Where a contractor enters into a special contract to pay the balance of construction to the contractor at the time of completion of the completion inspection, whether the contractor may refuse the payment of the balance of construction as well as the expenses incurred in performing the unexecution portion until the completion of the completion inspection if there is a defect in the completed building due to the failure of construction.

Unless there are special circumstances, such as the contractor’s failure to undergo a completion inspection or the contractor’s defense of simultaneous performance based on the special agreement, the contractor may refuse to pay the remainder of the construction as well as the amount equivalent to the expenses incurred in performing the non-construction until the completion of the completion inspection based on the special agreement, if the contractor has made a special agreement to pay the contractor the balance of construction at the same time as the completion of the completion inspection. If the contractor fails to undergo a completion inspection due to defects arising from the non-construction of the completed building, the contractor’s failure to undergo the completion inspection due to the reasons attributable to the contractor.

Articles 536, 665, and 667 of the Civil Act

[Judgment of the court below]

Defendant-Appellee et al., Counsel for the defendant

Seoul High Court Decision 94Na10711 delivered on October 4, 1994

The part of the lower judgment against the Defendant’s failure is reversed, and that part of the case is remanded to the Seoul High Court.

The defendant's attorney's grounds of appeal are examined.

According to the reasoning of the judgment below, the court below asserted that the payment of the remainder of the construction work at the time when the defendant entered into the contract for new construction works in this case with Nonparty 1 was to pay the remainder of the construction work at the same time as the completion of the completion inspection, and that the completion inspection was not completed, so the payment of the remainder of the construction work at the time of the above contract shall not be made simultaneously with the completion inspection of the construction work of the above building. Since Nonparty 1 did not complete the detailed construction work of the above building, the above non-party 1's failure to pay the remainder of the construction work at the time of the completion of the completion inspection, the defendant may refuse the performance of the obligation against the plaintiff who is the transferee of the claim for the construction work until the completion of the completion inspection. However, in this case due to a dispute between the parties to the above contract on the settlement of the contract price, the scope of the construction work price which may be refused to pay is the remainder of the construction cost in lieu of the remaining defect repair work cost or any other expenses equivalent to the damages and expenses.

However, it is clear that the contractor is responsible for the above non-party 1, who is the contractor, to undergo the completion inspection at the time of the contract for the construction of the building in this case on the record (Article 5 subparagraph 1 of the Construction Contract). If the contractor stipulates that the contractor shall pay the balance of the construction at the time of the completion inspection, barring special circumstances such as that the contractor fails to undergo the completion inspection due to the reasons attributable to the contractor or the contractor shall not be allowed under the principle of good faith to make a defense of simultaneous performance due to the above special agreement. The contractor can refuse to pay the balance of the construction until the completion of the completion inspection under the above special

Where a contractor fails to undergo a completion inspection due to a defect in a building which has not been completed by the contractor, the contractor may refuse to pay the amount equivalent to the expenses incurred in the execution of the non-execution portion in accordance with Article 667 of the Civil Act, even though there is no such special agreement, and if it is only possible to refuse the payment of the remuneration for the amount equivalent to the expenses incurred in the execution of the non-execution portion, as recognized by the court below, the existence of such special agreement is a result of not affecting the rights of the contractor, and the purport of the above special agreement is to be neglected.

In the instant case, even based on the factual basis acknowledged by the lower court, it cannot be deemed that the cause for failure to undergo a completion inspection for the instant building is the failure to undergo a completion inspection, and there is no evidence to find out the cause for failure to undergo a different completion inspection even after examining the record. In addition, if Nonparty 2 (the director at the site, who is the director of the company that received a contract for the construction of the instant building from Nonparty 1, is left unattended without completing detailed construction, such as painting and landscaping, on the ground that the Defendant did not pay the remainder of the construction, unless there are other special circumstances, in the instant case where the Defendant paid the remainder of the construction at the time of the completion of the completion inspection, the remaining detailed construction cannot be held the Defendant as the contractor.

Nevertheless, without examining who is responsible for the failure to undergo a completion inspection on the building of this case, the court below held that the defendant is liable to pay the remainder of the construction cost, excluding the expenses incurred in the construction of the remainder of the construction cost, on the ground that the procedure of completion inspection is delayed due to the defect caused by the failure to perform the remaining detailed construction works, is not sufficient to conduct a necessary deliberation or it commits an offence of law that affected the conclusion of the judgment by misunderstanding the legal principles on simultaneous performance. Therefore, the grounds for appeal

Therefore, without further proceeding to decide on the remainder of the grounds of appeal, the part of the lower judgment’s failure is reversed, and the case is remanded to the lower court. It is so decided as per Disposition by the assent of all participating Justices

Justices Cho Chang-tae (Presiding Justice)