In cases where the representative director’s power of representation is restricted by the articles of incorporation, regulations of the board of directors, etc. of a corporation, whether a third party, the other party to the transaction, is required to obtain protection pursuant to Article 209(2) of the Commercial Act (negative), and in cases where a third party was grossly negligent, whether the transaction is null and void (affirmative)

[Majority Opinion] (A) The representative director of a stock company externally and externally has the authority to represent the company and perform the business affairs of the company. The representative director is not a substitute for the act of the company, but a company itself is an institution that conducts the act of the company. The company is realized through its representative director, and the act of the representative director is the act of the company. The Commercial Act provides that the restriction on the representative director’s right to represent shall not be asserted against a third party acting in good faith (Articles 389(3) and 209(2) of the Commercial Act).

In a case where the power of representation is restricted, a representative director shall have the power of representation only within the scope of the limited scope. However, even if such restriction is not an act in violation of the company’s legal capacity, a third party who is unaware of the restriction on the power of representation is bound to believe that such act is the act in violation of the company’s legal capacity, and such trust should be protected. Even in a case where the power of the representative director is restricted to undergo a resolution of the board of directors regarding a certain external transaction, a resolution of the board of directors is merely an internal decision-making procedure of the company, and barring any special circumstance, deeming that the representative of the company was trusted as having completed the internal procedure of the company as the transaction partner accords with the empirical rule. Therefore, even in a case where the power of representation of the representative director subject to a resolution of the board of directors

In order to be protected pursuant to Article 209(2) of the Commercial Act, a third party, who is the other party to a transaction, does not need to act without fault in addition to good faith, but if there is gross negligence, it is reasonable to interpret that the transaction is null and void by deeming that there is no value to protect the third party’s trust. Gross negligence means a situation where the third party is considerably in breach of the duty of care required under the common sense of transaction by believing that a resolution of the board of directors was made by the third party, even though he/she could have been aware of the absence of a resolution of the board of directors if he/she did so with due care. Whether there is gross negligence on the part of a third party means a situation where it is difficult to protect the third party from an equitable perspective by neglecting due care to the fact that there is no resolution of the board of directors. Whether there is gross negligence on the part of a third party, the experience and status of a third party who made the transaction with the company, and whether the trading made by the representative director falls under this example in light of the empirical rule. However, there is no obligation to confirm whether there exists a resolution.

(B) Article 393(1) of the Commercial Act that limits the representative director’s right to represent applies uniformly to those who are unaware of, or unable to, understand the existence of, the relevant provision. Since the application cannot be avoided on the ground of mistake in the site or legal assessment of a law, restrictions pursuant to this Article may be viewed differently from internal restrictions. However, even in cases where the representative director of a corporation conducts a transaction without a resolution of the board of directors regarding “the disposal and transfer of important assets, and the act of borrowing large-scale assets, etc.” as stipulated in this Article, the validity of the transaction ought to be seen as in the foregoing internal restrictions.

[Dissenting Opinion by Justice Park Sang-ok, Justice Min You-sook, Justice Kim Yong-hwan, and Justice Noh Tae-ok] (A) It is unreasonable to view that Article 209(2) of the Commercial Act applies entirely to the case where a representative director of a stock company “where a resolution of the board of directors ought to be passed by the board of directors” constitutes a limitation on the representative director’s right of representation. Considering the structural differences between a stock company which has the legal limitation on the power of representation and an unlimited partnership company that is not so, Article 209(2) of the Commercial Act on the representative member of an unlimited partnership company that is anticipated to be restricted only by internal regulations, such as its articles of association, applies mutatis mutandis to the representative director of a stock company pursuant to Article 389(3) of the Commercial Act, not to apply mutatis mutandis to all cases concerning the restriction on the representative director’s right of representation, in nature, to the extent that it can be applied mutatis mutandis by nature. Thus, it cannot be deemed that Article

(B) The change of the standard to protect the counterparty from “faith and without fault” to “faith and without fault” is limited to the expression “faith and without fault.” From the perspective of the Majority Opinion, the change of the standard to protect the counterparty’s protection to “faith and without fault” is difficult to be specific and reasonable when resolving individual cases by taking account of the outcome of “faith and without fault”. Until now, the precedents focus on interpreting the scope of “faith and without fault” protected according to various substantive relations of a company under the principle to protect the counterparty of the transaction without fault, while the transaction partner without fault is operating the system to compensate for damages against the company, thereby promoting the fair and reasonable apportionment of damages through offsetting negligence. From the perspective of this, the change of the precedent to “faith and without fault” is not limited to the expression “faith and without fault.” From the perspective of the Majority Opinion, the change of the precedent to “faith and without fault” does not appear to bring about a change in the context of “non-performance” to the extent that it would result in the change of the precedent to the extent that the latter’s business practice would not change.

Articles 209, 389(3), and 393(1) of the Commercial Act

Supreme Court Decision 78Da389 delivered on June 27, 197 (Gong1978, 10971) (amended) Supreme Court Decision 94Da33903 delivered on April 11, 1995 (Gong1995Sang), Supreme Court Decision 94Da42754 delivered on January 26, 1996 (Gong1996Sang, 722 delivered on June 13, 197), Supreme Court Decision 96Da48282 delivered on June 26, 197 (Gong197Ha, 2151) (amended on August 29, 205), Supreme Court Decision 207Da1829 delivered on August 29, 207 (amended on April 29, 2005) (amended on August 29, 2005).

Jinjin Co., Ltd. (Attorney Jeong-il et al., Counsel for the defendant-appellant)

Treatment Industry Development Co., Ltd. (Law Firm LLC et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2014Na10801 decided July 10, 2015

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

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Whether the Plaintiff may be protected as “a bona fide third party” for the Defendant’s guarantee without a resolution of the board of directors (ground of appeal No. 3)

A. Key issue

Although the representative director of a corporation is required to conduct a certain transaction according to the resolution of the board of directors, the issue of this case is how to protect the third party, who is the other party to the transaction, in the case where the transaction was conducted without the

(b) Authority of the representative director and resolution by the board of directors;

Generally, the representative director of a corporation may perform all judicial or extra-judicial acts within the scope of the company’s legal capacity (Articles 389(3) and 209(1) of the Commercial Act). However, his/her power of representation may be restricted by law (hereinafter “legal restriction”), and may be restricted by internal procedures, such as the articles of incorporation and resolution of the board of directors, internal regulations, etc. (hereinafter “internal restrictions”).

Article 393(1) of the Commercial Act provides that “The disposal and transfer of important assets, and the borrowing of large-scale assets, etc. shall be subject to a resolution by the board of directors.” Accordingly, the board of directors of a stock company shall not be entrusted to the representative director without a direct resolution by the board of directors in the event a stock company disposes of important assets, borrows large-scale assets, etc. Therefore, the board of directors may not directly and specifically decide on the management of the company’s business. In other words, the execution of important business that is not entrusted to the representative director, which is not subject to ordinary business, must be necessarily subject to a resolution by the board of directors, regardless of whether the articles of incorporation or the regulations of the board of directors stipulate the resolution by the board of directors (see Supreme Court Decisions 2009Da55808, Jan. 14, 2010; 2019Da20463, Aug. 14, 2019).

In addition, even if a representative director does not fall under “the disposal of important assets or the business of borrowing large-scale assets, etc.” under Article 393(1) of the Commercial Act, a resolution of the board of directors may be made when the representative director performs a certain act in accordance with the articles of incorporation or the regulations of the board of directors of a corporation. Such cases are internal restrictions separate from

(c) Internal restrictions on the representative director's representative authority and protection of a third party in good faith;

The representative director of a corporation externally and externally has the authority to represent the corporation and perform the business affairs of the corporation. The representative director is not a substitute for the act of the corporation, but a company itself is an institution that conducts the act of the company. The company realizes the intent determined through the general meeting of shareholders or the board of directors and other decision-making organizations through its representative director, and the act of the representative director is the act of the company immediately. The Commercial Act provides that the restriction on the representative director’s right to represent shall not be asserted against a third party acting in good faith (Articles 389(

Where the power of representation is restricted, a representative director shall have the power of representation only within the scope of the limited scope. However, even if such restriction is not violated, if it does not deviate from the company’s legal capacity, a third party who is unaware of the restriction on the power of representation shall be bound to believe that such restriction is the company’s representative act, and such trust shall be protected (see Supreme Court Decision 97Da18059, Aug. 29, 1997). In a case where the authority of the representative director is restricted by a resolution of the board of directors regarding a certain external transaction, the resolution of the board of directors is limited to the company’s internal decision-making procedure, and barring any special circumstance, it is in accord with the empirical rule to deem that the representative of the company trusted that he completed the company’s internal procedure (see Supreme Court Decisions 2005Da480, May 27, 2005; 206Da47677, Mar. 26, 2009).

