In the event that a purchaser issues and delivers a promissory note that has become due after the due date for the supply of goods from a seller for the payment of the price following the supply of the goods, the obligation to pay the price of the goods (i.e., the due date for the payment of the Promissory Notes)

Where a purchaser supplied goods from a seller and then issued and delivered a promissory note, the due date for the payment of the price for the goods, which became the date of the delivery of the goods, to the seller for the payment of the price for the goods, barring any special circumstances, the due date for the payment of the price for the goods is the due date of the promissory note, and even if the said promissory note was rejected before the due date arrives as a cause for the payment suspension that occurred to the issuer, the due date for the payment of the goods does not arrive at the time of the refusal of the payment. In addition, in cases where the “performance guarantee insurance contract concluded for the obligation stipulated in the said contract for the supply of goods, such as the above obligation for the payment of the price for the goods, is a content guaranteeing damages caused by the nonperformance of the “liability within the due date

Article 388(1) of the Civil Act, Article 75 of the Bills of Exchange and Promissory Notes Act

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Domin, Attorneys Park Jong-soo et al., Counsel for plaintiff-appellant)

ELB Co., Ltd. (Attorney Yang Jae-soo, Counsel for the plaintiff-appellant)

Seoul Guarantee Insurance Co., Ltd. (Attorney Choi Sung-sung, Counsel for defendant-appellant)

Seoul Central District Court Decision 2011Na26925 Decided October 20, 2011

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

1. As to the ground of appeal on whether an insurance accident occurred

A. Where a buyer issues and delivers a promissory note to a seller for the payment of the price of the goods pursuant to an agreement on the method of payment between the seller and the seller for the payment of the price of the goods, the due date for the payment of the price of the goods is the due date of the promissory note, barring any special circumstances, and even if the said promissory note was rejected prior to the due date for the payment suspension that occurred to the issuer, the due date for the payment of the price of the goods does not arrive (see Supreme Court Decision 2000Da26333, Sept. 5, 200, etc.).

In addition, if the "performance guarantee insurance contract" concluded for the obligation stipulated in the goods supply contract, such as the above goods payment obligation, is a content guaranteeing damages caused by the failure to perform the "liability within the insurance period", it cannot be said that the "performance date" stipulated in the said insurance contract has arrived immediately due to the occurrence of reasons such as the refusal of payment, etc.

B. Review of the reasoning of the lower judgment and the evidence duly admitted by the lower court reveals the following facts.

① On September 12, 2008, the Plaintiff entered into a contract for the supply of electronic equipment equivalent to KRW 142,043,00 (hereinafter “instant goods”) with a forest construction company (hereinafter “forest construction”). The Plaintiff agreed that the payment of the price would be made by issuing bills and paying bills on the goods supplied each month by the Plaintiff at the 25th day of the following month, and the due date for the payment of bills shall be three months after the due date.

② On September 29, 2008, the Defendant concluded a performance guarantee insurance contract (hereinafter “instant insurance contract”) with the content that “compensation for losses sustained by the Plaintiff is not performed due to the failure to perform the obligation stipulated in the instant goods supply contract (limited to the obligation within the insurance period)” between September 19, 2008 to January 31, 2009 with the insurance period from September 19, 2008 to January 31, 2009.

③ As the Plaintiff supplied the instant goods to a forest construction around October 1, 2008, forest construction was issued and delivered to the Plaintiff on February 28, 2009, on November 28, 2008, a promissory note indicating the payment date as KRW 100 million (hereinafter “instant note”) to the Plaintiff, but the forest construction failed to pay the said promissory note on the said payment date.

④ On the other hand, the forest construction applied for the commencement of rehabilitation procedures on January 8, 2009, and was ordered to suspend current account transaction on January 14, 2009.

C. Examining the above facts in light of the legal principles as seen earlier, in the instant case where there is no other evidence to prove other special circumstances, the period during which the obligation to pay the price for the goods of this case to the Plaintiff of Yulim Construction is due is February 28, 2009, which is the due date of the Promissory Notes. As such, insofar as the due date does not fall within the insurance period stipulated in the instant insurance contract, the obligation to pay the price for the goods cannot be deemed as the “liability within the insurance period” stipulated in the instant insurance contract, and even if Yulim Construction did not pay the said Promissory Notes at the due date or was subject to an application for commencement of forest construction or suspension of current account transaction as to forest construction within the said insurance period, it cannot be deemed that the insured event stipulated

D. It is justifiable for the lower court to have determined that the insurance accident occurred within the insurance period stipulated in the instant insurance contract. In so doing, it did not err by misapprehending the legal doctrine on the interpretation of the instant insurance contract, contrary to what is alleged in the grounds of appeal.

2. As to the ground of appeal on the violation of the duty to explain the terms

For reasons indicated in its holding, the lower court rejected the Plaintiff’s assertion, namely, that the Defendant’s failure to explain and notify the Plaintiff of the additional risk burden clause constitutes a violation of the duty to explain the terms and conditions and the good faith principle, and thus, the said special terms and conditions should also

Examining the records in light of the relevant legal principles, the judgment of the court below is just and acceptable, and contrary to the allegations in the grounds of appeal, there is no error of law by misapprehending the legal principles as to the duty to explain the terms and conditions,

3. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Chang-suk (Presiding Justice)