[1] Where there is a defect in the object completed under a contract for work, whether the contractor's liability for warranty and liability for nonperformance are recognized concurrently (affirmative), and whether the same applies to the case where the contractor seeks the cost of defect repair as a substitute for the defect repair (affirmative)

[2] Meaning of “performance assistant” under Article 391 of the Civil Act, and whether the obligor is liable for the intent or negligence of the performance assistant in a case where the performance assistant consented or impliedly consented to the use of the third party as the performance assistant (affirmative)

[3] The starting point of the statute of limitations for the right to claim damages due to non-performance of obligation (i.e., when actual damage occurs), and the method of determining whether

[4] In a case where Gap corporation sought damages from incomplete performance of a contract against Gap corporation due to the occurrence of noise exceeding the noise from the electric motor for the diving ship delivered to the Navy according to the contract for the construction of diving ships, the case holding that the extinctive prescription shall run from that time on the ground that the Korean Classification Institute and the Defense Agency for Technology and Quality Assurance Co., Ltd, prepared and submitted a report on the cause of the breakdown of the electric motor for the first time when the noise was generated above the electric motor for the first time when the damage to the State occurred in reality

[1] Where there is a defect in an object completed pursuant to a contract for work, the warranty liability of the contractor and the default liability of the contractor are recognized concurrently by a separate title. The expenses for repairing the defect in the object constitute the warranty liability of the contractor and the damages in the default liability of the contractor. Therefore, the contractor may claim the expenses for repairing the defect in accordance with Article 667(2) of the Civil Act as the warranty liability, and may claim the damages due to the nonperformance of the obligation in accordance with Article 390 of the Civil Act. There is no reason to deem that only the warranty liability under Article 667(2) of the Civil Act is established and the liability for nonperformance of the obligation under Article 390 of the Civil

[2] Article 391 of the Civil Act provides that an agent’s intentional or negligent act shall be deemed as an obligor’s intentional or negligent act. Such performance assistant is sufficient if a person performs an act of performance of an obligation under the obligor’s involvement in the obligor’s intent and does not necessarily have to have a relationship with the obligor’s instructions or supervision. Thus, whether an agent is subordinate to an obligor or independent from an obligor is irrelevant. Even where an agent uses a third party for the performance of an obligation, if the obligor approves or implied consent to such use, the obligor shall be held liable for the intentional or negligent act of the performance assistant pursuant to Article 391 of the Civil Act.

[3] The extinctive prescription runs from the time when a right can be exercised (Article 166(1) of the Civil Act). The right to claim damages due to nonperformance of obligation is established when actual damage occurs, and whether actual damage has occurred shall be determined objectively and reasonably in light of social norms.

[4] In a case where Gap corporation sought damages from incomplete performance of a contract against Gap corporation as a result of the occurrence of noise exceeding the noise from the electric motor for the diving box delivered to the Navy under the contract for the construction of diving fleet, the case holding that the extinctive prescription shall run from that time, on the grounds that there is no evidence that the noise occurred since the Gap corporation delivered diving to the Navy, and that the defect of the external motor is revealed by submitting a report on the cause of the malfunction to the Korean Classification Institute and the Defense Agency for Technology and Technology, an incorporated association, by submitting a report to the Director of the Agency for Technology and Quality, and submitted it to the Director of the Agency for Technology and Technology.

[1] Articles 390, 667, and 669 of the Civil Act / [2] Article 391 of the Civil Act / [3] Articles 166(1) and 390 of the Civil Act / [4] Articles 166(1) and 390 of the Civil Act

[1] Supreme Court Decision 2001Da7037 Decided August 20, 2004 (Gong2004Ha, 1561) Supreme Court Decision 2019Da268252 Decided January 30, 2020 (Gong2020Sang, 528) / [2] Supreme Court Decision 201Da1330 Decided May 26, 201 (Gong201Ha, 1293) (Gong201Ha, 1293), Supreme Court Decision 2017Da275447 Decided February 13, 201 (Gong2018Sang, 563) / [3] Supreme Court Decision 2001Da22833 (Gong201Ha, 2001Ha, 12019) and Supreme Court Decision 300Da32947 Decided July 13, 2019

Korea

Hyundai Heavy Industries Co., Ltd. (Law Firm LLC, Attorneys Kim Nam-Nam et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2019Na2000126 decided November 29, 2019

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

The grounds of appeal are examined.