Although a third party, who is the other party to a transaction, does not need to be protected pursuant to Article 209(2) of the Commercial Act in good faith and without fault, if there is gross negligence, it is reasonable to interpret that a transaction is null and void by deeming that there is no value to protect the third party’s trust. Gross negligence refers to a situation where the third party is considerably in breach of the duty of care required in the common sense of transaction by believing that there was a resolution of the board of directors, even though the third party would have been able to know that there was no resolution of the board of directors if he/she had been paid a little attention. Whether there was gross negligence on the part of a third party refers to a situation where it is difficult to protect the third party from an equitable perspective by neglecting the duty of care required in the common sense of transaction. Whether there was gross negligence on the part of a third party, the recognition and status of the third party who transacted with the company, experience and status of the third party, and whether the trading made by the representative director falls under this example in light of the empirical rule. However, if there is no special circumstance to deem that the third party.

(d) Restriction on the representative director's power of representation and protection of a bona fide third party under Article 393 (1) of the Commercial Act;

Article 393(1) of the Commercial Act that limits the representative director’s right to represent applies uniformly to a person who is unaware of, or has failed to, understand the existence of, the relevant provision. Inasmuch as the application cannot be avoided on the ground of an error in the site of a law or the legal assessment, restrictions pursuant to this Article may be deemed different from internal restrictions. However, even in cases where a representative director of a stock company conducts a transaction without a resolution of the board of directors regarding “disposal and transfer of important assets, and borrowing of large-scale assets, etc.” as stipulated under this provision, even in cases where the representative director of a stock company conducted a transaction without a resolution of the board

(1) Whether a certain transaction constitutes “the disposal and transfer of important assets, and borrowing of large-scale assets” under Article 393(1) of the Commercial Act ought to be determined depending on whether it is appropriate to assign a representative director’s decision in light of the value of the assets and the weight of the total assets in the size of the company, the business or property status of the company, the management status, the purpose or place of the possession of assets, the company’s ordinary business relations, and the performance of its previous business affairs (see Supreme Court Decisions 2005Da3649, Jul. 28, 2005; 2007Da23807, May 15, 2008). However, from the standpoint of the counterparty who trades with the representative director, it is difficult to ascertain the specific situation of the company, and there is no need to know about the fact that the other party makes a transaction with the company. Even if the other party is aware of such circumstances, it is not easy to determine whether the transaction constitutes an asset subject to the representative director’s decision.

(2) In light of this, if the basis for demanding a resolution of the board of directors is either Article 393(1) of the Commercial Act or the criteria for protecting the other party depending on whether it is an internal provision, such as the articles of association, etc., the legal relationship is inevitable to be unclear. The distinction between gross negligence and lapsed room is relative, its boundary is ambiguous, and the existence and seriousness of negligence is determined by considering the specific circumstances in individual cases. In determining the validity of transactions without a resolution of the board of directors, where the resolution of the board of directors should undergo a resolution of the board of directors pursuant to Article 393(1) of the Commercial Act, the party to the “faith and without fault” should be protected, but if the articles of association, etc. stipulate that the resolution of the board of directors should be made, the so-called dual theory distinguishing between the two types, namely, protecting the other party in good faith and without fault, causes unnecessary confusion and transaction costs in the transaction surrounding the company. If following this Opinion, even if the company requires a resolution of the board of directors under the internal provision such as the articles of association, etc.

On the contrary, in the case of Article 393(1) of the Commercial Act, as in the case of internal restrictions, Article 209(2) of the Commercial Act applies to the case of Article 393(1) of the Commercial Act, it is only necessary to determine whether there was any bad faith or gross negligence on the part of the transaction partner, regardless of whether there was no resolution of the board of directors, regardless of whether Article 393(1) of the Commercial Act applies to the transaction subject to resolution of the board of

(3) A party who has transacted with a manager or an apparent representative director is protected unless gross negligence is gross negligence even if there is any negligence (see Supreme Court Decisions 96Da36753, Aug. 26, 1997; 9Da19797, Nov. 12, 199). The representative director has a strong authority over a manager or an apparent representative director. Demanding negligence from a transaction partner solely on the ground that a resolution of the board of directors required under Article 393(1) of the Commercial Act was not passed. Demanding negligence from a transaction partner would result in less protection than a manager or an apparent representative director than a transaction with a true representative director, and thus, it is difficult to understand even from a perspective of equity.

(4) A resolution of the board of directors is merely an internal decision-making procedure of the company when the representative director conducts a transaction on behalf of the company. Trust by a third party, the counterparty to the transaction, is not different depending on the grounds that the resolution of the board of directors is required. Nevertheless, if it is deemed that only if an internal restriction is violated, the act falls under Article 393(1) of the Commercial Act, or the degree of the duty of care that the counterparty should pay to the transaction partner depending on whether the internal restriction is an act or an act falling under a mere internal restriction, the other party should grasp the internal situation of the company, and ultimately, it ultimately causes an unreasonable result in the company by increasing unnecessary transaction costs.

(5) According to Article 393(1) of the Commercial Act, the cases where a resolution of the board of directors is required and where a resolution of the board of directors is required pursuant to the internal regulations, such as the articles of association, may be distinguished. However, the Supreme Court has determined the validity of a transaction depending on whether the other party is acting in good faith or without fault without distinction. This is because, regardless of which the representative director’s authority is limited in any way, it is reasonable to determine the validity of an external transaction made by the representative director in accordance with Article 393(1) of the Commercial Act rather than entirely distinguishing the case of internal restriction from the case of an internal restriction.

(6) Whether to determine the invalidity of a resolution of the board of directors as required by Article 393(1) of the Commercial Act is a matter of determining how to reasonably distribute the risks caused by the failure of the board of directors resolution between the company and its trading counterpart, and the interested parties in external transaction. In the case of a stock company, a resolution of the board of directors is an internal procedure of the company. Unless there are special circumstances to suspect that a third party did not have a resolution of the board of directors of the company, it is not desirable to transfer the risks arising from the company’s internal transaction to the other party to the transaction with the representative director. Until now, there are reasonable grounds to determine whether to distinguish the risks arising from the company’s internal transaction in violation of the internal restrictions and the transaction in violation of Article 393(1) of the Commercial Act based on the same effect. Therefore, even if the representative director without going through a resolution of the board of directors pursuant to Article 393(1) of the Commercial Act, it is reasonable to regulate the same as the case where the representative director’s power of representative director has been restricted internal or internal transaction.

E. Changes in precedents

Supreme Court Decisions 78Da389 delivered on June 27, 1978; 94Da33903 delivered on April 11, 1995; 94Da42754 delivered on January 26, 1996; 96Da48282 delivered on June 13, 1997; 97Da35276 delivered on July 24, 1998; 98Da2488 delivered on October 8, 1999; 206Da36465 delivered on July 26, 2005; 206Da36471 delivered on July 26, 2005; 206Da36475 delivered on July 24, 2005; 206Da366741 delivered on July 28, 2005.

F. Facts

The reasoning of the lower judgment and the record reveal the following facts.

(1) The Plaintiff is a company engaged in the manufacture and sale of electric machinery. The Defendant, as a result of the authorization of the rehabilitation plan for the Daewoo Motor Sales Co., Ltd., for which the rehabilitation procedure is in progress, succeeded to the construction sector of the said company, and the rehabilitation procedure was completed on December 30, 201, and the rehabilitation procedure was completed on December 30, 201. The ○○ New Urban Land Co., Ltd. (hereinafter “○○○ New Urban Land Co., Ltd.”) concluded an implementation agency contract with the Gwangjuyang District Land Partition Association and the Mineyang District Land Rearrangement Project Co., Ltd. (hereinafter “instant project”).

(2) Around January 2012, the Defendant entered into an agreement with △△ Construction Co., Ltd. on the instant project, and appointed Nonparty 1 as the president on February 3, 2012, and as the representative director on March 27, 2012. Around March 2012, the Defendant decided to order Nonparty 1 to undertake the instant project that was promoted when Nonparty 1 works for △△ Construction Co., Ltd., and entered into a joint construction agreement with △△ Construction Co., Ltd. on March 22, 2012, which recognized the Defendant as a certain equity share. The Defendant entered into the instant agreement on the instant project with △△△△ Construction Co., Ltd., Ltd., and the instant project, but the Defendant performed the instant project on behalf of ○○○ Urban Co., Ltd., and entrusted the Defendant with the initial fund required for the Defendant’s construction project and △△ Construction Co., Ltd., Ltd., to raise the initial project funds.

(3) The head of ○○ New Urban Complex, Inc., was unable to contribute the initial business fund, and the head of ○○ New Urban Complex was difficult to raise the necessary business fund by requesting the Defendant to lend the initial business fund. Nonparty 1 requested the Plaintiff to lend the fund to the Defendant.

