[1] The standard for determining whether a business transfer exists

[2] The case holding that it is reasonable to deem that the transfer of business was made at the time of acceptance of the report on change of the installer of educational facilities, not at the time of conclusion of the transfer contract

[3] Whether the transferor's obligation to a third party, which belongs to a business transferee who employs a trade name under Article 42 (1) of the Commercial Act, is limited to the transferor's obligation arising during the use of the trade name at the time of the business transfer (negative)

[4] The purport of Article 42(1) of the Commercial Act, which provides for the liability of a transferee of a business who uses a trade name, and whether Article 42(1) of the Commercial Act, which applies mutatis mutandis to cases where a transferee of a business belongs to a rooftop or business mark other than the trade name itself, even if the transferee of a business

[5] The case affirming the judgment of the court below that recognized liability by analogy of Article 42 (1) of the Commercial Act to the transferee who continues to conduct the same business by acquiring the business of "Seoul General Arts Center" as an educational facility

[1] Whether a transfer of business can be deemed as a transfer of business should be determined depending on whether the transferee continues to engage in the same business activity as the transferor performed by transferring functional assets as the source of revenue organized organically.

[2] The case holding that it is reasonable to view that the transferee, not at the time of conclusion of the contract for the transfer of educational facilities, succeeded to the status of the installer of the above educational facilities to the competent office of education, and that the transferee transferred the above educational facilities at the time of acceptance of the report for modification and started the same business activity as the transferor had done.

[3] The transferor's obligation to a third party, which belongs to the transferor's trade name under Article 42 (1) of the Commercial Code, is sufficient if the transferor's obligation is attributable to the transferor's business and is incurred before the transfer of business. It does not necessarily mean that the transferor's obligation arising during the use of the trade name at the time of the transfer of business.

[4] Article 42(1) of the Commercial Act, which provides for the liability of a transferee of a business who employs a trade name, generally provides for the obligor’s credit to a business obligee, where the business obligee’s business obligee’s credit is most substantially secured by the obligor’s business property and the succession to an obligation is excluded, the business obligee’s credit is separated from the obligor’s business property and thus the obligee would be harmed by the obligee. Thus, the business obligee’s credit comes to fall under the loss of the obligee’s business obligee’s opportunity to exercise the claim; where the business obligee’s credit is employed by the method of business transfer, such as loss of the obligee’s opportunity to exercise the claim; where the business obligee’s business obligee’s credit is not a business obligee’s trade name even though the business obligee did not succeed to an obligation; and where the business obligee’s mutual credit cannot be easily replaced or succeeded to, barring special circumstances, the transferee bears the liability by analogy under Article 42(1)2(1) of the Commercial Act, barring special circumstances.

[5] The case affirming the judgment of the court below that recognized liability by analogy of Article 42 (1) of the Commercial Act to the transferee who continues to conduct the same business by acquiring the business of the Seoul General Arts Center, which is an educational facility, using the name

[1] Article 42(1) of the Commercial Act / [2] Article 42(1) of the Commercial Act, Article 49(4) of the Enforcement Decree of the Lifelong Education Act / [3] Article 42(1) of the Commercial Act / [4] Article 42(1) of the Commercial Act / [5] Article 42(1

[1] [4] Supreme Court Decision 96Da8826 decided Apr. 14, 1998 (Gong1998Sang, 1315) / [1] Supreme Court Decision 2005Da602 decided Jul. 22, 2005 (Gong2005Ha, 1400), Supreme Court Decision 2007Da89722 decided Apr. 11, 2008 (Gong2008Sang, 675) / [4] Supreme Court Decision 88Da10128 decided Dec. 26, 198 (Gong190, 354), Supreme Court Decision 2007Da17123, 17130 (Gong209, 148) decided Jan. 15, 2009

Korea Electric Power Corporation (Law Firm Cr. and one other, Counsel for the plaintiff-appellant)

Seoul Central Arts Co., Ltd. (Law Firmcheon-ro, Attorneys Jeon Soo-soo et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2009Na81724 decided April 16, 2010

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

The grounds of appeal are examined.

