[1] In a case where a contract is rescinded or terminated on the ground of nonperformance and a claim for damages is made, whether an obligee may claim compensation for expenses incurred in belief that the contract is performed (affirmative), and the scope thereof / Whether such compensation for expenses may exceed the scope of the benefits of performance (negative)

[2] In a case where a creditor is not able to obtain profit from the performance of a contract, whether the creditor can claim compensation for expenses incurred in relation to the contract (negative)

[1] In cases where a contract is rescinded or terminated on the ground of nonperformance, and a claim for damages is filed, the obligee is in principle entitled to benefit from the performance of the contract, i.e., damages that would have accrued if the obligation had been performed. However, the obligee may instead claim damages arising from the nonperformance of the contract, to the extent that it can be deemed that the damages incurred by the nonperformance of the contract would have been incurred due to the belief that the contract would have been performed. Such compensation for expenses incurred may be acknowledged to facilitate proof in cases where it is difficult to prove the benefits of performance. In such cases, the damages suffered by the obligee, namely

[2] In a case where a creditor is not able to obtain profit from the performance of a contract, it cannot be deemed that the creditor has suffered loss, and therefore, the creditor cannot claim compensation for expenses incurred.

[1] Articles 393, 543, and 551 of the Civil Act / [2] Articles 393, 543, and 551 of the Civil Act

[1] Supreme Court Decision 2002Da2539 Decided June 11, 2002 (Gong2002Ha, 1617), Supreme Court Decision 2012Da101695 Decided May 14, 2015, Supreme Court Decision 2015Da5915 Decided April 15, 2016 (Gong2016Sang, 644)

Cable Infrastructure Corporation, Inc.

E. E.I.D. (Attorney Park Sang-hoon, Counsel for the defendant-appellant)

Co., Ltd.

Defendant 2 (Bae, Kim & Lee LLC, Attorneys Notice-hun et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2014Na2042286 decided August 20, 2015

The part of the lower judgment against Defendant Daom is reversed, and that part of the case is remanded to the Seoul High Court. The Plaintiff’s appeal by the succeeding intervenor is dismissed. The costs of appeal by the Plaintiff’s succeeding intervenor are assessed against the Plaintiff’s succeeding

The grounds of appeal are examined.

1. Judgment on the ground of appeal by the Plaintiff’s succeeding intervenor

A. The lower court recognizes the following facts:

(1) On December 2012, Defendant Daom Co., Ltd (hereinafter “Defendant Co., Ltd”) planned a new project of building a total of 340 units of apartment houses on the instant land by proxy for the implementation of a housing construction project by a regional housing association, and entered into the instant sales agency contract with the Plaintiff Co., Ltd., Ltd. (hereinafter “channel infrastructure”) entrusting the recruitment of its members to the withdrawing Plaintiff Co., Ltd. (hereinafter “channel infrastructure”).

(2) The sales agency contract of this case includes the contents that Defendant 2 is stated as the representative director of the defendant company, and that the representative director of the defendant company is jointly and severally and severally liable for the payment of the sales agency fee of the defendant company without additional seals.

B. In light of the actual operational relationship of the Defendant Company and the circumstances leading up to the conclusion of the sales agency contract, the lower court determined that it is difficult to recognize the fact that Defendant 2 agreed on the joint and several liability for damages to Defendant Company’s channel infrastructure under the sales agency contract of the instant case.

C. In light of the fact that Defendant 2 did not affix the seal to the instant sales agency contract, the above determination by the lower court is justifiable. In so determining, the lower court did not err by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the legal doctrine on the agencies, authority, and responsibility of the nominal lender, contrary to

2. Judgment on the grounds of appeal by Defendant Company

A. As to the grounds of appeal Nos. 1 and 2

The lower court determined that the period of sales agency contract was automatically extended even after June 30, 2013, which is the expiration date of the period of sales agency under the instant sales agency contract, and that it cannot be deemed that the sales agency contract was lawfully terminated according to the notice of termination as of July 2, 2013 issued by the Defendant Company.

Examining the reasoning of the lower judgment in light of the relevant legal principles, the lower court did not err in its judgment by misapprehending the legal doctrine on the interpretation of a disposal document, the validity of expression of intent refusing to extend the period, and the requirements for exercising the right to terminate, etc.

