[1] The case holding that the contract does not violate the Act on the Regulation of Terms and Conditions, since the contract cannot be deemed as unilaterally disadvantageous to the customer, and where the exchange rate of the contract is increased above a certain level, the contract does not include the content that recognizes the contract termination right to the customer, and thus the contract does not violate the Act on the Regulation of Terms and Conditions

[2] The case holding that the termination of a contract due to changes in circumstances cannot be recognized solely on the ground that foreign exchange rate sharply increased since a contract was concluded

[3] Where a customer applied for a disposition suspending validity of a contract concluded with a bank, the case holding that there is no urgent need to suspend validity of the contract due to a provisional disposition

[1] The case holding that, according to the terms and conditions of a contract, the contract "Leverage Track" (in case where the bank exercises options, one year and one month each, with the observation period divided into 12 units, and one month each, different rights and obligations to the contracting parties according to the fluctuation of exchange rates per each observation period, and the rights and obligations thereof are generated, and the bank's profits and losses are limited to exchange rate decline, while the bank's profits are limited to increase in exchange rates, and the contract's profits are set at two times more than the contract price in cases where the bank unilaterally exercises put options to customers, but it is not likely that the above change of exchange rates for two years before the conclusion of the contract would result in a significant loss of the contract's profits at a certain level, in light of the fact that there is no possibility that the above change of exchange rates can be seen as being disadvantageous to the customer at the time of conclusion of the contract.

[2] The case holding that, in light of the fact that, after a contract was concluded between a bank and a customer, exchange rate sharply increased to an unexpected level in light of exchange rate trends and prospects at the time of the contract conclusion, and that the bank did not clearly and sufficiently explain clearly and sufficiently to the customer about the risk to sustain unlimited damage during the contract period, in light of the contents of loss suffered by the customer in the contract and the loss suffered by the bank if the contract is acknowledged, it cannot be deemed that maintaining the validity of the contract as it is and recognizing the binding force of the contract in accordance with the contract cannot be deemed as contrary to the good faith, and thus, the contract termination

[3] The case holding that there is no urgent need to suspend the validity of a contract due to a provisional disposition in light of the following: (a) where the customer applied for a disposition suspending the validity of a contract concluded with a bank; (b) the settlement remains only once; (c) the additional loss resulting from the settlement does not seem to cause considerable liquidity to the customer; and (d) the customer would have no particular difficulty in returning unjust enrichment when he/she won in the lawsuit at the merits; and (c) the bank’s financial resources, etc.

[1] Article 6 (1), (2) 1, and 3 of the Regulation of Standardized Contracts Act / [2] Articles 2 and 543 of the Civil Act / [3] Article 300 (2) of the Civil Execution Act

[2] Supreme Court Decision 2004Da31302 decided Mar. 29, 2007 (Gong2007Sang, 601)

Applicant Co., Ltd. (Law Firm Subdivision, Attorney Lee Sang-hoon, Counsel for defendant)

Hong Kong District Court Decision 201Na14484 decided May 1, 201

1. The motion of this case is dismissed.

2. Costs of the application shall be borne by the applicant;

1. By the time of rendering a judgment on the claim for return of unjust enrichment between the claimant and the respondent of this Court No. 2009Gahap1692, the validity of the currency option contract between the claimant and the respondent of March 7, 2008 shall be suspended.

2. The respondent shall not make any disadvantageous disposition on the premise that the above contract is valid, such as exercising a call option based on the above currency option contract against the applicant.

1. Basic facts

According to the purport of each of the supporting materials and the entire examination of this case, the following facts are substantiated:

A. Status of the parties

In the case of 2007, the applicant is a company whose export amount accounts for at least 45% of the total sales amount exceeding 40 billion won, and the respondent is a bank that entered into a currency option contract with the applicant, as examined below.

B. Conclusion of a currency option contract between the applicant and the respondent

(1) On March 7, 2008, the applicant entered into a currency option contract (hereinafter “instant currency option contract”) with the respondent as follows.

(A) Basic terms and conditions

The transaction period from March 7, 2008 to March 9, 2009 from the exchange rate (Strike R rate) 967 won (Knock-Out rate) 1,000 won (Knock-Out rate) at the exchange rate (Knock-Out rate) 920 won (Knock-Out rate) at the exchange rate of 1,000 won (Knock-Out rate) at the exchange rate of March 7, 2008.