On April 10, 2012, the Plaintiff agreed to lend KRW 3 billion to ○○ New Urban Parcel, which is intended to receive the instant electrical construction, etc., and on April 10, 2012, at the Defendant representative director’s office Nonparty 1’s office, Nonparty 1, the Plaintiff’s actual manager, Nonparty 2, and Nonparty 3, the actual manager of ○○ New Urban Parcel, who is the Plaintiff’s actual manager, entered into the instant loan agreement with the Plaintiff’s New Urban Parcel, as follows.

“The Plaintiff shall lend KRW 3 billion to ○○ New Urban Parcel, and shall be paid KRW 6 billion plus dividends of KRW 3 billion in the principal within six months. If the Plaintiff fails to pay it on the repayment date, the Plaintiff shall transfer to the Plaintiff all the business rights granted by the Land Partition Association of the Mineyang ○○ District in total amount of KRW 3 billion.”

In addition, Non-party 3 and non-party 4, who are the substantial operator and directors of ○○ New Urban Parcel, jointly and severally guaranteed the debt of ○○ New Urban Parcel.

(4) On the same day, Nonparty 1 prepared a written confirmation under the name of the Defendant (hereinafter “instant confirmation”) stating that “if the terms of a monetary loan agreement between the two companies as above concluded on April 10, 2012 do not proceed, the principal of the loan shall be subrogated)” to the Plaintiff at the above office. However, at the end of the written confirmation, Nonparty 1 stated the Defendant’s trade name and address, and the phrase “representative director” as “representative director,” and Nonparty 1 stated the name in the name of the principal.

(5) According to the provisions of the Defendant’s board of directors at the time, the term “an act of raising a large amount of funds and providing guarantee” was set as the agenda of the board of directors. However, Nonparty 1 did not have a resolution of the Defendant’s board of directors at

(6) In 2012, the Defendant’s assets amounting to approximately KRW 170 billion and the sales amount to approximately KRW 100 billion.

G. Determination on the instant case

Examining these facts in light of the aforementioned legal principles, the following conclusion is derived.

(1) In light of the Defendant’s assets and sales size, the transaction relationship with the original Defendant, and the details of the preparation of the confirmation document, etc., the Defendant’s act of guaranteeing the Defendant’s obligation of KRW 3 billion by preparing the instant confirmation document constitutes a matter that ought to be resolved by the board of directors pursuant to the

(2) There is no evidence to deem that the Plaintiff knew that the instant certificate was prepared without the resolution of the Defendant’s board of directors.

(3) In full view of the following circumstances, it cannot be deemed that there was gross negligence on the part of the Plaintiff, a third party, who was not aware of the fact that the instant certificate was prepared without the resolution of the

The Plaintiff’s actual operator, Nonparty 2, upon Nonparty 1’s request, concluded the loan agreement of this case that lent KRW 3 billion to ○○ New City Parcel. If the Defendant did not guarantee the Defendant’s obligation of ○○ New City Parcel, the Plaintiff would have not concluded the loan agreement of this case.

In light of the Defendant’s scale and the degree of risk to be borne by the Defendant, it is not apparent that the Defendant has to undergo a resolution of the board of directors to prepare the instant confirmation document to the effect that the Defendant guarantees the obligation of KRW 3 billion through the instant confirmation document. It is in accord with the empirical rule to deem that the representative director of a stock company was trusted to have followed internal procedures necessary for transaction. In this case, there is no special circumstance to suspect that the Plaintiff did not have a resolution of the board of directors regarding the preparation of the instant confirmation document.

H. Appropriateness of the lower judgment

In the same purport, the court below’s conclusion that the instant confirmation document is recognized as the Defendant’s expression of intent, not Nonparty 1’s expression of intent, and that even if Nonparty 1 prepared the instant confirmation document without the resolution of the board of directors, the Defendant shall perform the obligation pursuant to the instant confirmation document to the Plaintiff is correct. In so doing, the court below did not err by misapprehending the legal principles on the interpretation of disposal documents and the validity of the

2. Whether a claim pursuant to the instant confirmation cannot be filed against the Defendant, since the Plaintiff’s claim for the borrowed money against the Plaintiff’s ○○○ Urban Parcel was extinguished by payment in kind (Ground of appeal No. 1)

The lower court determined that the loan obligation cannot be extinguished due to payment in lieu of the loan obligation under the loan agreement of this case, even if ○○ New Urban Lots requested the Plaintiff to proceed with the transfer of the right to execute the business of this case, inasmuch as ○○○ New Urban Lots lost the right to execute the business of this case as it was impossible to transfer the right to execute the business of this case instead of the repayment of the loan obligation under the loan of this case.

Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower judgment did not err by misapprehending the legal doctrine regarding the interpretation of the disposal document, the possibility of payment by joint and several sureties, and the requirements for claiming payment by subrogation.

3. Whether the lower court omitted the judgment on the Defendant’s assertion of abuse of representative authority (ground of appeal No. 2)

In the reasoning of a written judgment, it would be sufficient to indicate the judgment on the party’s allegations and other means of offence and defense to the extent that it can be recognized that the text is justifiable, and there is no need to determine all allegations by the parties or all means of offence and defense (Article 208 of the Civil Procedure Act). Even if no specific and direct judgment on a party’s allegations is indicated in a written judgment, if it is possible to find out that the allegations were quoted or rejected in light of the overall purport of the reasoning of the judgment, it may not be deemed omission of judgment. Even if there is no specific and direct judgment on a party’s allegations in the written judgment, if it is possible to find out that the allegations were admitted or rejected in light of the overall purport of the reasoning of the judgment, the omission of judgment may not be deemed an omission of judgment. If it is obvious that the allegation would be rejected even if there is a part in which the judgment was not actually made, it is unnecessary to reverse it on the ground of

According to the record, on April 1, 2014, the Defendant asserted that “the Plaintiff was aware or could have known that Nonparty 1 abused his authority for the benefit of himself or a third party, not by preparing the instant confirmation document on behalf of the Defendant,” and that the instant confirmation document has no validity, since it was sufficiently known or could have known that Nonparty 1 abused his authority for the benefit of himself or a third party.” On November 12, 2014, the Defendant stated the said preparatory document on the first date for pleading of the lower court and asserted for abuse of the power

While the lower court determined that the Defendant, as a guarantor under the instant confirmation letter, is obligated to pay the Plaintiff the principal amount of KRW 3 billion borrowed by ○○○ New Urban Parcel, and its delay damages, it did not explicitly determine whether the Defendant’s assertion of abuse of power of representation was made

However, in light of the overall purport of the reasoning of the lower judgment, the lower court may be deemed to have included the purport of rejecting the Defendant’s assertion, and even after examining the record, there is no sufficient evidence to acknowledge the Defendant’s assertion. In so doing, the lower court did not err by misapprehending the legal doctrine on abuse of power of representation or omitting judgment,

4. Conclusion

The Defendant’s appeal is dismissed as it is without merit, 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, except for a dissenting opinion by Justice Park Sang-ok, Justice Min You-sook, Justice Min You-sook, Justice Kim Yong-hwan, and Justice Noh Jeong-tae, and a concurrence with

5. Dissenting Opinion by Justice Park Sang-ok, Justice Min You-sook, Justice Kim Yong-hwan, and Justice Noh Tae-ok

A. Summary of the Dissenting Opinion

In short, the Majority Opinion argues that, in cases where a representative director of a corporation conducts a transaction without going through a resolution of the board of directors, if the other party to the transaction acted in good faith or without fault, the transaction is deemed valid, and that all established precedents have been changed so far as the other party to the transaction deemed valid.

The Dissenting Opinion objects to the change of precedents.

It is unreasonable to view that Article 209 (2) of the Commercial Act applies in whole on the premise that the "cases where a representative director of a remote stock company shall undergo a resolution of the board of directors" is all limited to the representative director's power of representation.

Next, changing the criteria for protecting the counterparty from “faith and without fault” to “faith and without fault” is not limited to the expression “faith and without fault.” From the perspective of the Majority Opinion, changing the criteria for protection of the counterparty to “faith and without fault” to “faith and without fault” is merely an emphasis on the protection of safety of transaction, and as a result, it is difficult to attain concrete and reasonable validity in resolving individual cases. Until now, the precedents focus on interpreting the scope of “faith and without fault” protected by various substantive relations of a company under the principle of protecting the counterparty in good faith and without fault. In short, the precedents do not change the precedents to “faith and without fault” to “faith and without fault” in the context of “faith and without fault” so far as there is no need to change the precedents in the context of “no fault and without fault” to “no fault” to “no fault and without fault” so far as there is no need to change the precedents in the context of “no fault and without fault” to the extent that there is no change in the legal practice of both parties to the transaction so far.

