[1] The legal nature of the duty of restitution following the rescission of a contract (=return of unjust enrichment) and the scope of return of such profit

[2] Whether comparative negligence applies to a case where a person seeks the return of the purchase price or other benefits as a performance of duty to restore the original status upon cancellation of a contract (negative)

[3] Whether the contents of the right to claim restitution, in accordance with the principle of good faith or the principle of fairness, are restricted due to the reasons such as the rescission of the obligation which caused the rescission of the contract providing part of the "reasons" (negative)

[1] The main text of Article 548(1) of the Civil Act, which provides for the duty to restore as the effect of rescission of a contract, has the nature of a special provision on unjust enrichment. The scope of return of profit is the whole amount of profit received unless there is a special reason, regardless of whether the profit exists or whether the claimant acted in good faith or not

[2] Set-off of negligence is recognized as a tort liability due to its original default or tort, and it does not apply where a party to a transaction seeks to return the purchase price or other benefits already paid, as a result of the cancellation of a sales contract, to recover the same financial status as those for which no benefits have been paid under the contract in question.

[3] The right to claim restitution due to the rescission of a contract shall not be permitted to limit the content of the right according to the good faith principle or the principle of fairness, on the ground that the rescission provided part of the “reasons” as to the non-performance of obligation, which is the cause of rescission.

[1] Articles 548(1) and 741 of the Civil Act / [2] Articles 396, 548(1), and 763 of the Civil Act / [3] Articles 2, 396, 548(1), and 763 of the Civil Act

[1] Supreme Court Decision 96Da47586 delivered on December 9, 1997 (Gong1998Sang, 213), Supreme Court Decision 98Da43175 delivered on December 23, 1998 (Gong199Sang, 228) / [2] Supreme Court Decision 96Da40714 delivered on January 24, 1997, 40721

Plaintiff (Law Firm Sejong, Attorneys Choi Ho-ho et al., Counsel for the plaintiff-appellant)

Defendant

Seoul High Court Decision 2012Na51365 decided April 3, 2013

The part of the lower judgment against the Plaintiff is reversed, and that part of the case is remanded to the Seoul High Court.

The grounds of appeal are examined.

1. After recognizing the facts as indicated in its reasoning, the lower court determined that the instant sales contract was lawfully rescinded by the Plaintiff’s declaration of intent to cancel the instant sales contract on the grounds that, after the purchase and sale contract between the Plaintiff and the Defendant for the instant housing site (hereinafter “instant sales contract”), the Defendant’s completion of the procedure for change of the name of the buyer for the instant housing site to Nonparty 1, thereby making it impossible for the Plaintiff to implement the procedure for change of the name of the buyer in the future.

Furthermore, the lower court determined that, considering the following circumstances as stated in its reasoning, it is reasonable to limit the Defendant’s responsibility for restitution to KRW 58,00,000, which is 40% of the sales price, considering the good faith and the principle of fairness, in light of the following: (a) the Plaintiff’s claim for the return of KRW 145,00,000,00, which the Plaintiff paid to the Defendant due to the cancellation of the contract; and (b) the Plaintiff’s claim for the return of KRW 145,00,000, which was paid to Nonparty 2, was believed to have the right to resell the sales price of this case to Nonparty 2; and (c) the Defendant had the right

2. However, we cannot agree with the above determination that limits the responsibility of restitution.

A. If a contract is terminated, the performance performed on the basis of the contractual obligation must be returned to the original state in order to restore the original state, as the effect of the contract is retroactively extinguished (see, e.g., the main text of Article 548(1) of the Civil Act and Supreme Court Decisions 2006Da37982, Feb. 14, 2008). The main text of Article 548(1) of the Civil Act, which provides for the duty to restore as the effect of termination of the contract, has the nature of a special provision on unjust enrichment. The scope of return of the benefit is all the benefit received unless there is a special reason, regardless of whether the benefit exists or whether the claimant acted in good faith or not (see Supreme Court Decision 96Da47586, Dec. 9, 197).

On the other hand, comparative negligence is deemed to be liable for damages caused by the original default or tort, and as a result, the sales contract was cancelled and retroactively becomes null and void as in this case, where the parties to the transaction have fulfilled the duty to restore the same property as those for which payment had not been made under the contract in question, and seek the return of the purchase price or other benefits already paid (see Supreme Court Decision 96Da40714 delivered on January 24, 1997, etc.).

B. In addition, it is not permissible to permit that the content of the right can be restricted by the principle of good faith or the principle of equity, on the ground that the person who rescinded the right to claim restitution due to the rescission of the contract provides part of the “reasons” as to the non-performance of obligation which is the cause of the rescission.

