[1] Whether a director's breach of duty of loyalty and duty of care constitutes an act of neglect of duty under Article 401 (1) of the Commercial Code (affirmative)

[2] Whether the representative director's delegation of all of his/her duties to another director, etc., and the failure of the representative director to perform his/her duties at all constitutes an act violating the duty of loyalty and duty of care (affirmative)

[1] The liability for damages to a third party by a director of a stock company under Article 401 (1) of the Commercial Act is a requirement that the director neglects his/her duties due to bad faith or gross negligence. Thus, the failure to perform the company's obligations due to ordinary transactions cannot be deemed to have neglected his/her duties in bad faith or gross negligence. However, if it is illegal as an act of a director's failure to perform his/her duties and breach of duty of care, it constitutes a case where the director neglects

[2] The representative director delegates all business as the representative director to another director, etc., and the representative director's failure to perform his/her duties at all constitutes an act in violation of the duty of loyalty and duty of care of the director.

[1] Article 401 (1) of the Commercial Act / [2] Article 401 (1) of the Commercial Act

[1] Supreme Court Decision 96Da30465, 30472 decided Dec. 23, 1996 (Gong1997Sang, 512) Supreme Court Decision 2000Da47316 decided Mar. 29, 2002 (Gong2002Sang, 90) Supreme Court Decision 2001Da52407 decided Jun. 14, 2002 (Gong2002Ha, 1650)

The Korea Export Insurance Corporation (Attorney Han-soo et al., Counsel for defendant-appellant)

Defendant (Attorney Lee In-bok, Counsel for defendant-appellant)

Seoul High Court Decision 2002Na3893 delivered on November 19, 2002

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

1. The liability for damages against a third party by a director under Article 401 (1) of the Commercial Act is a requirement that a director neglects his/her duties due to bad faith or gross negligence. Thus, the failure of a director to perform his/her duties is not merely a failure to perform his/her duties due to ordinary transactions, but it constitutes a failure to perform his/her duties in bad faith or gross negligence (see Supreme Court Decision 2000Da47316, Mar. 29, 2002). However, where a director's act of violating good faith and duty of care is illegal, it constitutes a failure to perform his/her duties in bad faith or gross negligence (see Supreme Court Decision 2000Da47316, Mar. 29, 2002). The representative director delegates all duties as the representative director to another director, etc.

According to the reasoning of the judgment below, ○○○○○○’s auditor, based on the facts of its recognition, concealed that ○○○○○○○’s export bills at discount will be in default, and issued an export credit guarantee certificate from the Plaintiff. In addition, ○○○○○○, despite being aware that the importer was actually aware of the fact, issued an export bill and gave an exemption agreement, so it can easily be predicted that ○○○○○ would not pay the bill of exchange again by issuing and discounting export bills, and that the bill of exchange would cause the actual importer to pay damages caused by the bill of exchange, despite the fact that ○○○○ could have easily predicted that ○○○○ would not pay the bill of exchange, and the Defendant, who is the husband’s representative director, entrusted the Nonparty with all of ○○○○○○○○○’s business operations and did not perform his duties in good faith, and therefore, the court below erred by misapprehending the legal principles on the Plaintiff’s duty to pay damages to the Plaintiff’s representative director as a result of failing to perform his duties.

2. The fact-finding or the determination of the ratio of comparative negligence in a claim for damages is a matter belonging to the exclusive authority of a fact-finding court unless it is deemed remarkably unreasonable in light of the principle of equity (see Supreme Court Decisions 92Da20477 delivered on September 25, 1992, 96Da11440 delivered on September 4, 1998, etc.). In light of such legal principles and records, it is reasonable that the court below is justified to limit the scope of the defendant's liability to 70% in consideration of the circumstances as stated in its reasoning in calculating the amount of damages that the defendant is liable for damages, and there is no error of calculating the ratio of the plaintiff's fault too low, as alleged in the ground for appeal.

3. 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.

Justices Shin Hyun-chul (Presiding Justice)