Where the buyer who acquired ownership of the subject matter of sale is unable to return the original property upon rescission of the contract by disposing of the subject matter to a third party before the cancellation of the contract, the scope of the value to be returned (i.e., the price at the time of disposal or the market price at the time of disposal), and whether the same applies where the right of the subject matter is transferred to a third party

Article 548(1) of the Civil Act

Supreme Court Decision 94Da2551 Decided May 12, 1995 (Gong1995Sang, 2104) Supreme Court Decision 2013Da14675 Decided December 12, 2013 (Gong2014Sang, 161)

Plaintiff (Law Firm Aststst, Attorneys Gu principal-ju, Counsel for plaintiff-appellant)

The Land Partition Association for the Geumpo District

Daegu High Court Decision 201Na7483 decided May 18, 2012

The judgment below is reversed, and the case is remanded to the Daegu High Court.

The grounds of appeal are examined.

1. As to the assertion regarding impossibility of performing the duty to provide the instant land

The court below acknowledged the following facts: (1) The land substitution contract of this case concluded between the plaintiff and the defendant association, the construction contract between the defendant association and the defendant association, and the defendant association and the defendant association on the donation contract of land allotted by the recompense for development outlay, the progress and present situation of the land readjustment project, etc.; (2) The duty to provide the land of this case to the plaintiff of the defendant association under the land substitution contract of this case was determined as the duty to provide the land of this case to the plaintiff of the plaintiff association in return for the donation of the land owned by the plaintiff to the unit to be achieved as the site of the office building site to be achieved; and (3) the duty to provide the land of this case to the defendant association was

Examining the reasoning of the lower judgment in light of the evidence duly admitted, the lower court did not err by misapprehending the bounds of the principle of free evaluation of evidence in violation of logical and empirical rules, contrary to what is alleged in the grounds of appeal.

2. As to the assertion regarding the scope of duty to restore following the cancellation of the instant land substitution agreement

A. Where a contract is terminated, each party is obligated to restore to the other party pursuant to Article 548 of the Civil Act, and shall pay the other party with interest added thereto. Article 548 of the Civil Act, which prescribes the duty to restore as the effect of termination of the contract, has the nature of a special provision on unjust enrichment. As such, the scope of return of profit is the whole of the profit received, unless there is good faith or bad faith (see, e.g., Supreme Court Decision 98Da43175, Dec. 23, 1998). Therefore, where the buyer who takes over the ownership of the subject matter from the seller disposes of the subject matter to the third party before the cancellation of the contract and thus it becomes impossible to return the subject matter due to the cancellation of the contract, the buyer shall return the value as the buyer’s duty to restore, and the value of the subject matter to be returned in this case is equivalent to the price at the time of the disposition or the market value thereof (see, e.g., Supreme Court Decision 94Da25515, May 12, 1995).

B. In full view of the reasoning of the lower judgment and the duly admitted evidence, the following circumstances are revealed.

(1) On May 28, 2002, the Plaintiff completed the registration of ownership transfer on the land ( Address 1 omitted) owned by the Plaintiff (hereinafter “instant land”) for the purpose of implementing the instant land substitution agreement entered into with the Defendant Union on the ground of donation acceptance.

(2) On August 31, 2005, the instant land was incorporated into part of the building site of the application company of the Jin-gun, and was combined into Daegu-gun ( Address 2 omitted) 49,793 square meters, which is the building site of the application company of the Jin-gun on April 6, 2005 after the completion of the construction of the applicant company of the Jin-gun.

(3) As the Defendant Union did not perform its duty to provide land under the instant land substitution agreement, the Plaintiff rescinded the said land substitution agreement on December 22, 2010.

C. Examining the above facts in light of the legal principles as seen earlier, the Defendant Cooperative shall return the instant land to the Plaintiff upon the rescission of the instant land substitution contract, but since the instant land was already donated to the achievement group prior to its cancellation so it was impossible to return its originals, the Defendant Cooperative shall be deemed to return to the Plaintiff the amount equivalent to the market price at the time of May 28, 2002, which was donated to the achievement group of the instant land.

D. Nevertheless, the lower court determined otherwise, although it was held liable for reimbursement equivalent to the value of the instant land because it was impossible to restore it to its original state, it did not err by deeming the time when the instant land substitution contract was rescinded as the time when the instant land substitution contract was rescinded.

Therefore, the judgment of the court below is erroneous in the misapprehension of legal principles as to the scope of restoration in a case where the restoration of the original property is impossible due to the termination of contract, which affected the conclusion of the judgment. The ground of appeal assigning this error is with merit

3. Conclusion

Therefore, 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 on the bench.

Justices Shin Young-chul (Presiding Justice)