the technical part (Design Part) to the defendant from the side of the contract of this case. The plaintiff bears only three times, and the other travel expenses shall be borne by the defendant, and the other travel expenses shall be borne by the defendant." The purpose of Article 2 of the contract of this case is to cooperate with the design of the facilities of this case and the technical support in China.

A. Contract deposit: 5,00,000 won shall be paid on June 23, 201 in cash, and b. The balance shall be paid within two days after the completion of a trial operation in cash. (4) Article 5 provides that "the plaintiff shall conduct an interim inspection, as required, in the presence of the defendant's technician. After the completion of construction of contract goods at the place designated by the plaintiff, the plaintiff shall conduct an interim inspection within five days and notify the defendant of the passing of the examination, and the examination period shall not exceed ten days." (5) Article 7 provides that "the defendant shall be liable to guarantee defects for 12 months from the completion of inspection of contract goods for manufacturing cases in Korea. In the event a problem in the construction of facilities occurs without the plaintiff's negligence during the warranty period, the defendant shall immediately take measures without delay."

C. Meanwhile, Article 1(1) of the Agreement (hereinafter “Agreement”) written by the Plaintiff and the Defendant around August 3, 201 (hereinafter “instant contract”) following the conclusion of the instant contract states, “The Defendant is responsible for the design following the Plaintiff’s request for automation system, is responsible for the overall system process following the Plaintiff’s request, and is responsible for the operation of equipment accordingly. Therefore, the Plaintiff is liable for the design cost of the requested product.”

On July 25, 201, the date of delivery of design drawings stipulated in the instant contract, the Defendant held several meetings with the Plaintiff regarding the entire work plan and progress of the instant facilities, including parts processing, assembly, and electricity work. On August 201 and September 201, the Defendant visited the Plaintiff’s Chinese workplace twice at the Plaintiff’s expense.

D. Around August 18, 2011, the Defendant received a written estimate from C on the electrical work of the instant facilities, and requested C to perform the electric work of the instant facilities.

E. On November 17, 201, the Plaintiff agreed to directly process and supply the instant facilities according to the instant contract, which were delayed to the extent that the instant facilities parts were produced in China and expected to be produced in China. On December 15, 2011, the assembly of the entire parts of the machinery was completed, and around that time, C began to work on the electrical facilities of this case.

F. C did not complete the electric work even if it had been postponed several times after the period ordinarily required for the electric work of the instant facilities was extended, and on April 10, 2012, the Plaintiff notified the Defendant of the cancellation of the instant contract and the return of down payment (the evidence No. 6, hereinafter referred to as the “instant notice”) by the notice of termination of the contract and the return of down payment, which the Plaintiff sent to the Defendant through C, a domestic corporation of the Plaintiff’s Republic of Korea, through a carter, around April 10, 2012, and thereafter, the notification was sent to the Defendant.

3. Based on the aforementioned factual basis: (1) around June 7, 2011, the Plaintiff entered into a written estimate submitted by the Defendant around June 7, 201, with the estimated amount of KRW 83,896,00,00, including production cost, assembly cost, installation trial operation cost, design cost, etc.; (2) as such, the contract amount has been considerably decreased from the estimated amount; (3) it appears that the Plaintiff, in order to lower the unit price of the production cost, which is most part of the estimated amount, was to manufacture the facilities of this case on its own account, including the Plaintiff’s direct production of some products; and (3) the agreement of this case written after the conclusion of the contract of this case, still stipulates that the Plaintiff would pay only the design cost of the product requested to the Defendant; and (4) the Plaintiff, through domestic corporations, from the notice of this case to the Defendant on April 10, 2012, through the machinery design and technical assistance, machinery construction work cost, and the Plaintiff’s overall production and distribution agreement between the Plaintiff and the Defendant.

On the grounds that the plaintiff produced and sent the net processed products to Korea, and that the design of the electric part, electricity, and other parts were delegated to the defendant and the defendant re-determined to assume the responsibility for the overall construction of design and automation facilities." (2) The defendant merely assumed that the plaintiff bears the responsibility for design of the facilities of this case to the plaintiff, and that the defendant is not responsible for technical advice and business selection in relation to the overall construction process after design. (3) It is insufficient to recognize that the defendant entered into a subcontract with C in the position of the contractor responsible for the entire construction process of the facilities of this case on the sole basis of the fact that the defendant received a estimate from C, and therefore, it is insufficient to recognize that the plaintiff cannot be held liable for the defendant, even if there is defect in the electric construction work of this case, and thus, the plaintiff's assertion that the contract of this case was cancelled due to the reasons attributable to the defendant.