Under the Majority Opinion, Article 209(2) of the Commercial Act, which is premised on the Majority Opinion, is a provision concerning the representative member of an unlimited partnership company, and its scope is limited in cases where the said provision applies mutatis mutandis to the representative director of a limited partnership company, and in particular, it is not applicable mutatis mutandis to the legal limitation on the representative director’s right of representation in the unlimited partnership company. Then, in cases falling under Article 393(1) of the Commercial Act, the grounds cited by the Majority Opinion for applying Article 209(2) of the Commercial Act are specifically contrary to the purport of the Commercial Act. Furthermore, in cases where the representative director of a stock company conducts transactions without the resolution of the board of directors, excluding only the other party who is bad faith or bad faith for the purpose of protecting the other party to the transaction, thereby uniformly protecting the other party to the transaction and treating the transaction

(b) Restrictions on delegation of authority to the board of directors to decision-making structure and representative director;

(1) A company is a corporation established for commercial activities or for other profit-making purposes, and it must have an independent legal capacity as a social entity, but it must be an institution in order to determine its intent as a social entity, execute its affairs, and express its decision-making intent externally. Among multiple kinds of companies stipulated in the Commercial Act, a company like an unlimited partnership company shall, in principle, have the right to manage affairs and the power of representation, and each member shall be appointed from among its employees even if a manager and a representative are appointed separately. Therefore, in line with institutional qualifications and employee qualifications, a company is not required to become an institution of a company except for a general meeting of shareholders comprised of investors and owners of the company (see Supreme Court en banc Decision 2016Da251215, Mar. 23, 2017).

A corporation’s institution may be divided into a decision-making institution, an executing institution, and an auditor depending on its function. Of them, the decision-making function is divided into a decision-making function on the basic matters of a corporation, a decision-making function on important matters, a decision-making function on daily matters, and a decision-making function is divided into internal business performance function and external business performance function. Of the agencies of a corporation, among the agencies of a corporation, shareholders are required to determine the company’s intent on important matters concerning the basic organization and management of the corporation. Of the agencies of a corporation, the general meeting of shareholders is not delegated to other agencies or third parties even upon the resolution of the articles of incorporation or the general meeting of shareholders under the Commercial Act (see Supreme Court en banc Decision 2016Da251215, supra). However, since it is difficult to determine all important matters concerning the company in reality without making an efficient decision-making function, most legislative cases on the corporation shall decide only the basic matters of the general meeting of shareholders, and other important matters concerning the

(2) Article 393(1) of the Commercial Act on a stock company provides that “The disposal and transfer of important assets, borrowing of large-scale assets, the appointment or dismissal of a manager, and the establishment, relocation, or closure of a branch office, shall be by a resolution of the board of directors.” In full view, Article 393(1) of the former Commercial Act provides that a “business performance of a company” shall be construed as “business performance of a company.” However, it is not clear whether the matters of authority of the board of directors are merely stipulated in the matters of authority of the board of directors, or whether the matters of exclusive resolution to be decided by the board of directors are not determined by the board of directors.” This is an amendment of Article 393(1) of the Commercial Act, which is amended in 201, to ensure that the board of directors has a right to make a decision on important matters concerning the business performance of a company.” This is, even if the scope of the matters resolved by the board of directors is embodied, it does not necessarily mean that the board of directors has a right to make a decision on its own decision.

In addition, since shareholders in a stock company, which is in principle divided ownership into ownership and management, make decisions on matters that cause significant changes to the foundation or business organization of the company as stipulated by the articles of incorporation, such as appointment and dismissal of directors in charge of management of the company, merger, division of the company, transfer of business, etc., by resolution of a general meeting of shareholders, making it impossible or considerably difficult for directors to exercise their voting rights, it is not allowed to do so as to undermine the fundamental function of the corporation system (see Supreme Court Decision 2009Da35033, Jun. 24, 201). The legal principle that, in the case of appointment of a director or auditor at a general meeting of shareholders, the company acquires the status of director or auditor and the representative director does not have the authority to appoint directors or auditors (see Supreme Court en banc Decision 2016Da251215, supra) also clearly state the distribution of authority between the decision-making

The resolution by the general meeting of shareholders under the Commercial Act shall not be delegated to other agencies or third parties (see Supreme Court en banc Decision 2016Da251215, supra). In light of the characteristics of the corporate law that regulates organization relations and has a strong nature of law enforcement, there is a limit to entrusting the authority granted to a specific agency under the Commercial Act to other agencies.

(c) Relationship between decision-making of a stock company and Article 209 (2) of the Commercial Act;

(1) Article 209 of the Commercial Act concerning an unlimited partnership company provides that a representative member is entitled to all judicial or extrajudicial acts pertaining to the business of the company, and the restriction on its authority does not oppose a third party acting in good faith, and Article 389(3) of the Commercial Act provides that the above provision shall apply mutatis mutandis to a representative director of the company. Accordingly, where a representative director of the company performs a transaction with a third party without the resolution of the board of directors, the interpretation of the legal relations and the scope of application mutatis mutandis of Article 209 of the Commercial Act

(2) As seen earlier, as a matter of principle, an unlimited partnership company should be appointed from among its members, even if each member has the right to manage affairs and the representative and the managing member are separately appointed, the company's institutional qualifications and employee qualifications coincide with each other. On the other hand, a stock company has a relationship between the decision-making function of the company and the management function of the company, such as the existence of an institution such as a general meeting of shareholders, a board of directors, and an auditor for each function. In particular, Article 393 (1) of the Commercial Act provides that the board of directors shall pass a resolution on the important management of the company, and Article 393 (2) of the Commercial Act provides that the board of directors shall supervise the performance of duties of the director, and at the same time, requires the board of directors to perform the supervision and check

For this reason, academic circles have conflicting opinions regarding ① the full application of Article 209(2) of the Commercial Act to a representative director without a resolution of the board of directors under Article 393(1) of the Commercial Act; ② the application mutatis mutandis to limited scope; ③ the application mutatis mutandis to a representative director under the Commercial Act. ① The opinion that Article 209 of the Commercial Act shall apply mutatis mutandis to the representative director in full. ② The opinion that Article 389(3) of the Commercial Act provides that “The provisions of the Commercial Act shall apply mutatis mutandis to the representative director.” (2) The opinion that Article 393(1) of the Commercial Act, which is a typical case where the representative director’s power of representation is restricted, shall not apply to a representative director without a resolution of the board of directors. Therefore, Article 389(2) of the Commercial Act provides that “The provisions of the Commercial Act shall apply mutatis mutandis to the decision-making of the general meeting of directors, which is beyond the limits of the representative director’s power of representation, and thus, shall not be applied mutatis mutandis to all cases where the decision-making of the general meeting is applied mutatis mutandis.

이와 같은 주식회사의 이사회와 대표이사의 관계는 오늘날 대부분의 입법례가 취하고 있는 보편적 현상이다. 그리고 위에서 본 해석상의 견해 대립은, 근본적으로 주식회사는 합명회사와 달리 의사결정권과 업무집행권이 원칙적으로 분리되어 있음에도 이에 관한 별도의 고려 없이 합명회사에서의 대표권 제한에 관한 상법 제209조 를 주식회사의 대표이사에 준용한다는 규정만을 두고 있는 데에서 나온 것임은 더 말할 필요가 없다. 또한 신주 발행이나 합병 등과 같이 상법에서 이사회나 주주총회의 결의를 요하도록 하면서 그 결의가 흠결된 경우에는 소로써 해결하도록 규정하였다면 그에 따르면 되지만( 상법 제429조 , 제529조 ), 그러한 규정이 없는 주주총회나 이사회 결의가 흠결된 모든 경우의 효과를 개별적으로 고찰하지 않고 ‘대표권 제한’으로 뭉뚱그려 규율하거나 획일적으로 해석하려고 시도하는 데에서 비롯된 것이기도 하다.

In the interpretation of Article 209 of the Commercial Act, a decision-making institution and a representative institution are accessible on the basis of the major principle of the structure of the institution that is separated from a decision-making institution and a business execution and representative institution. In determining the validity of a transaction in violation of such major principle, the fact that the representative director is in harmony with the conflicting ideology between “safety protection of the transaction” and “protection of shareholders and creditors through securing financial soundness of the company” should also be noted

(3) Unlike a partnership company where the legal relationship is divided into an internal and external relationship and a relatively simple and simple relationship, the legal relationship of the company is developed not only in the relationship between the inside and outside, but also in the context of capital, shares and other agencies of the company.