(B) The exchange rate of US$USD (hereinafter “USD”) of the Republic of Korea for each observation period by dividing one year into 12 units, as shown in the attached list, one month each as one of the above transactions periods, shall be settled on the settlement date of each month in accordance with the following different rights, obligations, rights, and obligations, depending on how the exchange rate of US$ (hereinafter “USD”) changes based on the above falling exchange rate, the falling-in exchange rate, the falling-in exchange rate, and the exercise exchange rate:

▼ 관찰기간 동안 환율이 1회라도 920원(낙아웃환율) 이하로 내려간 적이 있는 경우 : 그 기간 동안에 해당하는 신청인과 피신청인의 권리는 모두 소멸함

▼ 관찰기간 동안 환율이 920원(낙아웃환율) 이하로 내려간 적이 없는 경우

○ In the absence of an exchange rate of at least 1,00 won (in the absence of an exchange rate) during the duration of the observation;

- 관찰기간 종료일 환율 ≤ 967원(행사환율) : 신청인은 피신청인에게 50만 달러를 1달러당 967원에 매도한다(즉 신청인은 풋옵션 행사 가능).

- Foreign Exchange Rate (Exchange Rate 967 won upon the end of the observation period): No rights and obligations against the applicant and the respondent (so, that the applicant can sell US dollars at the spot exchange rate in the market).

○ During the observation period, the exchange rate is no less than 1,000 won, even once.

- 관찰기간 종료일 환율 ≤ 967원(행사환율) : 신청인은 피신청인에게 50만 달러를 1달러당 967원에 매도한다(즉 신청인은 풋옵션 행사 가능).

- An exchange rate of KRW 967 (exchange rate of events): The applicant shall sell USD 1 million to the respondent at KRW 967 per USD 1,000 (i.e., the respondent may exercise call options).

(2) The applicant’s profit and loss structure in accordance with the above contract terms

According to the above contract, the applicant has no exchange rate of less than 920 won during the observation period, and when the exchange rate of 967 won at the end of the observation period is less than 967 won, he/she gains profits (i.e., to sell USD 500,00 per month to the exchange rate of 967 won higher than the market exchange rate at the end of the observation period, so that he/she can gain profits from avoiding exchange risk). If the exchange rate of 920 won or less at one time is lower than 920 won, he/she cannot enjoy profits from avoiding exchange risk.

On the other hand, there is no difference between the exchange rate of not more than 920 won and the exchange rate of not less than 1,000 won during the observation period, and where the exchange rate of not less than 967 won on the last day of the observation period exceeds 967 won, the applicant must sell USD 100,00 per month to the exercise rate of not less than 967 won on the market exchange rate of not less than the market exchange rate of not less than the last day of the observation period. As such, (the exchange rate of not more than the end of the observation agency - 967) x 1,00,000 won x the applicant who has continuously increased the exchange rate may incur an unlimited loss.

C. The rapid increase in exchange rates of Won/US following the conclusion of the instant currency option contract

Since March 7, 2008 when the instant currency option contract was concluded, the exchange rate of KRW 1,021 was continuously increased, recording around March 18, 2008, and then 1,050 won was cut to the police officer on May 2008. The exchange rate of KRW 1,100 for the first time on September 2008, which was somewhat stable since August 2008, 1,100 for the first time on September 2008, and KRW 1,200 for the first time on October 208, 200, KRW 1,300, KRW 1,500, KRW 1,400 for the first time on November 24, 2008, and KRW 1,200 for the exchange rate of KRW 1,509 from around November 24, 200 to KRW 1,140 for the last time on May 29, 200.

D. Notice of invalidity, cancellation, and termination of the instant currency option contract against the applicant’s respondent

As above, the rise in exchange rate exceeding KRW 1,00 (in exchange rate) and continuing to increase the loss caused by the instant currency option contract. On January 8, 2009, the applicant sent to the respondent a written notification stating that the instant currency option contract becomes invalid or cancelled, and even if it becomes invalid or cancelled, the said contract should not be terminated, and the said written notification reached the respondent on January 9, 200.

2. Determination as to the existence of a preserved right

A. Whether the instant currency option contract violated the Act on the Regulation of Terms and Conditions is null and void

(1) Applicant's assertion

The structure of the instant currency option contract constitutes a standardized contract that the respondent prepared in advance in order to conclude a contract with a large number of companies. The content of the instant currency option contract is invalid for the following reasons, as it violates the Act on the Regulation of Terms and Conditions.

