“I received less money” The representative of a partner company who was sued by a subcontractor for construction costs... What are the results?

Plaintiff claims “non-payment of payment after construction progress”
The court dismissed the claim because “a party to the contract cannot be considered a defendant”

A shipbuilding subcontractor filed a civil lawsuit claiming that it had not received payment worth tens of millions of won from the representative of its partner company, but lost in the first trial.

In December of last year, Changwon District Court's Tongyeong Branch Civil Division 1 (Chief Judge Cho Hyun-rak) dismissed the plaintiff's claim in a construction payment claim lawsuit filed by company A, a welding work subcontractor, against the representative of the main contractor partner company.

Company A signed a welding work contract with Mr. B, the representative of the partner company, in August 2021. According to the contract, after the initial contract period, both parties agreed to extend the business relationship in three-month increments, and accordingly, Company A continued to trade with its partner company. However, Company A filed a lawsuit against Mr. B, claiming that it had not received subcontract payment of 44 million won during the period from February 2022 to December 2023. Company A has been entrusting its tax and accounting work to an outsourcing company, but the company received information from the company that B had reduced the subcontract amount without consent and had not paid it.

In response to this, Mr. B's side argued that the contracting party in the contract contract is the partner company represented by Mr. B, and that the construction price should be discussed with the partner company, not with Mr. B.

Mr. B's legal representative said, "The contracting party from February 2022, the period at issue in this case, was not Mr. B, but the partner company to which Mr. B belongs. Although previously, the contracting party was Mr. B according to the prior contract, the two parties reached an agreement in this regard and payments were made in the name of the partner company from then on, so Company A's claim should be regarded as groundless."

The court also ruled that an agreement had been reached regarding the change of contracting parties from Mr. B as an individual to a partner company. Chief Judge Cho ruled, “Considering the fact that Company A had received subcontract payments into an account in the name of the partner company and that the partner company was also listed as a transaction party on the tax invoice, it can be interpreted that there was mutual agreement in the process of changing the contracting parties.”

Attorney Cho Ik-cheon of Daeryun Law Firm (Limited), who represented Mr. B, explained, “The key to this lawsuit was to accurately identify the parties involved in the contract.” He added, “When the parties’ claims differ, we were able to defend the plaintiff’s claim based on previous precedents that state that the parties must be determined based on the nature of the contract, the circumstances surrounding the conclusion of the contract, and specific circumstances before and after the conclusion of the contract.”

[View full article]
Representative of a partner company sued by a subcontractor for construction costs for receiving less money... What are the results? (Shortcut)