1. As to the assertion that the educational facility of this case is not subject to transfer of business

Article 5 (2) of the Commercial Act provides that a company shall be deemed a merchant even if it does not engage in a commercial activity, and Article 47 (1) of the Commercial Act provides that an act performed by a merchant for business purposes shall be deemed a commercial activity, and Article 47 (2) of the Commercial Act provides that an act by a merchant shall be presumed to be an act by the merchant for

According to the reasoning of the judgment of the court below and the court of first instance as cited by the court below, the court below acknowledged facts based on the adopted evidences, and determined to the effect that since the act of operating the education facilities of this case is an ancillary commercial activity presumed to be conducted by merchants for a commercial activity or business for a business, and thus, the education facilities of this case constitutes a business property, and thus the transfer thereof constitutes a business transfer.

In light of the above provisions and the records, the above judgment of the court below is just, and it is not erroneous in the misapprehension of legal principles as to business assets in the transfer of business, as otherwise alleged in the ground of appeal.

2. The time of transfer of business

The issue of whether a transfer of business can be seen as a transfer of business ought to be determined depending on whether the transferee can be deemed to continue the same business activity as the transferor performed after the transferee transferred functional properties as the source of revenue organized organically (see, e.g., Supreme Court Decisions 2005Da602, Jul. 22, 2005; 2007Da89722, Apr. 11, 2008).

According to the facts established by the court below and the evidence established by the court below, the non-party company transferred and acquired the educational facilities of this case (including all attached corporeal movables) to 2,193,64,040 won, and the down payment of 443,707,280 won shall be paid up to October 15, 2008, and the remainder of 1,749,936,760 won shall be replaced by the Plaintiff’s acceptance of the obligation, such as salary, etc. for the former and incumbent professors and staff members of the educational facilities of this case (hereinafter “the transfer contract of this case”). The defendant paid the down payment to the non-party company by the date of the above down payment, and the lessee status of the building where the educational facilities of this case are located at that time, and the defendant received the new lease contract by succeeding the status of the installer of the educational facilities of this case to the competent office of education on the ground that he succeeded to the status of the installer of this case.

Examining the above facts in light of the legal principles as seen earlier, it is reasonable to view that the Defendant, at the latest around November 19, 2008, commenced business activities such as the transfer of educational facilities of this case from the Nonparty Company and the operation of the Nonparty Company. It is somewhat inappropriate for the lower court to determine that the transfer of business occurred around October 1, 2008, which was concluded by the transfer contract of this case. However, as long as the Plaintiff’s claim of this case occurred before it, the lower court did not affect the conclusion of the judgment.

On the other hand, it is sufficient that the transferor's obligation to a third party, which belongs to a business transferee who employs a trade name under Article 42 (1) of the Commercial Act, is due to the transferor's business and is incurred before the transfer of business, and it does not necessarily mean that the transferor's obligation arising during the use of the trade name at the time of the transfer of business. Thus, the ground of appeal on this different premise is rejected in this regard.

3. As to whether Article 42(1) of the Commercial Act is applied by analogy

Article 42(1) of the Commercial Act, which provides for the liability of a transferee of a business who employs a trade name, provides that, in general, the credit extended to an obligor is most substantially secured by the obligor’s business property, and in cases where the succession of an obligation is excluded from the process of realizing the obligor’s business transfer, the obligee’s claim is separated from the obligor’s business property, thereby impairing the obligee’s obligee, and thus, the same method of business transfer, i.e., loss of the obligee’s opportunity to pursuit of the obligee’s claim, i., loss of the obligee’s right to pursuit of the obligee’s claim, despite the absence of succession of an obligation, is interpreted as having been established in order to assume the obligor’s liability for performance even in cases where the obligor is employed, where the fact of the transfer of an obligation is difficult to prove externally due to the lack of succession of an obligation despite the mutual use of the trade name, or the method where it is difficult for the assignee to ascertain, barring special circumstances such as the transferee’s name or transferee’s trade name, etc.

In the same purport, the court below is just in holding that the defendant continued to conduct the same business by using the name "Seoul Comprehensive Arts Center", which is the name of the business of the educational facility of this case, after being transferred from the non-party company, is liable for by analogical application of Article 42 (1) of the Commercial Act, and there is no error of law such as misunderstanding of legal principles as to the responsibility of the business transferee

4. 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 Shin Young-chul (Presiding Justice)