(A) In accordance with the instant currency option contract, the scope of benefits that an applicant may acquire is limited to the scope of benefits that he can enjoy only the benefits of exchange rate decline until the exchange rate is set off, while the respondent may obtain unlimited benefits when the exchange rate increases, and the respondent may exercise options on the amount that the applicant reaches twice as much as that of the applicant. This is unilaterally favorable to the respondent and unfairly unfavorable to the applicant.

(B) As the applicant unilaterally and continuously suffers loss due to the continuous increase in exchange rate, the contract should be terminated at an appropriate time when the loss is increased due to the increase in exchange rate. However, there is no provision that can be terminated in the instant currency option contract. This excludes the petitioner’s exercise of fundamental rights under a contract that should have been borne by the applicant.

(2) Determination:

(A) In accordance with the contents of the instant currency option contract, the applicant’s interest and loss of the respondent due to exchange rate decline are limited, while the applicant’s interest and loss of the respondent may be unlimitedly expanded due to exchange rate increase, and the respondent’s interest may be unlimitedly expanded, and the contract amount when the respondent exercises put options is USD 1,00,000,000,000,000,000,000,000,000,000,000,000,000 won.

However, in full view of each of the following circumstances, it is insufficient to recognize that the structure of the contract of this case itself is unilaterally unfavorable to the applicant, and there is no evidence to prove otherwise.

① In the case of 2006, the highest price during the year of the original/US exchange rate was KRW 1,010.4, the lowest price was KRW 913.0, and the major scope of the change was KRW 920 through KRW 980. In the case of the year 2007, the highest price was KRW 952.3, the lowest price was KRW 899.6, and the major scope of the change was KRW 913 through 950. In the case of the Plaintiff from January 2008 to March 7, 2008 when the Plaintiff concluded the instant currency contract, the highest price of KRW /$ 954.3, and the lowest price was KRW 935.1. In light of the trend of the above exchange rate, the exchange rate during the contract period of the instant currency option was likely to change between KRW 920 and KRW 9367, which is a part of the applicant’s interest under the said contract.

② In addition, even if the prospects of domestic financial institutions are based on global financial institutions as well as domestic financial institutions and research institutes, the exchange rate of USD 2008 was reduced rapidly by maintaining the beginning of 900 Won. The current exchange price at the time was lower than the exchange price in kind, and thus, the market prospects and the decline in exchange rates were anticipated. In light of the exchange rate prospects of the financial institutions and the market at the time of concluding the instant currency option contract at the time of concluding the instant currency option contract, the possibility of exchange rate fluctuations was very rare, while the possibility of exchange rate fluctuations in the section where the respondent is able to gain profits (i.e., the applicant may suffer losses) was very rare.

③ The probability of fluctuation in the exchange rate in the section where the respondent is able to obtain profits as above was evaluated to be lower than the probability of fluctuation in the exchange rate in the section where the applicant is able to obtain profits. In light of the above probability difference, the amount of exercise of options by the respondent is twice the amount of exercise by the applicant, and when the exchange rate increases, there is no limitation on the benefits that the respondent is able to obtain. Thus, it is difficult to conclude that the content of the instant currency option contract is unfairly disadvantageous to the applicant solely on the above grounds of the applicant’s assertion (in this case, the most significant reason why the above contract terms in this case are considered disadvantageous to the applicant is that the applicant was caused by a sudden increase in the exchange rate in the direction where it was deemed that the possibility of a sudden occurrence was very rare at the time of the contract, or that the contract terms themselves cannot be determined to be unilaterally disadvantageous to the applicant due to the aforementioned ex post facto and empirical circumstances).

(B) (1) The terms and conditions of the contract, such as the contract period, ② the applicant’s expectation profit during the one-year period, and the respondent’s expectation profit during the entire contract period, are determined taking into account. If the exchange rate increases above a certain level, the terms and conditions of the contract are deemed inevitable to change the applicant’s right to terminate the contract to the extent more favorable to the applicant. (3) If the applicant’s primary purpose of the contract of this case’s currency contract is to avoid the risk of a decline in the value of the export price of US dollars that the applicant, who is the export company, sells to the applicant, even if the exchange rate increases, it is necessary to purchase US dollars separately and sell it to the respondent, and thus, it is not necessary to limit the applicant’s right to receive exchange profits due to exchange rate increase in the market, and it is not included in the contract’s cancellation, which is a passive loss where the applicant’s right to cancel the contract of this case is not more than a certain level.