1. Basic factual basis

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

A. The Minister of National Defense has invested one trillion won from 2000 to 2009, and carried out the following business (KS-II; hereinafter “KS-II business”) with the content of building ○ ○ Babba in the Republic of Korea through the introduction of technology and securing the independent design technology to diving.

The Plaintiff entered into a provisional contract on September 22, 200 with respect to “The supply and related services of three materials for the construction of HDW 214 diving,” without distinguishing before and after the merger, except where used in the name of the contract or the contract, etc.; hereinafter “HDW” and “HDW 214 DDW 3 construction.” According to the above provisional contract, the Plaintiff’s powers and duties as prescribed in the instant provisional contract are transferred to the domestic company of the KSⅡ business selected by the Plaintiff. The Minister of National Defense determined the overseas type of the KS-II project as the type of the HW 214th DW, and selected Defendant on January 25, 2005 as the above domestic company.

B. On December 4, 200, the Plaintiff and the Defendant agreed to transfer the Plaintiff’s powers and obligations under the above contract to the Defendant, except for the powers and obligations partly reserved.

On December 11, 200, the Defendant entered into a contract on the supply of total materials for the construction of at least three HDW 214 diving boxes (hereinafter “instant overseas contract”). On December 12, 2000, the Plaintiff entered into a contract on the construction and supply of diving boxes, the main contents of which are the construction and delivery of three divers to the Navy by the Defendant and the Defendant (hereinafter “instant building contract”). The contents of the instant overseas contract were incorporated into the instant building contract. According to the special terms and conditions of the instant building contract, the warranty period is one year from the date of delivery.

C. According to the instant foreign contract, the Defendant built raw materials supplied by Escrup in accordance with the instant plant contract, and delivered one of them (hereinafter “the instant diving”) to the Navy on December 26, 2007 under the instant building contract. On April 10, 201, the noise was generated from the exhaustor of the instant diving in the course of the exclusive navigation training during the underwater marketing training (hereinafter “instant propellor”). The instant propellor was one of the raw materials supplied by the Defendant from Escrup in accordance with the instant foreign contract, which was manufactured by the German corporate mentor (hereinafter “Seman”).

D. On August 9, 201, the Navy, the Defense Acquisition Program Administration, the Defense Acquisition Program Administration, and the Defense Acquisition Program Administration, and the Defendant agreed on the prompt recovery of the motive for the promotion of the instant case by means of a large number of the Defense Acquisition Program Administration and the Defendant’s general contract. The content is that the Administrator of the Defense Acquisition Program Administration and the Defendant promote recovery by means of a public contract or general contract; the Agency for Defense Technology and Quality Assurance shall administer all the affairs related to the discovery of causes; the organization of the joint investigation committee

On December 29, 2011, the Plaintiff entered into an outsourcing maintenance contract with the Defendant for the restoration of diving boxes of this case. On February 29, 2012, between the Plaintiff (YA) and the mentmen, the Plaintiff and the mentmen, pursuant to the Work Convention concluded on February 29, 2012, and the Work Convention concluded on March 30, 2012, the Korean level and the German level were selected as the third party, an incorporated association. The Korean level and German level were jointly conducted with the research team and mentmen of the Republic of Korea, from June 11, 2012 to August 29, 2012, to find out the causes of the defects that occurred in the motive of the instant implementation.

On July 19, 2013, the Korean Agency for Defense Technology and Quality Assurance, an incorporated association, prepared a report on the fact that the cause of the failure of the promoted electric motor was caused by mechanical escape, which was caused by the mechanical stimulation, and submitted it to the Director of the Agency for Defense Technology and Quality Assurance a report stating that it was caused by the stecana (the phenomenon in which metal absorptions are absorbing hydrogens) during the manufacturing process, and that the V was damaged by the mechanical polarization that was generated during the manufacturing process.

E. The Plaintiff filed the instant lawsuit seeking damages on the ground that the Defendant supplied a defective lock to the propelling engine, thereby failing to perform its obligations under the construction agreement of this case.

2. Whether a contractor’s default liability and warranty liability conflict (ground of appeal No. 1)

Where there is a defect in an object completed pursuant to a contract for work, the contractor's warranty liability and default liability are recognized concurrently by a separate title (see, e.g., Supreme Court Decisions 2001Da7037, Aug. 20, 2004; 2019Da268252, Jan. 30, 2020). Expenses for repairing a defect in an object constitute damages arising from the contractor's warranty liability and default liability. Therefore, the contractor may claim the cost for repairing the defect in accordance with Article 667(2) of the Civil Act as compensation for the defect in accordance with Article 667(2) of the Civil Act, and the contractor may claim damages due to nonperformance pursuant to Article 390 of the Civil Act. There is no reason to deem that only the warranty liability pursuant to Article 667(2) of the Civil Act is established and that the nonperformance liability pursuant to Article 390 of the Civil Act is not established.