Unless otherwise stipulated in the articles of incorporation, an unlimited partnership company shall consist of the members who are directly and severally liable for the obligations of the company. Each member shall represent the company, and shall designate a person who shall represent the company with the consent of the articles of incorporation or all the members (Article 207 of the Commercial Act). Unless otherwise stipulated in the articles of incorporation, each member shall have the right to represent the company (Article 200 of the Commercial Act). Therefore, in the case of an unlimited partnership company, the restriction on the right to represent by the managing member shall be limited by the articles of incorporation, and there is no provision that restricts the legal power

On the other hand, a stock company has several agencies, other than the representative director, under the Commercial Act, such as a general meeting of shareholders, directors, and board of directors, and Article 3 Section 3 of Part III of the Commercial Act provides for the contents and exercise of each authority in relation to the agencies of a stock company. As seen earlier, in principle, each partner has the right to manage affairs of a stock company, but a stock company shall select the representative director by a resolution of the board of directors (main sentence of Article 389(1) of the Commercial Act). The representative director of a stock company selected as such may be internally restricted by the articles of incorporation, rules of the board of directors, etc., but may also be restricted by the provisions of the Commercial Act. In particular, Article 393(1) of the Commercial Act provides that the board of directors grant the right to make decisions on the important business performance of a

In light of the structural difference between a stock company which has a legal limitation on the power of representation and an unlimited partnership company, even if Article 209(2) of the Commercial Act with respect to the representative director of the unlimited partnership company, which is anticipated to be restricted only by internal regulations such as its articles of association, applies mutatis mutandis to the representative director of the limited partnership company pursuant to Article 389(3) of the Commercial Act, it shall not apply mutatis mutandis to all cases concerning the restriction on the power of representation of the representative director, but shall apply mutatis mutandis only to the extent that it can be applied mutatis mutandis by nature. Thus, it shall not be deemed that Article 393(1) of the Commercial Act shall apply to cases where

(4) Article 209 of the Commercial Act with respect to an unlimited partnership company cannot be fully applied to a stock company. It is substantially revealed in the case of Article 374(1) of the Commercial Act, which provides that a stock company shall undergo a special resolution of the general meeting of shareholders when it performs an act, such as transfer of all or important parts

Article 374(1) of the Commercial Act is a mandatory law that intends to protect the interests of shareholders by requiring a special resolution of the general meeting of shareholders to be obtained when a corporation enters into a contract which seriously affects the interests of its shareholders and reflects the intent of its shareholders (see Supreme Court Decision 2017Da288757, Apr. 26, 2018). In a case where a corporation executes a matter that requires a resolution of the general meeting of shareholders without a resolution of the general meeting of shareholders by determining its collective intent under the Commercial Act, it is null and void and is not protected by the other party to the transaction, which is the enforcement act, as the other party to the transaction (see Supreme Court Decision 91Da1148, Nov. 8, 191). This is because the intention of the corporation itself is defective. It is difficult to find that Article 209(2) of the Commercial Act should be applied to a case where a resolution of the general meeting of shareholders is defective.

(d) The effects of transactions for representative directors, which lack resolution of the board of directors under Article 393 (1) of the Commercial Act, although such resolution is required;

In light of the above legal principles, the core issues in this case, and the validity of the transaction without the resolution of the board of directors under Article 393(1) of the Commercial Act, are examined. The majority opinion states that in all cases where the representative director acts without the resolution of the board of directors, a third party in good faith should be protected pursuant to Article 209(2) of the Commercial Act, and that the good faith should be interpreted as “faith and negligence without fault.” However, the dissenting opinion argues that Article 209(2) of the Commercial Act, which applies mutatis mutandis under Article 389(3) of the Commercial Act, cannot be applied to cases where the representative director’s power of representation is restricted pursuant to Article 393(1) of the Commercial Act. The reasons are as follows.

(1) First, we examine the language and text of the relevant provisions.

The Commercial Act does not stipulate the validity of a representative director’s act without a resolution of the board of directors required under Article 393(1) of the Commercial Act. Therefore, the issue is whether such act is null and void, and whether a director is deemed liable for damages to the company, if considered null and void, or if deemed null and void, it would be deemed null and void under any condition, and whether a director may assert invalidation and void. Article 209(2) of the Commercial Act provides that “in good faith,” even according to the above provision, the issue is whether to protect only a third party without fault or negligence, and whether to protect a third party with good faith, if so, is to be resolved by interpretation by comprehensively taking account of individual provisions.

Therefore, according to the language and text of Article 209(2) of the Commercial Act, only a third party in good faith and bad faith may be distinguished; however, the above provision shall apply mutatis mutandis to the interpretation that limits the conditions of invalidation and the scope of a third party protected by considering transaction safety; for example, “if known or could have known,” it is not good faith, or if “if known or could have known,” it is possible to take a view that the degree of protection is different by narrowly interpreting the above provision. Therefore, even if the board of directors’ resolution required under Article 393(1) of the Commercial Act is absent, if there is a lack of a resolution of the board of directors required under Article 393(2) of the Commercial Act, it does not constitute a violation of the above provision.

(2) As seen earlier, in light of the regulatory structure of the Commercial Act and the structural differences between the unlimited partnership company and the stock company, it is unreasonable to uniformly apply the said provision in all cases where the representative director’s power of representation is restricted.

(3) Under the above, the arguments cited in the Majority Opinion are specifically reflected.

(A) First, the Majority Opinion lists the circumstances cited in the precedents in order to determine whether a transaction constitutes “the disposal and transfer of important assets, and borrowing of large-scale assets” under Article 393(1) of the Commercial Act, and states that “the other party to the transaction is difficult to understand and know the specific situation of the company, and it does not need to know and know such circumstances,” or that “it is not easy to judge whether the transaction is an adequate act to be in charge of the decision of the representative director even if he knows it.” This is understood to the purport that the transaction should be in the position of the other party to the transaction. However, as we agree with the Majority, Article 393(1) of the Commercial Act applies uniformly to any person who is unaware of the existence of the provision, and thus, cannot avoid the application of the above provision on the ground of the land under law. In other words, the Majority Opinion does not consider whether the transaction partner is a “the other party to the transaction” as well as the circumstances listed in the Majority Opinion, namely, the total asset value of the company, the size and property status of the company, management status of the company, or the purpose of the transaction and the business.

If a certain transaction constitutes “important business of a company, such as disposal and transfer of important assets, and borrowing of large-scale assets,” under Article 393(1) of the Commercial Act, this is also an act of lending a large amount of funds or purchasing important assets from the standpoint of the counterparty. As such, the counterparty is expected to make a rational decision-making and make another transaction by exercising reasonable care. If the counterparty with the previous transaction experience is a stock company and the other party with the previous transaction experience, the transaction is bound to be conducted in recognition of the difference between the previous transaction and the present transaction at issue in terms of the performance result, the content and scale of the transaction, and the unique nature of the transaction circumstance. If the other party with the company first transaction with the company is confirmed at the time of the ordinary transaction, the transaction will be conducted in comparison with the amount of the company’s capital stated in the certified copy of corporate register, namely, the purpose of its establishment, and the content and scale of the relevant transaction. In addition, the court’s determination criteria required by the precedents so far are based on such empirical rules as stated in light of these circumstances.

However, the Supreme Court Decision 2005Da3649 Decided July 28, 2005, etc., 2001, which was decided after the amendment of the Commercial Act in 2001, includes the Supreme Court’s decision that did not distinguish the restriction on the power of representation under Article 393(1) of the Commercial Act from pure internal restriction. The case is not understood in light of the fact that, in presenting the board of directors’ regulations in a stock company, the company actively dealt with the transaction in question that the resolution of the board of directors is unnecessary, and that there is a clear need to protect the other party’s trust.

Furthermore, the following precedents clearly indicate that the board of directors of a corporation has the power to make a decision on the management of the company's business, and therefore the resolution of the board of directors has to be passed on not only the disposal of important assets or the borrowing of large-scale assets, but also the important business which is not generally and specifically delegated to the representative director, and which does not belong to the daily business by the board of directors (Supreme Court Decisions 2009Da55808 Decided January 14, 2010; 2009Da47791 Decided April 28, 201; 2014Da213684 Decided July 14, 201; 2012Da75352 Decided December 22, 2017; 2012Da75369 Decided 2039 Decided December 14, 2019).

(B) Next, the majority opinion presented the opinion that "where a resolution by the board of directors is required under Article 393 (1) of the Commercial Act, the other party to the transaction without fault shall be protected, and in the case of internal restrictions that are subject to the resolution by the board of directors by the articles of incorporation, etc., the other party to the transaction without fault shall be protected" and criticizes this opinion as the so-called "original theory," and criticizes this opinion. The dissenting opinion does not assert any objection theory as referred to in the majority opinion, but it points out the legal problems of the majority opinion that comprehensively pays attention to Article 209 (2) of the Commercial Act based on the assertion that the other party to the transaction with the representative director who did not undergo the resolution by the board of directors shall be protected, and as such, it is reasonable to protect the other party to the transaction without fault in good faith and without fault in the case of the representative director who did not undergo the resolution by the board of directors, the majority opinion argues that the change in the precedents is unnecessary.