B. As to the grounds of appeal Nos. 3 and 4

(1) In cases where a contract is rescinded or terminated on the ground of nonperformance, and a claim for damages is filed, the obligee is in principle entitled to benefit that would have accrued from the performance of the contract, i.e., compensation for damages, inasmuch as the obligee would have suffered losses that would have accrued if the obligation had been performed. However, the obligee may instead claim to the extent that such damages may be deemed as losses incurred due to nonperformance, which would have been incurred due to the belief that the contract would have been performed on behalf of the obligee. Such compensation for expenses incurred may be acknowledged to facilitate proof if it is difficult to prove the benefits of performance. In such cases, even in such a case, the damages incurred by the obligee, namely, the scope of the benefits of performance, should not exceed the extent of the benefits of performance (see, e.g., Supreme Court Decisions 2002Da2539, Jun. 11, 2002; 2012Da1695, May 14, 2015; 2015Da59115, Apr. 16).

On the other hand, in case where an obligee does not recognize a benefit which he can obtain through the performance of a contract, it cannot be deemed that the obligee has suffered a loss to the obligee, and therefore, the obligee cannot claim compensation for expenses.

(2) On the premise that the Defendant Company is liable to compensate for damages arising from nonperformance of obligations to the channel infrastructure, the lower court determined that the channel infrastructure entity was liable to compensate for damages totaling KRW 412,113,425, including the former advertising cost paid by the channel infrastructure entity for the recruitment of union members under the instant sales agency contract.

(3) Of the lower judgment, the allegation in the grounds of appeal disputing the part of the lower court’s determination that the Defendant Company paid KRW 412,113,425, such as the former advertising cost, is merely disputing the choice of evidence and the determination of the value of evidence belonging to the free trial by the fact-finding court, and thus cannot be accepted. However, on this premise, the part of the lower court’s determination that the Defendant Company is liable for compensating for

(A) According to the reasoning of the lower judgment, the Defendant Company entered into the instant parcelling-out agency contract entrusting a regional housing association with the recruitment of its members, and agreed to pay the sales agency fee for each household’s sales agency fee of KRW 6 million and the recruitment rate of its members (liability ratio) to be achieved by the channel infrastructure at least 80% and maximum 95%, and the Defendant Company agreed to pay the sales agency fee for each member when 170 households of its members (50% of all 340 households) are recruited.

The Plaintiff filed a claim against the Defendant Company for compensation for performance benefits that could have been earned by the said channel infrastructure operator through the performance of the contract, prior to claiming compensation for the expenses incurred by the said channel infrastructure operator. If the sales contract remains effective, the performance benefits claimed by the Plaintiff is KRW 1.938 million (323 households) calculated on the premise that the said channel infrastructure operator could achieve the maximum liability allotment rate of 95%, and the lower court rejected the Plaintiff’s assertion for the following reasons. ① A channel infrastructure operator recruited only 74 households as regular members until the time when the sales contract for the instant land was terminated, and continued to recruit its members until September 23, 2013, even if the said channel infrastructure operator continued to recruit its members until September 23, 2013, it could not be deemed that the said 117 generation infrastructure operator could not be viewed as having claimed for the performance of the contract without any circumstance such as cancellation of the sales contract for the instant land.

(B) As determined by the lower court, if the channel infrastructure manager could not recruit 170 households, which are the standards for claiming sales agency fees under the contract, even if he/she recruited members for a considerable period of time, the channel infrastructure operator cannot claim sales agency fees from the Defendant Company. Therefore, it may be deemed that there was no loss of the performance interest that the channel infrastructure operator can claim as damages due to the Defendant’s nonperformance.

However, the lower court determined that the Defendant Company is responsible for compensating for the expenses 412,113,425 won incurred by channel infrastructure persons for the performance of a contract. However, if the performance profit is not recognized under the foregoing legal doctrine, the Defendant Company cannot claim compensation for expenses. In so determining, the lower court erred by misapprehending the legal doctrine on compensation for expenses incurred in the performance, thereby adversely affecting the conclusion of the judgment. The Defendant Company’s ground of appeal

3. Conclusion

Without proceeding to decide on the remaining grounds of appeal, the part against the above defendant among the judgment below against the defendant is reversed, and this part of the case is remanded to the court below for further proceedings consistent with this Opinion. The appeal by the plaintiff succeeding intervenor is dismissed, and the costs of appeal by the plaintiff succeeding intervenor are assessed against the losing party. It is so decided as per Disposition by the assent of all participating

Justices Park Poe-young (Presiding Justice)