(1) The right to statutory rescission is a fundamental element for nonperformance due to a cause attributable to an obligor who is a party to a contract (Articles 544 through 546 of the Civil Act). In such a case, if the right to claim the return of performance held by an obligee, who is the other party to a contract, is limited on the ground that the obligee partially provided the cause for nonperformance, etc., the right to claim the return of performance, which is the other party to the contract, is determined to have a cause attributable to the non-performance, and thus, the right to claim the return of performance should be more limited than the obligee’s right to claim the return of performance without any exception.

In addition, even in ordinary cases where a creditor does not have such reasons as the provision of "reasons" for nonperformance, if the grounds for restricting the creditor's right to claim the return of the performance are met, the debtor's right to claim the return should be restricted. This is because the debtor is the person who is the person who is the original person responsible for

In this sense, the restoration relationship due to the rescission of a contract cannot be said to be the same as the one in which the contract was not concluded. It is more important to reduce it into “restricted restitution” without any particular ground, and it becomes a general aspect of the duty to restore in the rescission of the contract. This is entirely deviating from the basic rules of our law, and the attitude of the precedents mentioned above is also inconsistent with the attitude of the precedents mentioned above.

(2) In this case, the seller’s duty to return the purchase price received as a contractual benefit due to the rescission of the contract, i.e., the obligation to pay money. In principle, the seller’s duty to compensate for damages (see Articles 394 and 396 of the Civil Act) pursuant to the comparative negligence set-off (see Articles 396 and 763 of the Civil Act) is difficult to feel any particular attention.

However, in the event that a purchaser is obliged to cancel the registration of transfer of ownership or to deliver an object due to the cancellation of a contract, it shall be applied to the seller's right to claim the cancellation of the registration or the right to claim the delivery of the object. Whether the buyer is obliged to cancel the registration of transfer only with respect to a part of the real estate or a specific part of the real estate, or if the buyer returns only a part of the real estate, what is sufficient if the buyer returns it? It is questionable whether the court should bear the burden of such determination.

(3) In the event of invalidity or cancellation of a contract or other non-performance of a contract, our law does not stipulate the application of the good faith principle or the principle of equity as to the restitution of the contractual relationship to the general public.

For instance, in a case where a contract, such as sale and purchase, is concluded by deception of one party, even though the cancellation of the contract depends on the choice of the defrauded, if the defrauded has selected and expressed his/her intent to cancel it, the contract is entered into a reinstatement relationship. At this stage, not only the defrauded but also the defrauded may claim restitution of the performance he/she performed to the other party for the performance of the contract. In such a case, the cause of the claim for return of performance (which has the nature of the right to claim return of unjust enrichment as well as the right to claim return) ultimately may be limited in accordance with the principle of good faith or fairness, which is invoked as a primary factor to consider the situation that the defrauded is illegal deceptive act committed by himself/herself (if it takes the same attitude as the original trial, it would be difficult to deny it), and the defrauded, as well as in the case of the defrauded, can only legally retain all the benefits he/she performed by the defrauded, as it is, in addition to the return of performance he/she performed by himself/herself. This does not permit the claim for return of performance more than the original civil benefit.

In addition, our law does not constitute “serious negligence” even in cases where a contract was entered into by mistake due to one’s own mistake (see the proviso of Article 109 of the Civil Act), so long as it does not correspond to “serious negligence” (see the proviso of Article 109 of the Civil Act), it is well known that the mistake may cancel the contract on the ground of mistake. If the court below takes the same attitude as the court below, it would be easy for the mistake to be restricted from the national level of restitution of contractual benefits it performs, notwithstanding the cancellation of the contract, in spite of the cancellation of the contract.

(4) Meanwhile, the principle of good faith or fairness is an important legal means that contains flexibility in the actual handling of a case. This satisfies the emotional orientation for fair handling of a case in a certain limited case. However, the positive legal system has been carefully prepared through a long-term accident (accident) and specific application and reflectability thereto. In fact, it is more clear and “fair” than the principle of good faith, etc.

C. In light of the above legal principles, the circumstances cited by the court below should not be considered in determining the scope of the Defendant’s duty to restore due to the rescission of the instant sales contract, including that the Defendant should return the full amount of the purchase price that the Plaintiff received from the Plaintiff, and that the Plaintiff is also liable for the cancellation of the instant sales contract.

Nevertheless, solely for the reasons indicated in its holding, the lower court erred by misapprehending the legal doctrine as to the duty to restore the original status arising from the rescission of a contract, thereby adversely affecting the conclusion of the judgment. The ground of appeal assigning this error is

3. Therefore, the part of the lower judgment against the Plaintiff is reversed, and that part of the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Ko Young-han (Presiding Justice)