(C) The Majority Opinion is that, even if a manager or the other party who has transacted with an apparent representative director was negligent, protection is not granted unless gross negligence is gross negligence. Therefore, it is against the principle of equity to protect less protection by demanding only the other party who has transacted with the representative director with strong authority.

However, this is not consistent with the Commercial Code of the manager or expressed representative director.

Article 395(1) of the Commercial Act provides that an act of representing a representative director is irrelevant to the legal limitation on the representative director’s power of representation, and Article 395(1) of the Commercial Act provides that “any person who has no original power of representation shall be held liable to a bona fide third party,” and stipulates the requirements and legal effect immediately in the above Article. In addition, the requirement is also different from the case of Article 393(1) of the Commercial Act, which does not apply where a representative director makes a transaction without a resolution of the board of directors, due to a cause attributable to the company.

Article 11 of the Commercial Act on the right of representation of a manager also provides that the manager shall have the right of representation concerning business and the restriction on the right of representation of the manager shall not be asserted against a bona fide third party. Therefore, the protection of the other party who has transacted with the manager shall be in accordance with the interpretation of the above legal provision. The restriction on the right of the manager under the above provision is only included in the "business", and there is no provision that restricts the representative director's right of representation under Article 393 (1) of the Commercial Act, and there is no

As such, it is not reasonable to discuss not only the form of the provisions, but also whether the transaction partner's "serious negligence" is "serious negligence" compared to cases where the purpose and requirements of the system are different.

(D) In addition, the majority opinion argues that the resolution of the board of directors is merely an internal decision-making procedure of the company, and the fact that the resolution of the board of directors did not go through the resolution of the board of directors is premised on the risk that occurred inside the company and, in principle, the other party to the transaction who trusted that it had gone through the resolution of the board of directors should be protected in principle. However, as seen earlier, in the case of a stock company, the “subject of decision-making” and “subject of business execution” are not bound to be separated from the “subject of decision-making” in its essence, and therefore, the issues in this case are derived. The fact that the resolution

(e) the settlement of specific feasibility issues and the settlement of interests between both parties;

(1) Since the establishment of the structure of a corporation centered on the general meeting of shareholders, the board of directors, and the representative director at the time of the enactment of the Commercial Act in 1962, Korea has maintained the structure of a corporation without fundamental changes.

Since the enactment of the Commercial Act, economic situation changes after a long time after the enactment of the Commercial Act, and the structure of the institution needs to be redesigned in accordance with the reality of the corporation in modern times where the size of the corporation and the composition of the shareholder are diverse. Accordingly, the Commercial Act simplifys the convocation procedure and resolution procedure of the general meeting of shareholders with respect to a small-scale company, the total amount of capital of which is less than one billion won (Article 363(4) of the Commercial Act) so that only one or two directors can be appointed (Article 383(1) of the Commercial Act), and allow not to appoint auditors (Article 409(4) of the Commercial Act). Accordingly, some of the matters to be decided by a resolution of the board of directors are stipulated as the resolution of the general meeting of shareholders, and some of them are stipulated as the representative director’s authority (Article 383(4) through (6) of the Commercial Act). This means that a small-scale company, in light of the fact that only a director is appointed for the purpose of name of a small-scale, and that has a substantial gap between laws and regulations.

On the other hand, it is necessary to improve the audit system for compliance management while promoting the efficiency of decision-making in large-scale companies, especially listed companies, and to prevent unnecessary disputes by clarifying the division of authority among various companies. Therefore, in light of this point, there is a special provision on corporate governance of listed companies under Article 542-2 of the Commercial Code.

As can be seen, even if a “stock company” as stipulated in Chapter 4 of Part III (A) of the Commercial Act is included in the perception that the type is diverse from a small-scale company to a large-scale company that is difficult to separate ownership and management in its substance and scale, and that the specific and individual regulations are needed by comprehensively taking into account various circumstances for each individual company and each individual transaction.

In the future, it would be ideal to establish individual and explicit provisions concerning the composition of a corporation and the division of authority between each institution through the amendment of the law. However, such shot and flexibility may only be realized in the process of determining the fault of the parties in the trial procedure, etc. before the legislation is implemented. This is because the negligence of the parties is a critical concept, rather than a conclusive concept, which is a aggressive one, that is, a judge’s normative judgment in which the parties are judged by taking into account many indirect facts asserted and proved by the parties at an individual trial site.

(2) We examine the flow of judicial precedents so far with such critical mind.

The Commercial Act has several provisions that limit the representative director’s authority to represent when a stock company issues new shares (Article 416 of the Commercial Act), such as having the board of directors make decisions (Article 416 of the Commercial Act). The Supreme Court has held that if a resolution of the board of directors as stipulated in Article 393(1) of the Commercial Act, which is the issue of this case, is incomplete, its effect is different depending on the other party’s bad faith or negligence. However, if new shares are issued without a resolution of the board of directors as stipulated in Article 416 of the Commercial Act, the issuance of such new shares is deemed valid (see Supreme Court Decision 2005Da77060, Feb. 22, 2007; 2005Da70777, Feb. 22, 2007). Even if there was no resolution of the general meeting of shareholders required under Article 374(1) of the Commercial Act, it is reasonable to uniformly limit the company’s external act to be valid and to recognize its liability for the company’s representative director’s act.

Until now, the attitude of judicial precedents is to respect the legislative intent stipulated by the law to go through the resolution of the board of directors, while considering the difference in the impact of each act on the company and its counterparty depending on the type of each act, it is a result of and effort to find a balance between the protection of the company and the protection of the counterparty. At the same time, this shows the theoretical consistency of Article 209(2) of the Commercial Act in the case where a stock company that has many interested parties, such as creditors, shareholders, and workers, conducts external transactions as a party, it is rather desirable to pay attention to the theoretical consistency of the resolution by a single legal provision.

(3) We examine the actual state of regulations by judicial precedents so far as to the interpretation of Article 393(1) of the Commercial Act.

As already examined, the Supreme Court has widely protected the other party who has transacted with the representative director, not simply “if the other party is bona fide and without fault, it shall be protected” but also “if the other party bears the burden of proving the other party’s negligence, it shall be deemed as valid.” Furthermore, the Supreme Court has widely protected the other party who has transacted with the representative director, by holding that the representative of the company trusted that the internal procedure of the company necessary for the transaction was completed, barring any special circumstances, and that the other party who has transacted with the representative director should be proved by the general rule of experience (see, e.g., Supreme Court Decision 2012Da73530, Jun. 26, 2014).

First of all, since it does not fall under the important matters stipulated in Article 393(1) of the Commercial Act, and the representative director is delegated the right to decision-making, it shall be deemed to be limited due to internal restrictions such as “the rules of the board of directors.” In cases where the power of representation is restricted internally, the bona fide object of the transaction partner is ① the existence of internal regulations necessary for the resolution of the board of directors on the transaction in question, and ② the resolution of the board of directors was not passed accordingly. However, as the premise is based on ① and ② the existence of internal restrictions that require the resolution of the board of directors is essential, the contents of the restriction on the power of representation do not fall under absolute matters in the articles of incorporation (Article 289(1) of the Commercial Act). Therefore, there is a need to protect a third party who was unaware of such circumstances. Accordingly, the attitude of the precedent is to protect the other party from the burden of confirming the internal regulations of the stock company where the transaction partner cannot know, and if the internal regulations of the board of directors are completed.”

On the other hand, in the case of legal restrictions under Article 393(1) of the Commercial Act, even though the other party to the transaction did not know that the resolution of the board of directors is required pursuant to Article 393(1) of the Commercial Act, it cannot be asserted.

However, according to Article 391-3 of the Commercial Act, the minutes of the board of directors shall be prepared with respect to the proceedings of the board of directors (Paragraph 1), and the minutes shall contain the proceedings, summary of proceedings, the result, the opposing parties, and the reason for opposing thereto, and the directors and auditors present at the meeting shall sign and seal or sign the minutes (Paragraph 2). In light of the purport of these provisions, in cases where the minutes of the board of directors have not been prepared with respect to the disposal of important assets which must undergo a resolution of the board of directors pursuant to Article 393(1) of the Commercial Act, it is necessary to be careful to recognize the existence of a resolution of the board of directors (see Supreme Court Decision 2012Da75352 (main lawsuit), and 2012Da75369 (Counterclaim) Decided December 22, 2017). If a transaction partner who has conducted transactions falling under the legal restriction that requires a resolution of the board of directors pursuant to Article 393(1) of the Commercial Act without confirming the existence of the minutes of the board of directors.