B. Whether the instant currency option contract constitutes an unfair legal act is invalid

The applicant is extremely unfavorable to the applicant in terms of the structure of profit and loss with poor experience, and concluded the instant currency option contract unilaterally favorable to the respondent. Thus, the instant currency option contract is deemed null and void as it constitutes an unfair legal act under Article 104 of the Civil Act.

However, as seen earlier, it cannot be readily concluded that the structure of profit and loss of the instant currency option contract is unilaterally disadvantageous to the applicant. ② In light of the content of conversation between the applicant and the respondent, the applicant relied on the export of a substantial part of the sale, and had been engaged in multiple currency options transactions since 2004, and the applicant appears to have concluded a contract in the state of accurate understanding of the structure of the instant currency option contract (Evidence 13), etc., it is difficult to acknowledge that the instant currency option contract is an unfair legal act stipulated in Article 104 of the Civil Act, and there is no other evidence to acknowledge it differently.

C. Whether the instant currency option contract was cancelled

(1) The applicant did not be notified that any loss could not be incurred due to the instant currency option contract may be incurred when the applicant continues to maintain the level of exchange rate due to the increase in exchange rate, and the applicant entered into the instant currency option contract due to the mistake that the Respondent’s oral statement is an appropriate means to avoid exchange risk, which may be cancelled as a declaration of intent or mistake caused by deception. The applicant asserts that the instant currency option contract was retroactively invalidated, since he/she declared that the instant currency option contract was cancelled by a notice issued on January 8, 2009.

(2) However, during the observation period: (a) there was a fact that the exchange rate was listed in excess of the remote exchange rate even once; and (b) in the event that the exchange rate as of the end of the observation period is higher than the exercised exchange rate, the applicant has to sell USD 1 million to the respondent during the exercise exchange rate; and (c) in light of the dialogue between the applicant and the respondent at the time of signing the contract, the applicant and the respondent clearly knew that the exchange rate as of the end of the observation period exceeds KRW 967,00,000,000,000,000 won should be sold to 967,000,000 won (Evidence 13). In light of the fact that the applicant had clearly known that the exchange rate as of the end of the observation period exceeds KRW 967,00,000,0000,

D. Whether the instant currency option contract was terminated by the exercise of the right to terminate due to changes in circumstances

(1) Applicant's assertion

① In light of the following: (a) the exchange rate fluctuations rapidly rise after the instant currency option contract was concluded; (b) there has been a significant change in circumstances in which the fluctuation in the exchange rate commonly assumed by the applicant and the respondent; (c) the applicant suffers enormous trade loss; and (c) the respondent does not comply with the suitability principle and duty to explain while making transactions with the applicant who is merely an ordinary investor; and (d) the binding force of the instant currency option contract is contrary to the good faith principle; (e) the applicant is entitled to exercise the right to terminate; and (e) the applicant expressed his intention to terminate the instant currency option to the respondent by notification on January 8, 2009.

(2) Determination:

(A) The termination of a contract due to changes in circumstances occurs due to a significant change in circumstances that could not have been predicted by the parties at the time of the formation of the contract, and the change in circumstances occurred due to reasons not attributable to the party who acquired the right to terminate the contract. If the binding force as stipulated in the contract is recognized, it is recognized as an exception to the principle of contract observance only when the result is significantly contrary to the good faith principle. The circumstances here refer to the objective circumstance that served as the basis of the contract, not to refer to the subjective or personal circumstance of one party (see Supreme Court Decision 2004Da31302, Mar. 29, 2

(B) As to the instant case, in light of the fact that the exchange rate sharply increased after the instant currency option contract was concluded, and the exchange rate prospects at domestic and foreign financial institutions and research institutes at the time of the conclusion of the instant currency option contract during the two years prior to the conclusion of the instant currency option contract, the applicant or the respondent could not have anticipated that the KRW 1,000 exchange rate exceeds KRW 1,500 and exceeds KRW 1,500 to KRW 1,50.

