[1] In a case where the parties to a contract of delegation determined the grounds, procedures, and liability for damages different from those stipulated in Article 689(1) and (2) of the Civil Act when entering into the contract of delegation, whether the contract cannot be terminated unless it follows the grounds and procedures for termination as stipulated in the agreement, and whether the legal relationship between the parties as to the liability for damages is governed by the agreement (affirmative

[2] In the case of a juristic act by a person having a legitimate representative authority, not only the effect of its establishment but also the liability for nonperformance, which is the effect of the violation, shall be attributed to a juristic person, not the representative authority (affirmative)

[1] Article 689(1) and (2) of the Civil Act merely merely provides a voluntary provision and thus, it may exclude the application of the above provision or otherwise determine the content of the agreement. In addition, in the event that a party concludes an agreement with a content different from that of Article 689(1) and (2) of the Civil Act with respect to the grounds and procedures for termination of delegation contracts, liability for damages, etc., such agreement may be deemed to have the intent to clarify the legal relationship between the parties and to protect the safety of transaction and their trust, and at the same time, it shall not be readily concluded that it is of a critical nature. Therefore, if a party entered into a delegation contract with a content different from that of Article 689(1) and (2) of the Civil Act, unless there are special circumstances to deem that this agreement is independently applied, it is reasonable to deem that the contract cannot be terminated without resorting to the grounds and procedures for termination as stipulated in the agreement, and that the agreement between the parties as to liability for damages shall also be governed by the legal relationship as stipulated in the agreement.

[2] Where a juristic person performs a juristic act through a representative body, the provisions on representation shall apply mutatis mutandis (Article 59(2) of the Civil Act). Therefore, the effect of a juristic act entered into with a person having legitimate authority of representation belongs not to a representative but to a juristic person which is the principal himself/herself, as well as the liability for damages arising from nonperformance of the obligation under such a juristic act is a principle that only a juristic person which is not a

In addition, Article 391 of the Civil Code considers the legal representative or performance assistant's intentional or negligent act as the debtor's own intentional or negligent act, thereby devolving on the debtor's responsibility for nonperformance. In the case of a corporation, the representative agency's intentional or negligent act is limited to a corporation.

Therefore, a juristic act by a person who has a legitimate power of representation of a juristic person can only belong to the juristic person as well as the effect of its establishment, and the liability for nonperformance, which is the effect of the violation, unless there are special circumstances such as other Acts and subordinate statutes, barring special circumstances, tort liability, etc. under Article 750 of the Civil Act should be established separately.

In order to view that the representative body of a corporation is liable for tort liability under Article 750 of the Civil Act as a natural person for a third party, the representative body, who entered into a contract with a corporation, should be held liable for tort liability based on the act of the representative body, is insufficient solely on the fact that the effect attributable to the corporation externally causes the result of nonperformance against a third party. It should reach the extent that it can be deemed an illegal act contrary to social norms in relation to a third party beyond the internal act of the corporation. The determination of such act ought to be made individually and specifically by comprehensively assessing the circumstances leading up to the decision-making and the act, the contents and procedure of the decision-making, the contents of the right infringed, the form of infringement

[1] Article 689 of the Civil Act / [2] Articles 59(2), 114, 391, and 750 of the Civil Act

[2] Supreme Court Decision 2006Da37465 decided Jan. 30, 2009 (Gong2009Sang, 211)

Seocho L&C Co., Ltd (mutual name before its correction: S&C Co., Ltd.) (Attorneys Lee Jae-soo et al., Counsel for the plaintiff-appellant)

Support 1 District Housing Redevelopment Project Association and one other (Attorneys Kang Dong-dong et al., Counsel for the plaintiff-appellant)

Defendant 3 and four others (Attorneys Kang Dong-dong et al., Counsel for the defendant-appellant)

Gwangju High Court Decision 2016Na1587 decided November 10, 2017

The part of the judgment of the court below against Defendant 3, Defendant 4, Defendant 5, Defendant 6, and Defendant 7 is reversed, and that part of the case is remanded to the Gwangju High Court. All appeals against the Plaintiff against Defendant 3, Defendant 4, Defendant 5, Defendant 6, and Defendant 7 are dismissed. The costs of appeal against Defendant 3, Defendant 4, Defendant 5, Defendant 6, and Defendant 7 are assessed against the Plaintiff.

The grounds of appeal are examined.