The Supreme Court has previously held that whether the disposal of important assets or the borrowing of large-scale assets under Article 393(1) of the Commercial Act constitutes the disposal of important assets or the borrowing of important assets should be determined depending on whether it is reasonable to entrust the decision of the representative director in light of the value of the assets and the ratio occupied by the total assets, the size of the company, the status of the company's business or assets, management status, purpose or use of assets, the purpose of holding or use of assets, the company's ordinary business relations, and the previous handling in the company concerned (see, e.g., Supreme Court Decisions 2005Da3649, Jul. 28, 2005; 2007Da23807, May 15, 20

Specifically, the following are as follows: (1) An application for commencing rehabilitation procedures for a corporation under the Debtor Rehabilitation and Bankruptcy Act: (a) deemed that a resolution of the board of directors was necessary pursuant to Article 393(1) of the Commercial Act because the application falls under an important business that is not an ordinary business of the representative director (see Supreme Court Decision 2019Da20463, Aug. 14, 2019); (2) where the representative director of a corporation operating a building-sale business disposes of unsold housing unsold in lots, which amounts to about 77% of the total construction quantity, differently from the contract under Article 393(1) of the Commercial Act (see Supreme Court Decision 209Da4791, Apr. 28, 2011; and (3) determined that the disposal of assets and liabilities of the company, including sales contract for stocks generated by put options (see Supreme Court Decision 2019Da20463, Aug. 14, 2019); and (4) determined that the amount of sales of assets and liabilities at the time of the company was transferred (see Supreme Court Decision 2016.

As can be seen, there exists a established precedent regarding whether the matter constitutes a matter subject to a resolution of the board of directors under Article 393(1) of the Commercial Act, and accordingly, a majority precedent is accumulated. As such, the interpretation theory of Article 393(1) of the Commercial Act is uncertain or the other party’s predictability is low, as discussed in the Majority Opinion.

(4) In addition, I would like to point out that if a listed company is a listed company, a resolution of the board of directors is required pursuant to Article 393(1) of the Commercial Act, the other party to the transaction should be strengthened.

A listed company shall have outside directors, except as otherwise provided for by Presidential Decree, so a listed company shall send a notice of convening a board of directors and hold a meeting to make a resolution by the board of directors at least one week prior to the prescribed period of the Commercial Act, including outside directors. In the case of a trading partner who fails to verify the existence of meeting minutes of the board of directors in a transaction where the resolution of the board of directors is not carried out rapidly without sufficient time due to the compliance with the procedure prescribed by the law,

(5) Furthermore, in accordance with the precedents so far, even in cases where the transaction with the company is null and void due to the progress room of the other party, the other party to the transaction may seek liability against the company based on the employer’s liability under Article 756 of the Civil Act or the provision on the liability for damages under Article 210 of the Commercial Act which is applicable mutatis mutandis under Article 389(3) of the Commercial Act on the ground that the representative director performed the transaction without a necessary resolution of the board of directors pursuant to Article 393(1) of the Commercial Act. In such cases, the court may recognize the company’s liability and seek a fair share of liability by offsetting negligence (see, e.g., Supreme Court Decisions 200Da20670, Jan. 24, 2003; 2003Da6707, Feb. 25, 2005).

However, such an employer liability or liability under Article 210 of the Commercial Act is established to be exempted from liability if the other party was gross negligence. The meaning of gross negligence is the same as the other party’s gross negligence in regard to the fact that the other party’s act of an employee would not have been lawfully performed within his/her authority when he/she knew that it would not have been lawfully performed within his/her authority and authority. However, the other party’s gross negligence is merely identical to that of the other party’s gross negligence as stated in the Majority Opinion, and thus, the other party’s intentional breach of his/her duty of care required to the general public is extremely insufficient and there is no need for protection from the perspective of fairness (see, e.g., Supreme Court Decision 2011Da41529, Nov. 24, 201).

In other words, insofar as the other party to a transaction is not negligent in paying due attention to the intention of the other party to the transaction, the other party to the transaction without gross negligence is an attitude to protect in principle, and where the transaction with the company is deemed null and void only with respect to the other party with gross negligence pursuant to the Majority Opinion, it is difficult to recognize liability for damages to the other party with gross negligence as to the transaction with the company pursuant to Article 756 of the former Civil Act or Article 210 of the Commercial Act. Accordingly, in most cases where the transaction with the company where the resolution of the board of directors is incomplete is not recognized as a bad faith or gross negligence of the other party to the transaction with the company where the resolution of the board of directors is incomplete, the whole transaction shall be deemed null and void in all cases, and there is doubt as to whether the conclusion of the whole or the whole business is reasonable from the corporate law point of view, and it is unreasonable to suggest a flexible resolution in accordance with the litigation surrounding

As stated in the Majority Opinion, no person may deny the need to reasonably coordinate interests between interested parties, including the company and the trading counterpart, and the Majority Opinion is the pursuit of trial and the principle of the settlement of disputes. The Majority Opinion uniformly considers that “the protection of the other party to a transaction at fault” in all stock companies is a reasonable method of mediation. However, under the principle of protecting the other party to a transaction without fault, the Dissenting Opinion recognizes the transaction partner’s negligence in the case of an important decision-making decision-making of a company that requires the resolution of the board of directors under Article 393(1) of the Commercial Act, through the legal doctrine that “it is consistent with the empirical rule that deeming that the representative of the company trusted that the internal procedure necessary for the transaction was completed, unless there are any special circumstances.” However, in the case of an important decision-making decision-making of a company that requires the resolution of the board of directors, the effect of the transaction between the party to the transaction at the expiration of the period shall be denied,

Until now, the legal principles of precedents recognize that the transaction is null and void, but there is an area where the other party can claim compensation for damages. Accordingly, the disputes between the company and the other party to the transaction can be resolved harmoniously through offsetting negligence, etc. In particular, if the precedents are modified to protect the other party to the good faith and without fault, such as the majority opinion, the carbonity of the dispute resolution can be reduced in that the transaction between the company and the other party to the transaction is deemed null and void or only the legal resolution

F. Compatibility with the legal principles on abuse of power of representation

Even if the representative director of a corporation abused his/her authority for the purpose of promoting his/her own interest or a third party, such act is valid as an act of the corporation, regardless of the company’s profit. However, if the other party to the act knew or could have known the intention of the representative director, it shall be null and void against the company, the established precedents regarding abuse of the representative director’s right of representation (see, e.g., Supreme Court Decisions 97Da18059, Aug. 29, 1997; 2005Da3649, Jul. 28, 2005). In other words, even if the representative director abused his/her power of representation within the scope of the company’s right of representation, the other party to the transaction is limited to cases where the representative director abused his/her power of representation within the scope of the company’s right of representation without fault and negligence. However, if the precedents regarding restriction of the representative director’s right of representation are modified, it is questionable that the other party to the transaction would be more effective than the resolution of the company’s own interest.

G. Review of the instant case

(1) Until the lower court, the instant confirmation document was deliberated on the premise that the Defendant’s act of preparing the instant confirmation was an internal restriction pursuant to the provisions of the Defendant’s board of directors. The meaning of the instant confirmation document, as shown in the lower judgment, is that “where ○○ New Urban Parcels fail to repay the Plaintiff a loan of KRW 3 billion, the Defendant bears the Defendant’s obligation.” Therefore, it may be interpreted as a “guarantee.” Nevertheless, the lower court did not have deliberated on whether the instant confirmation document was an act corresponding to the “loan of large-scale assets” under Article 393(1) of the Commercial Act. As long as it was revealed that there was a provision of the Defendant’s board of directors, which requires the resolution of the board of directors for the act of guarantee, it would have been because it did not dispute whether the instant confirmation document constitutes an act under Article 393(1) of the Commercial Act, but rather

(2) There exists a few precedents that regard the act of guaranteeing or guaranteeing another person’s debt as an act constituting “loan of large-scale property” under Article 393(1) of the Commercial Act (see, e.g., Supreme Court Decisions 2012Da73530, Jun. 26, 2014; 2014Da206563, Aug. 20, 2014). In addition, whether the act of guaranteeing a debt is “large scale” should not be determined uniformly on the basis of the difference between the amount of guarantee and the amount of guarantee, the amount of the company’s business or property, the situation of the company’s business or property, the management status, the ordinary business relations of the company, and the previous handling of the company, etc., depending on whether it is reasonable to place the representative director’s decision.

Examining the record of this case in accordance with these legal principles, there are many circumstances to deem that the defendant prepared the instant agreement without going through Nonparty 1’s resolution by the board of directors in order to guarantee the defendant’s obligation of ○○ New City (hereinafter “○○”) and the plaintiff knew or could have known of such fact.