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

A. Even if a written estimate as recognized by the lower court was prepared prior to the conclusion of the instant contract, as long as the instant contract was concluded with the intent of the parties thereafter, the objective and reasonable meaning of the agreement to be performed by the Defendant ought to be interpreted by taking into account the relevant circumstances based on the content of the said written estimate or the content of the instant contract, which is a disposal document, irrespective of their inner intent.

B. However, Article 1 of the instant contract states to the effect that all parts of the instant equipment are included in the Defendant’s liability, and Articles 3 and 5 provide that the Defendant shall undergo an examination of the Plaintiff regarding the trial operation after the completion of construction of the instant equipment, and that the Plaintiff shall pay the remainder to the Defendant within 2 days after the completion of the trial operation. Article 7 provides that the Defendant shall bear the responsibility for warranty of defects for 12 months from the completion of the inspection of the instant equipment.

In addition, taking into account the circumstances described in the purport that the Defendant is responsible for the complete operation of the facilities of this case, including the design, even the agreement of this case, which was made after the conclusion of the contract of this case, which provides for the Defendant’s duty to perform, the Defendant’s duty under the contract of this case includes not only the duty to design the facilities of this case, but also the duty to complete the trial operation of the facilities of this case by assembling the facilities of this case with parts supplied by the Plaintiff as well as the duty to design the facilities of this case, and the duty to complete the trial operation thereof. In addition, it is objectively consistent with the language and text of the contract of this case. Accordingly, the electricity work of this case done by C provided by the Defendant through C to perform the duty to operate the facilities of this case, and therefore, it is deemed that there is a cause attributable to the Defendant as to the failure to perform the said duty, such as the defect

C. Therefore, notwithstanding the language and text of the instant contract, the Defendant’s contractual obligation includes only the design of the instant facilities, and it is merely a mere obligation to cooperate except that. In order to interpret the instant contract as the original judgment, there should be special circumstances acceptable.

However, the circumstance that the contract of this case was concluded with the amount considerably reduced compared to the amount of the initial estimate cited by the lower court is merely the result of the Plaintiff’s direct manufacture and supply of the parts of the instant facilities, even based on the reasoning of the lower judgment. Moreover, in light of the circumstances that the Plaintiff appears to have failed to properly satisfy such technology, it is difficult to interpret the contract of this case to the effect that the overall production process, other than the design, solely on the grounds that the Plaintiff is responsible for the production and supply of the parts or processed products, takes place by the Plaintiff and the Defendant merely bears the duty of cooperation, such as technical advice and business selection, etc., in the process of performing the contract of this case.

In addition, the lower court still interpreted the Defendant’s obligation as above on account of the circumstances that the instant agreement states that the amount of the design cost stipulated in the instant agreement is to be paid or that the Plaintiff sent the instant notice. However, even upon examining the content of the instant agreement or the instant notice, it appears to the purport that the Defendant re-verifications the content of the instant agreement on the premise that not only the design but also the Defendant is responsible for the overall system process for operating the instant equipment and its normal operation, and there is sufficient room to deem that it conforms to the text of the instant agreement. Accordingly, there is sufficient room to deem that the said circumstances are consistent with the text of the instant agreement. Accordingly, unlike the objective meaning of the text of the instant agreement, there is a special reason to interpret that the Plaintiff directly agreed to manufacture the instant equipment on his responsibility or that the Defendant’s obligation is

It is reasonable to view that it is insufficient to view it as one of the circumstances.

5. Nevertheless, the lower court erred by misapprehending that the Defendant’s obligation was limited to the Defendant’s duty to design the instant facilities solely on the grounds that the Defendant did not interpret the Defendant’s obligation under the language and text of the instant contract, and instead denied the Defendant’s duty to design the instant facilities and equipment on the premise of such erroneous premise.

Therefore, the court below erred by misapprehending the legal principles on the interpretation of the disposal document, which affected the conclusion of the judgment. The ground of appeal assigning this error is with merit.

6. Therefore, 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 Kim In-bok

Justices Kim In-bok, Counsel for the defendant

Justices Park Young-young

Justices Kim Jong-il