Refund of design fee is refused, saying business agreement and implementation contract are ‘unrelated’... Court “disapproves of independent agreement”

After signing the business contract, let’s remit the design fee and change the main contract details… Request for return: “Design fee is a separate contract”
Seoul Central District Court “The remittance was made with the expectation of concluding an implementation contract as originally agreed upon... The unjust enrichment must be returned.”

A ruling was made that design fees paid after an oral contract for a new house construction project must be returned if the implementation contract has not been concluded.

Judge Geon-ho Choi of the Seoul Central District Court's Civil Division 1006 recently ruled in favor of the plaintiff in a miscellaneous (financial) claim lawsuit filed by rental business operator A against his acquaintance B.

The two decided to build a new building together in July 2021 and signed a joint business agreement. In this process, Mr. B guaranteed profits of 450 million won and presented 35 million won as a design fee. Mr. A, who accepted this, first transferred 30 million won.

However, the final contract that Mr. A received two months later contained different content. As commissions that did not exist before were added and some of the construction costs were changed, the profits were calculated to be about 200 million won, which is less than the amount originally proposed.

Accordingly, Mr. A informed Mr. B that he would not proceed with the new construction project. He then demanded a return of the 30 million won he had previously remitted.

However, Mr. B refused to return the business contract and the final implementation contract on the grounds that they were independent matters. Mr. B emphasized that he had only received the design fee according to the previous contract and had no obligation to return the money.

Judge Choi Geon-ho of the Seoul Central District Court, who heard this case, ruled in favor of plaintiff A.

Judge Choi Geon-ho said, “The plaintiff thought that a contract guaranteeing profits of 450 million won would be concluded and made the remittance in advance before the final contract,” and ruled, “The final contract and the business contract cannot be viewed as separate and independent issues.”

Judge Choi continued, “Because the final contract has not been concluded, the defendant has no reason to receive payment of 30 million won,” and ruled, “The plaintiff has an obligation to return it.”

Attorney Lee Ki-eun of Daeryun Law Firm (Limited), who represented the plaintiff A in this lawsuit, said, “If you take another person’s property and cause damage without a legal cause, it is considered unjust enrichment.” He added, “In this case, as the content of the contract negotiation between the two people changed, it can be seen that the legal cause for Mr. A to pay the design fee has disappeared.”

Reporter Son Dong-wook (twson@lawleader.co.kr)

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Refusal of return of design fee, saying business agreement/execution contract is ‘unrelated’... Court “disapproves of independent agreement” (link)