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Legislative Study on Earnest Money Clauses of Civil Code

  • DONG-A LAW REVIEW
  • 2010, (46), pp.175-200
  • Publisher : The Institute for Legal Studies Dong-A University
  • Research Area : Social Science > Law

조일윤 1

1동아대학교

Accredited

ABSTRACT

Generally, one of parties delivers money or other things to the other party, at the time of entering into a contract, under the name of down payment, assurance deposit, etc. in all types of contracts in daily life. It is usually defined as the contract deposit. As a rule, the contract money has legal implications and purposes such as effects of deposit money, penalty, earnest money, etc., however, it has the effect of earnest money unless otherwise specially agreed upon between the parties. According to present civil code, “the deliverer should give up the contract money or the receiver should repay double such money, before one of the parties has initiated performance of the contract,” in order to exercise the right of rescission by the stipulation of the earnest money of Article 565. Here, pursuant to the two parties' theory, the theories and judicial precedents adpoted in Korea, ‘one of the parties’ cannot exercise the right of rescission, if one of the parties initiates the performance of the contract. However, in consideration of such points, (1) the latter part of Article 565 Paragraph of Civil Code is meant to protect the party who has initiated the performance of the contract from the other party, (2) it is difficult to consider only initiation of contract performance as the party's waiver of the right of rescission, (3) it is consistent with the principle of private autonomy, that it is interpreted to mean the party who intends to exercise the right of rescission should be entirely free to decide to give up the protection from the other party and exercise such right, (4) unpredictable damage to the party who hasn't initiated the contract performance can be supplemented by the delivered contract deposit, I think, it is legislatively reasonable that, in the latter part of Article 565 Paragraph 1 of Civil Code, ‘one of the parties’ is interpreted as ‘the other party of a contract’ and revised as ‘the other party of a contract’. Accordingly, it is thought to be reasonable that the contradiction to the principle “the contract should be fulfilled” can be controlled, when interpreting the scope of ‘till the initiation to fulfill the contract’ broader. Moreover, it is reasonable that ‘the waiver of the contract deposit’ is adequate only with the claim of contract cancellation, I think. It is thought to be reasonable to accept the amendment into ‘the autual tender of double repayment’ or the tender of double repayment, pursuant to the judicial precedents that it is not necessary to perform ‘the repayment of double amount’ actually and to deposit the contract money in the bank in case of the other party's refusal to receive such money. Accordingly, it is legislatively reasonable to amend a part in question in the latter part of Article 565 Paragraph 1 of Civil Code into the waiver of the contract deposit or the tender of double repayment (or the actual tender of double repayment) before the other party's initiation to enter into the contract, I think.

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