[1] Whether "the name and seal of the guarantor" as stipulated in the main sentence of Article 428-2 (1) of the Civil Code can be substituted by another person as an element to take effect of guarantee (affirmative)

[2] In a case where guarantee is guaranteed for a large number of obligations uncertain, whether the maximum amount of the guaranteed obligation is specified in writing and the guarantee contract is valid, whether the document indicating the guarantor's intent to guarantee is clearly indicated or specific to the extent that it can be deemed identical (affirmative)

[3] The case holding that the judgment below erred by misapprehending legal principles, in a case where Eul corporation, which was awarded a contract for the construction of a factory by Gap corporation, was not indicated in the contract term, on-site name, payment condition, size of ready-mixed and unit price per cubic meter, etc. at the time of the contract, but did not indicate the maximum amount of the guaranteed debt or the guaranteed debt, in the case where Eul corporation's agent was not specified in the contract term, since it cannot be deemed that the maximum amount of the guaranteed debt indicated by Eul company's guarantor was specified in the contract term, although Eul company's agent's agent is not specified in the contract term, and Eul company's agent's agent's duty to pay back to Byung corporation's present and future amount is the joint and several surety guarantor's name and corporate seal to guarantee Eul company's obligation to pay back to Byung corporation.

[1] The main sentence of Article 428-2(1) of the Civil Code provides that "a guarantee shall take effect when the intent thereof is written with the name and seal or signature of the guarantor." Since the guarantor, in principle, means that the guarantor personally takes the name of the guarantor, it does not constitute a substitute for the name of the guarantor. However, the name and seal of the guarantor is not sufficient for another person to do so by proxy.

[2] Article 428-3 of the Civil Code provides that "a guarantee may be made for a large number of obligations with uncertain duration. In this case, the maximum amount of the guaranteed obligation must be specified in writing." Paragraph (2) of the same Article provides that "in the case of paragraph (1), the maximum amount of the debt shall be specified in writing pursuant to Article 428-2 (1) shall not be effective."

The purpose of this is to protect the guarantor by allowing the guarantor to clearly understand in advance the limit of the legal burden that the guarantor has to bear, in the event of guaranteeing a large number of obligations in uncertain case, the amount of the guaranteed obligation to be borne by the guarantor is likely to be excessively expanded than that which the guarantor has anticipated or could have anticipated.

In light of the above provisions and legislative intent of the Civil Act, in order to make the maximum amount of the guaranteed debt to be guaranteed for a large number of obligations with uncertain capacity specified in writing and the guarantee contract valid, the maximum amount of the guaranteed debt must be explicitly stated in the document indicated by the guarantor’s intent to guarantee the guaranteed debt. Even if the maximum amount of the guaranteed debt is not explicitly stated, it is reasonable to deem that a specific statement is necessary to the extent that the guaranteed debt is identical to the case explicitly indicated in writing, such as where the maximum amount of the guaranteed

[3] The case holding that in a case where Eul corporation, which was awarded a contract for the construction of a factory by Gap corporation, puts and seals the name of Eul corporation and the corporate seal stamp of Eul corporation on the joint and several surety column of the contract as Eul corporation's agent or Eul corporation's agent, and Eul corporation's agent's agent's agent's intent to jointly and severally guarantee the duty to pay the price of ready-mixed to Byung corporation and future, although the contract term, on-site name, payment condition, size of ready-mixed and unit price per cubic meter were stated in the contract at the time, but the contract was not stated on the supply amount or the maximum amount of guaranteed liability, the court below erred in the misapprehension of legal principles merely because Eul's name and seal of the company Gap corporation's agent's name and corporate seal were affixed to the contract without permission from Gap corporation's agent's agent or the contract for the contract for the supply of ready-mixed to Eul corporation.

[1] Article 428-2 (1) of the Civil Act / [2] Article 428-3 of the Civil Act / [3] Articles 428-2 (1) and 428-3 of the Civil Act

[1] Supreme Court Decision 2016Da233576 Decided December 13, 2017 (Gong2018Sang, 159)

Dae Young-gu Co., Ltd. (Law Firm Jungwon, Attorneys Jeon-ju et al., Counsel for the plaintiff-appellant)

Yongnam ethyl Co., Ltd. (Attorney Cho Ho-ho, Counsel for defendant-appellant)

Changwon District Court Decision 2017Na61307 decided September 21, 2018

The judgment of the court below is reversed, and the case is remanded to the Changwon District Court Panel Division.

The grounds of appeal are examined.

1. As to the assertion that the defendant did not conclude a joint and several guarantee contract

According to the reasoning of the judgment below, the court below acknowledged that non-party 2, who was an employee of the defendant, who managed the instant construction, obtained permission from non-party 1 or non-party 1, affixed the name of the defendant and a corporate seal impression to the joint and several surety column of the contract of this case with the intention of joint and several sureties.

This part of the ground of appeal disputing the judgment of the court below is merely an argument about the selection of evidence and the fact-finding, which are the exclusive authority of the court below, and it does not constitute a legitimate ground of appeal. Furthermore, the fact-finding of the court below cannot be deemed to have exceeded the bounds of the principle of free evaluation of evidence against logical and empirical rules.