1. As to the liability for damages of Defendant 1 District Housing Redevelopment and Rearrangement Project Association

A. Article 104 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter “Urban Improvement Act”) provides that “Except as otherwise expressly provided for in this Act, with respect to the relationship between a person entrusting or requesting a management entity specialized in improvement projects with a person who has entrusted or requested a management entity specialized in improvement projects, the provisions on delegation under the Civil Act shall apply mutatis mutandis.” Article 689 of the Civil Act provides that “Any delegation contract may be terminated at any time by either party (Article 1), and where one party terminates a contract at a disadvantage of the other party without any inevitable reason, he/she shall compensate for losses (Article 2). Therefore, even if an association establishment promotion committee or project implementer under the Urban Improvement Act concludes a contract on the entrustment of business and the request for consultation with a management entity specialized in improvement projects, if this provision applies mutatis mutandis, the party may terminate the said contract at any time, and thereby, shall be liable for damages only if the other party terminates at a disadvantage without any inevitable reason.

However, the application of the above provision is merely a voluntary provision under Article 689(1) and (2) of the Civil Act and thus, it may be excluded or otherwise determined by the agreement of the parties. In addition, in the event that the parties enter into an agreement with a content different from the grounds and procedures for termination of delegation contracts, liability for damages, etc., such agreement may be deemed to have the purport of clarifying the legal relationship between the parties with the effect of the parties, and at the same time protecting their safety and trust, it shall not be readily concluded that it is of a critical nature. Therefore, if the parties entered into a delegation contract with a different content as stipulated in Article 689(1) and (2) of the Civil Act, unless there are special circumstances to deem that this agreement is separately and independently applied, it is reasonable to deem that the agreement cannot be terminated without recourse to the grounds and procedures for termination as stipulated in the above agreement, and that the agreement between the parties as to liability for damages shall also be governed by the legal relationship as stipulated in the above agreement.

B. 1) The lower court acknowledged the following facts in full view of the admitted evidence.

A) On November 5, 2014, the Committee for Promotion of the Establishment of Group 1 Housing Redevelopment and Rearrangement Project (hereinafter collectively referred to as the “Defendant Cooperative”) (hereinafter referred to as the “Defendant Cooperative”) selected the Plaintiff as a rearrangement project management contractor, and entered into a service contract (hereinafter “instant service contract”) with the content of entrusting the business of the rearrangement project on November 5, 2014.

B) Article 9(1) of the instant service contract provides that where the Plaintiff is found unable to perform the contract due to the occurrence of a cause falling under any of the following subparagraphs, the Defendant union may cancel or terminate all or part of the instant service contract if the Plaintiff failed to perform the contract within the said period after giving written notice within the ten-day contract execution period, without justifiable grounds (Article 9(1)); and also, where the Defendant union’s failure to comply with the business instruction of the Defendant union or to perform the service within the service period without justifiable grounds (Article 9(2) of the instant service contract provides that the Plaintiff may cancel or terminate all or part of the instant service contract if it is found that the Defendant union was unable to perform the contract by intentionally violating the contract terms and conditions (Article 9(2) of the instant service contract).

In addition, Article 11(1) of the instant service contract provides that the Defendant Union shall compensate the Plaintiff for the damages incurred by the cause falling under any of the following subparagraphs, and the Defendant Union’s failure to perform its duty of cooperation, etc. under this contract for the reasons set forth in each of the following subparagraphs (Article 11(1) of the instant service contract refers to the case where the Plaintiff suffered damages due to the Defendant Union’s replacement of the service agency business to a third party or the cancellation or termination of this contract due to the cause attributable to the Defendant Union (Article 2), and the case where the Plaintiff suffered damages due to the delay

C) Meanwhile, Article 10 of the instant service contract provides that the Plaintiff shall lend KRW 50 million to the account in the name of the financial institution designated by the Defendant Union immediately after the conclusion of this contract, and the Defendant Union shall issue a receipt therefor, and the Defendant Union shall attach the minutes to the meeting.

D) On November 6, 2014, immediately after the conclusion of the instant service contract, the Nonparty, who was in fact led to the conclusion of the instant service contract as the Plaintiff’s auditor, demanded that Defendant 2, the representative of the Defendant Union, deposit KRW 50 million in the contract deposit under Article 10 of the instant service contract, and that the account number in the name of the Defendant Union would be known to the financial institution.

E) However, Defendant 2 said to the effect that it may not use the existing financial account because it is likely to provisionally attach the financial account of the Defendant association in an international city, a management entity specialized in improvement projects, to the Nonparty, which is a management entity specialized in improvement projects. The Nonparty advise Defendant 2 to open another financial account under the name of the Defendant association, and the Nonparty again requested Defendant 2 to deposit the contract deposit with Defendant 2 at around 09:30 on November 14, 2014, but Defendant 2 did not give a definite answer.