The lower court determined that the Plaintiff could assert the Defendant’s liability for nonperformance due to incomplete performance, even if the warranty period for defect repair under the special conditions of the contract has expired, on the grounds that the instant building contract constitutes a contract for construction.

The lower judgment is justifiable in light of the foregoing legal doctrine. In so determining, the lower court did not err by misapprehending the legal doctrine on the relationship between the contractor’s warranty liability and nonperformance liability.

3. Whether performance assistant constitutes grounds of appeal (ground of appeal No. 2)

A. Article 391 of the Civil Act provides that an agent’s intentional or negligent act shall be deemed as an obligor’s intentional or negligent act. Such performance assistant is sufficient if a person performs an act of performance of an obligation under the obligor’s involvement in the obligor’s intent and does not necessarily have to be in a relationship under the obligor’s direction or supervision. Thus, whether an agent is subordinate to an obligor or independent from an obligor. Even in cases where an agent uses a third party as a subagent for the performance of an obligation, if the obligor consented or implied consent to such use, the obligor shall be held liable for the intentional or negligent act of the performance assistant (see, e.g., Supreme Court Decisions 201Da130, May 26, 2011; 2017Da275447, Feb. 13, 2018).

B. The lower court determined that the Defendant was liable for damages due to nonperformance on the following grounds.

A mentor’s negligence in the process of manufacturing a mentor. The Defendant concluded the instant overseas contract and constructed the instant diving by receiving raw materials, including the instant propellor, supplied by mentorum. The Defendant entered into the instant overseas contract under the condition that mentor was aware of the fact that mentor’s manufacturing the instant nuclear motor. It is reasonable to deem that mentorum constitutes the Defendant’s performance assistant, and that mentorum consented or impliedly consented to the Defendant’s use of mentor’s mentor as the mentor’s mentor’s mentor’s mentor’s mentor’s mentor’s mentor’s mentor’s intent or negligence under Article 391 of the Civil Act. Therefore, the Defendant is liable for damages caused by the defect of the instant nuclear motor.

Examining the reasoning of the lower judgment in light of the aforementioned legal doctrine and the evidence duly admitted, the lower judgment is justifiable. In so determining, the lower court did not err by misapprehending the legal doctrine on the liability of performance assistants.

4. Whether extinctive prescription expires (Ground of appeal No. 3)

The statute of limitations runs from the time when a right can be exercised (Article 166(1) of the Civil Act). The right to claim damages due to nonperformance is established at the time when actual damage occurs, and whether actual damage has occurred must be determined objectively and reasonably in light of social norms (see, e.g., Supreme Court Decisions 2001Da22833, Jul. 13, 2001; 2009Da10249, Jan. 27, 201).

According to the reasoning of the lower judgment and the record, the following facts are revealed. The Defendant handed over the instant diving to the Navy on December 26, 2007. There is no evidence to deem that noise was generated more than before April 10, 201 from the instant electric motor. The defect of the instant electric motor was discovered by submitting a report on the cause of the breakdown to the Korean Prior Payment and the Defense Agency for Technology and Quality, an incorporated association, on July 19, 2013, by submitting it to the Director General of the Defense Agency.

In light of such circumstances, when the Plaintiff’s damage was actually incurred, the Plaintiff’s claim for damages cannot be deemed to have been completed after the lapse of the extinctive prescription, since it is apparent that the Plaintiff filed the instant lawsuit on May 8, 2014, before the lapse of the five-year extinctive prescription under Article 96(1) of the National Finance Act, prior to the lapse of the five-year statute of limitations under Article 96(1) of the National Finance Act.

Although the extinctive prescription of the claim for damages from the date of delivery of diving, it is not appropriate for the lower court to have agreed to exercise the right to claim damages when the cause of damage to the motive for the implementation of this case was discovered explicitly thereafter and when the party’s whereabouts are determined, but the conclusion that rejected the Defendant’s defense of extinctive prescription is justifiable. In so doing, the lower court did not err by failing to exhaust all necessary deliberations and exceeding the bounds of the principle of free evaluation of evidence

5. 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.

Justices Lee Dong-won (Presiding Justice)