Small amount remittance despite knowing the possibility of contract cancellation...Supreme Court says, “It is not a lawful provision of performance.”

After signing the sales contract, let's announce the intention to cancel.. After remitting about 3% of the down payment, insist on 'maintaining the contract'
The court said, “The defendants made unilateral deposits for the purpose of extinguishing the plaintiff’s right to cancel the contract.”

The Supreme Court ruled that in a real estate sales contract, unilaterally transferring only part of the down payment without the seller's consent and attempting to continue the contract was not justified.

According to the legal community on the 25th, the Second Division of the Supreme Court confirmed the lower court ruling on the 1st of last month that the plaintiff, A, in her 40s, won the appeal in the lawsuit for confirmation of non-existence of debt filed by A, a woman in her 40s, against B and his wife.

Mr. A signed a contract to sell the apartment he owns to Mr. B and his wife in 2020.

Mr. B and his wife first remitted a deposit of 30 million won and promised to pay the balance the following year.

A few days later, Mr. A informed the real estate agency of his intention to terminate the contract due to personal circumstances.

However, the conflict began when Mr. B and his wife suddenly transferred 10 million won to Mr. A.

Mr. A argued that unilaterally sending money against his will cannot be considered fulfillment of the sales contract.

In addition, he emphasized that 70 million won was deposited in accordance with the terms of the contract, which states that 'the seller may repay the contract amount and cancel the contract until the buyer pays the balance,' and that the contract was legally terminated.

However, Mr. B and his wife refuted that it was impossible to cancel the contract due to repayment of the down payment since the sales contract had already begun with their own remittance before the deposit was made.

The first trial court ruled in favor of Mr. B and his wife.

The court said, “There is no evidence to suggest that there was a special clause in the contract not to begin performance of the balance before the balance payment date,” and added, “It should be seen that the defendants, who are the buyers, can begin performance of the balance even before the balance payment date.”

However, the judgment of the second trial court was different.

The appellate court ruled, "The defendants paid part of the balance immediately after learning of the plaintiff's possibility of canceling the contract, but that amount is only about 3% of the total contract deposit," and "This appears to have been made unilaterally with the purpose of extinguishing the plaintiff's right to cancel the contract, so it cannot be viewed as a legitimate provision for performance."

He added, “Therefore, the contract can be considered canceled at the point when the notice of cancellation of the sales contract reached the defendants.”

The Supreme Court also dismissed the appeal and upheld the original judgment.

Attorney Choi Han-sik of Daeryun Law Firm, who has represented Mr. A since the appellate trial, explained, “If the seller also has a benefit due on the payment date of the balance of the real estate sales contract, this applies when there are special circumstances in which the debtor cannot begin performance before the performance period.” He added, “These special circumstances include the content of the obligation, the act of performing the obligation, and acts that unfairly interfere with the other party’s exercise of the right to discharge.”

He continued, "Mr. B and his wife unilaterally deposited only 10 million won, which is only a small portion of the total balance, into the plaintiff's account, and this can be seen as an act that violates the rules of good faith. We were able to win the case by emphasizing the fact that this act was aimed at interfering with Mr. A's right to statutory discharge."

Shin Min-ji (sourminjee@ikbc.co.kr)

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Small remittance despite knowing the possibility of contract cancellation...Supreme Court: "It is not a lawful provision of performance" (Shortcut)