In a case where the representative director is not interested in other person's business without being entrusted with all of the company's business and thus has neglected to perform his duties, whether it constitutes an act of breach of duty under Article 401 (1) of the Commercial Act (affirmative)

Articles 209(1), 382(2), 382-3, 389, and 401(1) of the Commercial Act; Article 681 of the Civil Act

[Plaintiff-Appellant] Plaintiff 200Da47316 delivered on March 29, 2002 (Gong2002Sang, 990) Supreme Court Decision 2002Da70044 delivered on April 11, 2003 (Gong2003Sang, 1167)

Plaintiff

Defendant (Attorney Ansan-jin, Counsel for defendant-appellant)

Seoul High Court Decision 2009Na1285 decided October 30, 2009

The judgment below is reversed and the case is remanded to Seoul High Court.

We examine the grounds of appeal.

The liability of a director for damages to a third party of a stock company under Article 401 (1) of the Commercial Act is a requirement that a director neglects his duties due to bad faith or gross negligence. Thus, the failure of a director to perform his duties is merely a failure to perform his duties due to ordinary transactions. However, if a director's act of loyalty and breach of duty of care is illegal, it constitutes a failure to perform his duties due to bad faith or gross negligence (see Supreme Court Decision 2000Da47316, Mar. 29, 2002). It is reasonable to see that the representative director's act of loyalty and negligence constitutes a failure to perform his duties due to bad faith or gross negligence (see Supreme Court Decision 200Da47316, Mar. 29, 200). It is reasonable to see that the representative director has a duty to faithfully perform his duties with the care of a good manager and to pay attention to the company's overall affairs. Thus, if he did not have any interest in the company's entire affairs without being entrusted with another person's business affairs, and caused a bad faith or gross negligence (see Supreme Court Decision 4001.

According to the facts and records admitted by the court below, the following facts are revealed.

In other words, the first instance court's co-defendant 2 stated that the co-defendant 2 would be an executive director of the 1st instance court's general construction office (hereinafter "the 1st instance court's 2nd executive director") and the defendant would be the representative director of the 20th instance court's company. The 1st instance court's 29th instance court's co-defendant 2nd instance court's 29th instance court's 1st instance court's 29th instance court's 1st instance court's 3th instance court's 29th court's 29th court's 1st court's 29th court's 1st court's 29th court's 1st court's 29th court's 1st court's 29th court's 6th court's 200 court's 2nd court's 29th court's 1st court's 3th court's 29th court's 200th court's 2nd court's 2.

Examining these facts in light of the legal principles as seen earlier, the Co-Defendant 2 of the first instance court committed an illegal act by deceiving the plaintiff by using the name of a large source in relation to his duties and the name of the representative director. The defendant, the representative director of the first instance court, who is the large source, is responsible for damages to the plaintiff as a result of neglecting the above illegal act of Co-Defendant 2 of the first instance court because he did not perform his duties as the representative director at all, while he did not perform his duties as the representative director. Accordingly, the defendant's above act of neglecting his duties constitutes a case where he neglected to perform his duties in bad faith or by gross negligence, and there is a proximate causal relation between the defendant's failure to perform his duties and the plaintiff's damage. Thus, the defendant is liable for compensation to the plaintiff.

Nevertheless, the court below rejected the remaining plaintiff's claim of this case, which held that it does not constitute a case where the defendant neglected his duties in bad faith or by gross negligence or there is no evidence to acknowledge it. The court below erred by misapprehending the legal principles on the liability of the director to a third party under Article 401 of the Commercial Act, which affected the conclusion of the judgment. The ground of appeal on this point is with merit

Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Young-ran (Presiding Justice)