F) On November 14, 2014, after 30 minutes from the Plaintiff, the Defendant Cooperative sent a notice of termination of the service contract (hereinafter “instant notice of termination”) to the Plaintiff by facsimile around 10:00, the Plaintiff sent to the Plaintiff a notice of termination of the service contract stating that “The Plaintiff shall immediately deposit the contract deposit amount of KRW 50 million in the passbook opened by the Promotion Committee pursuant to Article 16(1) of the Notice of Participation in the Tender Act, upon being selected as a rearrangement project management contractor. However, even after the lapse of one month after a general meeting, it still has not been deposited and is not deposited even after a demand was made.” This reached the Plaintiff at that time.

G) Around 12:00 on November 14, 2014, the Plaintiff became aware of the financial account of the instant promotion committee through Defendant 2, and deposit KRW 50 million with the said financial account around 15:12 on the same day.

H) On December 31, 2014, after the notice of termination of the instant case, the Defendant Cooperative concluded a consulting services contract with the Bad Co., Ltd. on December 31, 2014, and terminated it in order to prevent future legal lawsuits. On August 14, 2015, the Defendant Cooperative held a residents’ general meeting and selected the Dodle as a new management entity of rearrangement projects.

2) The lower court, based on the premise that the Defendant Union could freely terminate the instant service contract pursuant to Article 689(1) of the Civil Act and that the Plaintiff was not liable to compensate for damages therefrom, the lower court rejected the Plaintiff’s assertion that the Defendant Union should be liable for nonperformance under Article 11(1)2 of the instant service contract, as it did not accept the Plaintiff’s assertion that the Defendant Union should be held liable for damages due to the termination of the instant service contract, on the ground that there was no inevitable reason to terminate the instant service contract, and that the Defendant Union was jointly liable with Defendant 2, its representative, for damages incurred by the termination of the instant service contract.

C. However, the lower court’s determination is difficult to accept for the following reasons.

1) Article 9(1) of the instant service agreement entered into between the Plaintiff and the Defendant Union provides that the Defendant Union shall set the ten-day contract execution period and the written notification thereof, by limiting the grounds for rescission or termination to the Plaintiff’s nonperformance of obligation.

Article 9(2) of the instant service contract provides, contrary to the foregoing, the grounds for cancellation or termination by the Plaintiff as to the Defendant’s nonperformance of obligation, and provides, as the foregoing paragraph (1), procedural requirements to set the sufficient period for performing the contract and to give written notification.

As such, it is reasonable to view that the grounds and procedures for the cancellation or termination of the instant service contract by the Plaintiff and the Defendant Union, who are parties to Article 9(1) and (2) of the instant service contract, separately set out the grounds and procedures for the cancellation or termination thereof, as the parties intended to limit the case where there exist grounds prior to the unilateral termination of the instant service contract.

2) Article 11(1) of the instant service contract provides for the grounds for the payment of damages to the Plaintiff by the Defendant Union. In particular, the reason why the Defendant Union unilaterally terminates the instant service contract due to the reason attributable to the Defendant Union is the cause of the liability for damages. Such content is difficult to be compatible with the provision of Article 689 of the Civil Act, which provides that the parties to the instant service contract may freely terminate the contract and may only terminate the contract at an unfavorable time of the other party’s disadvantage without any inevitable reason.

Examining these circumstances in light of the legal principles as seen earlier, Article 689(1) and (2) of the Civil Act, which is a voluntary provision, excludes the application thereof by an agreement between the Plaintiff and the Defendant Union. In order for the Defendant Union to lawfully terminate the instant service agreement, one of the reasons under the subparagraphs of Article 9(1) of the instant service agreement ought to exist.

3) However, even according to the decision of the court below, if the amount of KRW 50 million is not paid before the notice of termination of the instant contract, it can be deemed that the Defendant association’s refusal of performance or violation of its duty of cooperation, or the Defendant association’s request for lease was not met with the requirements under Article 10(1) of the instant service contract, and thus, it cannot be deemed that the Plaintiff’s failure to meet the requirements under each subparagraph of Article 9(1) of the instant service contract, which is associated with the Plaintiff’s failure to pay.