In addition, according to the currency option contract of this case as seen earlier, the applicant is at risk of continuously causing unlimited loss during the contract period, but according to the explanation materials and the overall purport of the examination of this case, where the exchange rate exceeds 967 won, the respondent merely provided a general and abstract explanation that the applicant should sell twice the contract amount to 967 won if the exchange rate exceeds 967 won, and the respondent did not clearly and sufficiently explain the risks of continuous and unlimited loss, and the respondent mentioned the possibility that the exchange rate may decline and did not specifically mention the possibility that the exchange rate may increase. Accordingly, it is reasonable to deem that the applicant entered into the contract of this case without sufficiently recognizing the risks inherent in the currency option contract of this case.

(C) However, as examined below, in light of the circumstances such as losses suffered by the applicant or losses incurred by the respondent when recognizing the contents or termination of the instant currency option contract, each of the circumstances listed in subparagraph (b) is insufficient to recognize that maintaining the validity of the instant currency option contract as it is and recognizing the binding force of the content of the contract is contrary to the good faith principle, and there is no other evidence to prove otherwise.

① Even according to the claimant’s assertion, the applicant entered into the instant currency option contract for the purpose of cancelling the risk of decline in the value of the export price of US dollars that will be received after the difference (three pages of the provisional disposition application). Thus, even if the applicant bears an obligation to sell US dollars according to the respondent’s exercise of the call option, the applicant did not purchase US dollars at the market rate and sell it to the respondent, but on the premise that the respondent sells US dollars that will be received as the export price to the respondent. In such a case, the applicant loses profits from exchange in Korean currency according to the market exchange rate that increases the US dollars received as the export price, separate from the loss of profits from exchange proceeds arising from exchange in Korean currency according to the market exchange rate that increases the US dollars received as the export price. In reality, it does not place losses equivalent

In fact, according to the applicant’s export value, when it is based on the financial statements (Evidence A, No. 14) for the business year of 2008 submitted by the applicant, the export price of the product in 2008 reaches 39.2 billion won, and the export price of the product in 2007 exceeded 1.7 billion won in the second half of 2008, where the exchange rate of USD 7 increased, the export price reaches 1.7 billion won in the second half of 2008 (the cumulative export price of USD 2.4 billion in the third quarter of income statement No. 7). Thus, it is difficult to view that the applicant suffered losses other than USD 1.7 billion in the second half of 200,000 from the Respondent’s export price to the Respondent’s exchange rate of 2.1 billion in the second half of 200,000 won after the conclusion of the contract. Thus, it is difficult to view that there is a lack of exchange rate of 1.5 billion won in the second half of 200.

② Since the notice of termination of the instant currency option contract sent by the applicant to the respondent on January 9, 2009 reaches the respondent, the remaining part is merely the settlement part on January 12, 2009 and the settlement part on February 11, 2009 and March 11, 2009.

(3) In full view of the explanation materials and the overall purport of the examination of the instant case, the respondent appears to have made an opposite transaction with a third party, such as other financial institutions, etc. to avoid the risk regarding the circulation of the instant currency option contract. If the instant currency option contract is terminated in the middle, the respondent is unable to exercise the right pursuant to the instant currency option contract, and the respondent is obliged to perform the obligation pursuant to the opposite transaction, and thus, the respondent is likely to have a considerable loss.

3. Determination as to the existence of necessity for preservation

A. A provisional disposition to determine a temporary position under Article 300(2) of the Civil Execution Act, such as the instant application, may be issued only when there is a significant loss on a continuing legal relationship or when there is any other necessary reason to avoid an imminent danger or prevent an imminent danger.

B. However, in light of the following circumstances acknowledged by the purport of this case’s explanatory materials and examination, ① settlement due to the instant contract remains on March 11, 2009, and ② losses that may be incurred to the applicant due to additional settlement once are calculated based on exchange rate of KRW 1,50,000 as of March 6, 2009 (the amount calculated by subtracting KRW 967,000 from the exercise exchange rate of KRW 1,50,000). The applicant’s financial status and business status of the applicant and the amount of KRW 200,000,000,000,000,000 won, which were 108,000,000 won, cannot be viewed as 20,000,000 won if the applicant submitted 20,000,000 won, which were more than 1,000,000 won (the amount of 20,000,000 won).

4. Conclusion

Therefore, the applicant's application for provisional disposition of this case is dismissed as it does not appear to be any part or there is no reason, and it is so decided as per Disposition.

Judges Lee Tae-tae (Presiding Judge)