2. As to the allegation that Nonparty 1 did not have the right to represent the joint and several guarantee contract

In full view of the circumstances stated in its holding, the lower court determined that it is reasonable to deem that the Defendant’s financial director and Nonparty 1, an on-site agent of the instant construction, had the authority to conclude a contract that guarantees the obligation to pay back ready-mixed used in the instant construction.

This part of the ground of appeal disputing such judgment of the court below is merely a dispute over the selection of evidence and the fact-finding, which are the exclusive authority of the court below, and it does not constitute a legitimate ground of appeal. Furthermore, the fact-finding of the court below is not deemed to have exceeded the bounds of the principle of free evaluation of evidence in violation of logical and empirical rules.

3. As to the defendant's assertion that the representative shall affix his/her name and seal to the contract of this case

The first sentence of Article 428-2(1) of the Civil Act provides, “A guarantee shall take effect when the intention thereof is written with the name and seal or signature of the guarantor.” The term “the signature of the guarantor”, in principle, means that the guarantor directly takes the name of the guarantor, and thus, it does not constitute a substitute for the name of the guarantor (see, e.g., Supreme Court Decision 2016Da233576, Dec. 13, 2017). However, “the name and seal of the guarantor” of the guarantor may also be done by another person acting on behalf of the other person.

In the same purport, the court below is just in holding that the non-party 1 or the non-party 2, who has obtained legitimate power of attorney from the defendant, affixed the defendant's name and corporate seal to the contract of this case, also constitutes a case where the guarantor's name and seal are affixed thereto. In so doing, contrary to what is alleged in the grounds of appeal, the court below did not err by misapprehending the legal principles on the name and seal of the guarantor as stipulated in

4. As to the assertion that the maximum amount of the guaranteed debt is not specified in writing

A. Article 428-3 of the Civil Act provides, “A guarantee may be made for a large number of obligations with uncertain duration. In such cases, the maximum amount of the guaranteed obligation must be specified in writing.” Paragraph 2 of the same Article provides, “In the case of paragraph 1, the maximum amount of the debt shall not be effective unless the written contract is specified in accordance with Article 428-2(1).”

The purpose of this legislation is to protect the guarantor by allowing the guarantor to clearly know in advance the limit of the legal burden that the guarantor has to bear, if the guarantor guarantees a large number of obligations in uncertain case, the amount of the guaranteed obligation to be borne by the guarantor is likely to be excessively expanded than that which the guarantor has anticipated or could have anticipated.

In light of the above provisions of the Civil Act and the legislative intent thereof, in order to make the maximum amount of the guaranteed debt to be guaranteed for a large number of obligations with uncertain capacity specified in writing and the guarantee contract valid, the maximum amount of the guaranteed debt must be explicitly stated in the document specifying the guarantor’s intent to guarantee the guaranteed debt, and even if the maximum amount of the guaranteed debt is not explicitly stated, it is reasonable to deem that the specific statement to the extent that it can be deemed necessary to be identical to the case where the maximum amount of the guaranteed debt is clearly indicated in writing,

B. According to the reasoning of the lower judgment and the record, the Defendant awarded a contract for the new construction of a factory to Hoho Construction around September 9, 2016, but the Hoho Construction drafted the instant contract around October 5, 2016 to be supplied with ready-mixed necessary for the construction from the Plaintiff, and Nonparty 1 or Nonparty 2, who was the Defendant’s agent, obtained his/her permission, signed the Defendant’s name and corporate seal impression on the joint guarantor column of the instant contract with the intent to jointly and severally guarantee the Defendant’s obligation to pay ready-mixed to the Plaintiff at present and in the future. At the time the Defendant’s name and corporate seal impression affixed to the instant contract, the Defendant’s name and corporate seal impression were written in the terms of the contract period, on-site name, payment conditions, and the unit price on which Sungho Construction ordered to do so, but the maximum amount of the amount of the obligation to pay or the maximum amount of the guaranteed liability was not stated, and there was no other indication to the effect that the guaranteed liability was not indicated.

C. Examining the above facts in light of the relevant provisions and legal principles as seen earlier, the Defendant is jointly and severally guaranteed for an uncertain obligation owed by Hoho Construction to the Plaintiff, and the Defendant cannot be deemed to explicitly specify the maximum amount of the guaranteed obligation in the instant contract indicated by the Defendant’s intent to guarantee, and it cannot be seen as much as the maximum amount of the guaranteed obligation solely on the written contract of this case. Thus, the instant contract of this case cannot be said to have specified the maximum amount

Nevertheless, the lower court determined that the maximum amount of the guaranteed obligation was specified solely on the grounds stated in its reasoning. In so doing, the lower court erred by misapprehending the legal doctrine on specifying the maximum amount of the guaranteed obligation in the collateral guarantee, thereby adversely affecting the conclusion of the judgment. The allegation contained in the grounds of appeal on

5. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices

Justices Kwon Soon-il (Presiding Justice)