4) As to the notice of termination of this case issued by the Defendant Union, the instant notice of termination is null and void unless the grounds set forth in each subparagraph of Article 9(1) of the instant service contract are met. Nevertheless, the Defendant Union’s conclusion of a contract with another company by unilaterally excluding the Plaintiff from the service after the notice of termination of this case is highly likely to fall under the grounds set forth in Article 11(1)2 of the instant service contract, which stipulates that the Defendant Union shall be liable for damages against the Plaintiff.

5) Nevertheless, the lower court, without examining whether the application of Article 689(1) and (2) of the Civil Act, which is a voluntary provision, was excluded by the party’s explicit or implied agreement included in the instant service agreement, determined on the premise that such provision of the Civil Act is, as it is, applied to the instant service agreement for the reasons indicated in its reasoning. In so determining, the lower court erred by misapprehending the legal doctrine on the interpretation of a party’s expression of intent to exclude the application of a voluntary provision, thereby adversely affecting the conclusion of the judgment. The Plaintiff’s ground of appeal assigning this error is with merit.

For this reason, as long as the Plaintiff’s appeal is accepted, it cannot be further determined on the grounds of appeal by the Defendant Union on a different premise.

2. As to the defendant 2's liability for damages

A. In a case where a juristic person performs a juristic act through a representative body, the provisions on representation are applied mutatis mutandis (Article 59(2) of the Civil Act). Therefore, the effect of a juristic act entered into with a person having legitimate authority of representation belongs to a juristic person, not a representative but a juristic person himself/herself, and as a matter of principle, liability for damages incurred due to nonperformance of obligations under such juristic act is the subject of responsibility.

In addition, Article 391 of the Civil Code considers the legal representative or performance assistant's intentional or negligent act as the debtor's own intentional or negligent act, thereby devolving on the debtor's responsibility for nonperformance. In the case of a corporation, the representative agency's intentional or negligent act is limited to a corporation.

Therefore, a juristic act done by a person who has a legitimate representative authority is merely attributable to a juristic person as well as the effect of its establishment, and the liability for nonperformance, which is the effect of the violation, is merely attributable to a juristic person. Unless there are special circumstances such as other statutes, tort liability, etc. under Article 750 of the Civil Act should be separately established if a representative authority is liable for

In order to view that a representative body of a corporation is liable for tort liability under Article 750 of the Civil Act against a third party, who is a party to a contract entered into with a corporation, as a natural person, the effect attributable to the corporation is insufficient solely on the ground that the act causes the result of the third party’s nonperformance. It should reach the extent that it can be deemed an illegal act contrary to social norms in relation to a third party beyond the internal act of the corporation. Whether it constitutes such act ought to be individually and specifically determined by comprehensively assessing the circumstances leading up to the decision-making and the subsequent act, the details and process of the decision-making, the contents of the right infringed, the form of infringement, the intent of the representative body, and the existence of intent or year (see Supreme Court Decision 2006Da37465, Jan. 30, 200).

B. Nevertheless, as seen earlier, the lower court determined that Defendant 2 is liable for damages under Article 689(2) of the Civil Act, on the sole basis of the fact that Defendant 2, who was the chairperson of the Defendant Union, knew that there was no inevitable reason to terminate the instant service contract with the Defendant Union, was terminated without examining whether the requirements for the establishment of liability for damages under Article 750 of the Civil Act with respect to the instant termination notification, and that Defendant 2, who was the chairperson of the Defendant Union, would immediately be jointly liable for damages due to tort against the Plaintiff. In so determining, the lower court erred by misapprehending the legal doctrine on the establishment of liability for damages by the representative body of the legal entity and failing to exhaust all necessary deliberations, thereby adversely affecting

For this reason, as long as Defendant 2’s appeal is accepted, the Plaintiff’s ground of appeal on the premise that Defendant 2’s liability for damages arising from tort is recognized is not further determined.

3. As to the Plaintiff’s remaining Defendants’ appeal

The ground of appeal submitted by the Plaintiff does not contain any indication in the grounds of appeal against Defendant 3, Defendant 4, Defendant 5, Defendant 6, and Defendant 7, and the petition of appeal does not contain any indication in the grounds of appeal.

4. Conclusion

Therefore, the part of the judgment of the court below against the defendant union and the defendant 2 is reversed, and that part of the case is remanded to the court below for further proceedings consistent with this Opinion. The plaintiff's appeal against the defendant 3, the defendant 4, the defendant 5, the defendant 6, and the defendant 7 is all dismissed. The costs of appeal against the defendant 3, the defendant 4, the defendant 5, the defendant 6, and the defendant 7 are assessed against the losing party. It is so decided as per Disposition by the assent

Justices Kim Jae-hyung (Presiding Justice)