2018Da220215 Lawsuits for performance guarantee under the Convention

Korea Land and Housing Corporation

Attorney Park Jae-ho, Counsel for the plaintiff-appellant

person

B A.

Law Firm LLC et al., Counsel for the defendant-appellant

Attorney Park Young-chul, Park Chang-chul, Lee Ho-hee, Lee Jin-hee, Park Woo-young

Seoul High Court Decision 2016Na2087542 Decided January 19, 2018

December 30, 2020

All appeals are dismissed.

Costs of appeal shall be borne by each party.

The grounds of appeal are examined.

1. As to Defendant 1’s ground of appeal

The lower court, on the grounds indicated in its reasoning, rejected all the Defendant’s assertion that the instant agreement was lawfully terminated by the Plaintiff’s notification of termination of the instant agreement, and that the Plaintiff failed to perform the duty of cooperation with respect to the progress of the first phase project, or that the two phase project was no longer carried out due to the Plaintiff’s cause attributable to the Plaintiff. Examining the records in accordance with the relevant legal doctrine, the lower court did not err by misapprehending the legal doctrine on the content and nature of the Plaintiff’s duty of cooperation, as otherwise alleged in the grounds of appeal, contrary to what is alleged in the grounds of appeal.

2. As to the Plaintiff’s grounds of appeal Nos. 1 and 2 and Defendant’s ground of appeal No. 2

The court below acknowledged that the contract of this case was concluded in order for the plaintiff, who is the executor of the housing site development project of the D District, to supply the project site of this case within the general business area by establishing a corporation G (hereinafter referred to as the "G"), H, I, J and project company, and let the project company implement the complex construction project with large convenience in the site. The contract of this case is paid 5% of the cost of private investment in order to guarantee the execution of the agreement of this case, which is the above G, etc., and if the contract of this case is judged to be impossible to implement the project of this case due to the reasons attributable to the consortium of this case, the plaintiff can terminate the contract of this case. In this case, the contract of this case shall be reverted to the plaintiff. The contract of this case was not commenced until the expiration of the business period for which the consortium of this case would extend, and the contract of this case shall be paid the amount of the warranty bond of this case to the plaintiff lawfully in accordance with the contract of this case.

Furthermore, in light of the legal principles on the reduction of the estimated amount of damages (see Supreme Court Decision 2013Da64090, Jan. 16, 2014) and ① the fact that the Plaintiff exercises considerable influence on the promotion of the instant project in the nature of the public-private partnership projects, even though the instant agreement provides that only the Plaintiff is responsible for and damages caused by failure, such as determining the estimated amount of damages, shall be borne by the members of the consortium only when the agreement is terminated due to the cause attributable to the instant consortium; ② the failure to start the second stage project has caused domestic and foreign real estate market and the aggravation of the financial market; ③ the Plaintiff sold the second stage project site at the higher price after the termination of the agreement; and the Plaintiff may also receive considerable compensation for investments and shares in K corporation, which is the project company of the instant consortium, and for remaining property disposal rights, the instant agreement determined that the performance guarantee of the Defendant’s performance bond should be unfairly reduced by 50% as determined by the instant agreement.

Examining the record in accordance with the relevant legal principles, the lower court did not err by misapprehending the legal doctrine on the grounds for reduction of the estimated amount of damages and the ratio thereof, as alleged in the grounds of appeal.

3. As to the ground of appeal No. 3

The lower court invoked the legal doctrine that can become an installment liability according to the ratio of shares even in cases where a cooperative’s obligation under the Civil Act is borne by an act of commercial activity for all members (see, e.g., Supreme Court Decisions 2001Da75332, Jan. 11, 2002; 201Da60759, Jul. 11, 2013). Based on the circumstances indicated in its reasoning, the lower court ordered the payment of a performance bond under the agreement, which is an estimated amount of compensation for damages, to be a installment liability pursuant to the investment ratio of the Defendant in the entire consortium. As recognized by the circumstances and records established by the lower court, the Plaintiff asserted that the Plaintiff is a installment liability between A and the Defendant who issued a warranty bond against G, etc. with respect to the first instance court, on the premise that the performance bond reduced to the Defendant was an installment liability. In light of the legal doctrine as to the entire performance bond ordered by the Plaintiff, a member of the consortium, as alleged in the grounds of appeal, the lower court below did not err regarding the payment guarantee against the Defendant Association.

4. Conclusion

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

Supreme Court Decision 201

A person shall be appointed.