It was true that the Defendant decided to take over the instant project at around March 2012. However, at that time, at that time, there was no internal decision-making made by the Defendant with regard to the fact that the Defendant guaranteed the obligation to borrow the instant project or bears any monetary obligation. Rather, the Defendant did not have any legal obligation to guarantee the Defendant’s obligation to take over the instant project, as the Defendant was at the time of entering into the instant project agreement with △△, ○○ New Urban District Deposit Co., Ltd., the Defendant had been in charge of the business of raising the project funds. Moreover, the Defendant did not have any legal obligation to guarantee the Defendant’s obligation to take over the construction project as divided from the said company in accordance with the rehabilitation plan of the Medical Automobile Sales Co., Ltd., and the Defendant was a company established by succession to the construction project sector as at the time of the instant case. However, it is very exceptional to guaranteeing the obligation of others around March 2012.

The Plaintiff and the Defendant, as a company whose sales in 2012 exceed KRW 100 billion, deemed that there exists a form of contract conclusion that is expected at the time of an external transaction, is in conformity with the empirical rule. In other words, the form of two documents is different even though the instant confirmation document and the loan contract for consumption in 2010, which was prepared by the Plaintiff at the same place as the representative director’s office, are simultaneously written at the same time. In other words, the loan contract for consumption, which appears to have been completed with only the seal affixed by the parties while the names and addresses of the parties were cut back, appears to have been completed. On the other hand, the Defendant’s indication of the instant confirmation document, which was written by Nonparty 1, the Defendant’s personal seal affixed to Nonparty 1, the representative director who is not the Defendant’s corporate seal impression, and the loan contract for consumption was authenticated by a representative on the same day. There is no evidence

Of the contents of the instant confirmation, Nonparty 5, the vice president of the Defendant, who was present at the time of the instant contract, appears to have failed to be aware of the proviso clause referred to in the “performance by subrogation,” and Nonparty 1, who prepared the instant confirmation document, did not inform the Defendant’s other executives of the fact or report it to the board of directors, etc., and there is no evidence to support that Nonparty 5, as well as Nonparty 5, as well as the other Defendant’s executives, knew that the Defendant may incur monetary liability

(3) On the other hand, the lower court should re-examine whether Nonparty 1 knew or could have known that the resolution of the board of directors was not made by the Defendant for the preparation of the instant confirmation document. Therefore, the lower court erred by misapprehending the legal doctrine on the judgment of the counterparty to the transaction where the representative director conducted a transaction without the resolution of the board of directors, and failing to exhaust all necessary deliberations, thereby adversely affecting the conclusion of the judgment. Therefore, the lower court should be reversed.

6. Concurrence with the Majority by Justice Kim Jae-hyung

I would like to supplement the Majority Opinion with respect to the several matters mentioned in the Dissenting Opinion.

A. According to the Dissenting Opinion, the “faithless and without fault”, which was based on the previous precedents, is not a simple “faith and without fault.” However, the previous precedents have repeatedly ruled that the transaction partner was aware or could have been aware of the absence of a resolution of the board of directors for a period of not less than a hundred million years, and thus, the representative director has determined the validity of the transaction without the resolution of the board of directors. Even if the Supreme Court held that the transaction partner did not know or have been aware of the absence of a resolution of the board of directors, the transaction is valid unless he knew or was grossly negligent,” the part of the “serious negligence” is pointed out to be erroneous in light of the legal principles as seen earlier, and made it clear that all of the transaction partners should be excluded from the protection object without distinguishing the other party in gross negligence from the past (see Supreme Court Decision 93Da1391, Jun. 25, 1993). As such, “no fault” as stated in the previous precedents refers to a progress room, and thus, it cannot be interpreted that there is no gross negligence.

The law must be clear. In the legislation, it is possible to use uncertain concepts or abstract expressions, but it is inevitable to use such concepts or expressions only in unavoidable circumstances, and it is necessary to ensure that the meaning and contents of the law are not changed according to the personal preference or the direction of the judge. Such clarity doctrine is required by all Acts as an expression in the principle of a rule of law, and is likewise applicable when interpreting and declaring the law. The Supreme Court has to ensure predictability and legal stability for the people who are the parties of the law by declaring a clear legal doctrine as to the interpretation and application of the law. If good faith and without fault are not a simple good faith and without fault as stated in the Dissenting Opinion, it would be confused how to distinguish between a simple good faith and without fault and without fault from a simple and simple good faith and without fault.

B. According to the Dissenting Opinion, not only disposal of important assets or borrowing of large-scale assets, but also disposal of important assets by the board of directors, the legal doctrine is clearly distinguishable from cases where a resolution of the board of directors is required pursuant to Article 393(1) of the Commercial Act, by repeated Supreme Court decisions that the board of directors shall pass a resolution of the board of directors on important business which is not entrusted to the representative director in general and specific manner, and where it

However, examining the specific cases cited by the Dissenting Opinion, the issue of whether the pertinent transaction constitutes a business under Article 393(1) of the Commercial Act, without any assertion or certification as to the existence of the internal regulations that are stipulated by the resolution of the board of directors, is the issue of whether the transaction constitutes a business under Article 393(1) of the Commercial Act (see Supreme Court Decision 2014Da213684, Jul. 14, 2016). If there is no assertion or certification as to the existence of internal regulations, such as the articles of incorporation, in individual cases, the issue is only whether the resolution of the board of directors should be made in accordance with Article 393(1) of the Commercial Act, and ultimately, it is natural that the legal restriction matter is

In fact, an internal provision regarding the pertinent transaction pertains to a matter that requires a resolution of the board of directors. As examined in the Majority Opinion, an internal provision that requires a resolution of the board of directors, regardless of whether the board of directors’ resolution was made in the articles of incorporation or the rules of the board of directors, etc., with respect to the execution of an important business that did not delegate to the representative director generally and specifically, falls under the legal limitation that requires a resolution of the board of directors. Therefore, even if an internal provision exists, pure internal restriction cases and the legal limitation under Article 393(1) of the Commercial Act exist mutually. However, since the existing precedents did not distinguish between internal restriction cases and the statutory limitation under Article 393(1) of the Commercial Act, there was no need to examine whether the pertinent transaction constitutes an important business under Article 393(1) of the Commercial Act, and the court determined the validity of the transaction without fault or negligence of the other party to the transaction (see, e.g., Supreme Court Decision 2019Da139319, Oct. 31, 2019).

(c) the law is established and interpreted in such a way as to minimize transaction costs as much as possible, and the risk to a certain situation is desirable that the risk will be more easily predicted and less costed. In particular, the corporate law should be operated in a way that properly adjusts the interests of interested parties, such as shareholders, directors, and creditors, and minimizes transaction costs in the market.

In the event of a transaction between a company and a third party, a person who is able to avoid the risk that the transaction will be invalidated at the lowest cost due to the absence of a resolution of the board of directors, i.e., the least cost avoidance, is a company, and such risk should be borne by the company. In other words, imposing an investigation duty on the other party to the transaction or imposing a risk that the transaction

It is a matter of whether the representative director is working properly the function of the board of directors and the representative director, which is an institution that has passed a resolution of the board of directors when the board of directors should go through the resolution of the board of directors. This is ultimately an internal governance issue, such as monitoring, supervising, and checking management through the internal organization and system of the company. If the representative director can perform any act without going through a resolution of the board of directors, then it is not properly operated by the board of directors of the company. It is an internal matter of the company. If the board of directors is an internal matter of the company, and if the board of directors can transfer the risk to the other party due to the failure of the board of directors' resolution, it is likely that the company should properly operate the board of directors. It is not reasonable from the perspective of rational allocation of risks, as well as hindering the sound operation of the company.

Therefore, in a case where the representative director neglected to undergo a resolution of the board of directors due to the failure to properly operate the board of directors, it is desirable from the perspective of strengthening the power of the board of directors or normalization of the role of the board of directors to compensate for the loss of the company by imposing the risk on the other party to the transaction, rather than protecting the company by transferring the risk to the other party to the transaction. In this case, the company should also endeavor to have the decision-making body function as an institution supervising the business performance of the representative director.

D. The Majority Opinion, in light of the language and text of Article 209(2) of the Commercial Act, which provides that the resolution of the board of directors was incomplete, deemed the standards for good faith and without fault rather than good faith and without fault, in a case where the previous precedents were followed. Furthermore, it may be distinguished from cases where the resolution of the board of directors is required pursuant to Article 393(1) of the Commercial Act and pure internal restriction is a matter of internal restriction, but the precedents have been uniformly modified in respect of the reason why the previous precedents were judged without distinguishing it. Accordingly, the Majority Opinion’s intent is to resolve the uncertainty of transaction relation surrounding the absence of the resolution of the board of directors.

Chief Justice Kim Jong-soo (Presiding Justice)