The purpose of Article 7 (1) of the Special Act on the Protection of Surety and the meaning of "guarantee period" as provided in the above provision.

The purpose of the Special Act on the Protection of Surety (hereinafter “Surety Protection Act”) is to contribute to the settlement of a credit society by preventing any economic and mental harm of a guarantor, which takes place without compensation, and by establishing a reasonable practice of guarantee contract for monetary obligations, by prescribing special cases concerning guarantee under the Civil Act (hereinafter “Guarantee Act”). When entering into a guarantee agreement, the maximum amount of guarantee obligations shall be specified in writing (Articles 4 and 6), if there is no agreement for guarantee, the period shall be deemed three years (Article 7(1)), and if there is no agreement for guarantee, the guarantee period may be renewed, but if there is no agreement for the guarantee period, the guarantee period shall be deemed the period at the time of concluding the contract (Article 7(2)).

In light of the contents, structure, legislative purpose, etc. of these provisions, the purpose of Article 7(1) of the Surety Protection Act is to protect the guarantor by specifying the scope of the guaranteed obligation. Therefore, the term “guarantee period” prescribed in this provision is reasonable to interpret it as the period of the principal obligation to which the guarantor is responsible for the guaranteed obligation, barring any special circumstance, and it cannot be deemed as the term of

Articles 1, 4, 6, and 7(1) and (2) of the Special Act on the Protection of guarantors

Plaintiff

Defendant (Attorney Kim Sang-hoon, Counsel for defendant-appellant)

Daegu District Court Decision 2018Na1986 decided August 29, 2018

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

The grounds of appeal are examined.

1. The Special Act on the Protection of Surety (hereinafter “Surety Protection Act”) provides for special cases on guarantee to the Civil Act, thereby contributing to the settlement of a credit society by preventing any economic and mental harm of a guarantor, which takes place without compensation, and by establishing a reasonable practice of guarantee contract for pecuniary obligations, (Article 1). When entering into a guarantee agreement, the maximum amount of the guaranteed obligation must be specified in writing (Articles 4 and 6); when there is no agreement for guarantee, the period shall be deemed three years (Article 7(1)); however, if there is no agreement for guarantee, the guarantee period may be renewed at the time of entering into the contract (Article 7(2)).

In light of the contents, structure, legislative purpose, etc. of these provisions, the purpose of Article 7(1) of the Surety Protection Act is to protect the guarantor by specifying the scope of the guaranteed obligation. Therefore, it is reasonable to interpret the term “guarantee period” as the period of the principal obligation to which the guarantor bears the responsibility for guarantee unless there are special circumstances, and it cannot be deemed that the term of the guaranteed obligation means the duration of

2. The lower court accepted the Plaintiff’s claim on the following grounds.

On July 14, 2009, the Nonparty prepared and delivered to the Plaintiff a letter of set forth as the sum of KRW 120,000,000, and the due date of payment August 31, 2009, respectively, and the Defendant jointly and severally guaranteed the obligation of borrowing. Therefore, the Defendant is liable to pay the Plaintiff the loan amount of KRW 120,000,000 and the damages for delay.

The Defendant asserts that, at the time of the filing of the instant lawsuit, the period of guarantee period from the date of the Defendant’s joint and several liability to the guarantor under Article 7(1) of the Surety Protection Act has expired, and thus, the liability for joint and several liability has ceased to exist. However, it cannot be said that the guarantor’s liability for guarantee has ceased to exist on the ground that the guarantee period of

3. The lower judgment is justifiable on the basis of the foregoing legal doctrine. In so doing, it did not err by misapprehending the legal doctrine regarding the interpretation of the guarantee period under Article 7(1) of the Surety Protection Act, contrary to what is alleged in

4. The Defendant’s appeal is without merit, 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 Lee Dong-won (Presiding Justice)