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A Study on Creditor’s Right to Cancel

  • DONG-A LAW REVIEW
  • 2010, (48), pp.517-548
  • Publisher : The Institute for Legal Studies Dong-A University
  • Research Area : Social Science > Law

이태철 1

1동아대학교

Accredited

ABSTRACT

Creditor’s right to cancel (“CRC”) refers to a right through which a creditor may disclaim the effectiveness of his/her debtor’s act and have debtor’s property restored to the original state for the maintenance/ preservation of the value of security when the debtor has diminished his/her total properties through legal acts, knowing that such acts cause damage to his/her creditors. Since the original power of CRC is to disclaim the effectiveness of debtor’s disposal of properties, which have already been established, and to have the properties, which have been gained from beneficiary or third party acquirer, restored to the original state, it greatly affects third parties and threatens to harm the safety of transactions. Nonetheless, Korean civil law addresses CRC only in Articles 406 and 407. Consequently, important legal doctrines addressing CRC solely remain in the domain of court cases. Recently, dishonors and bankruptcies have increased due to international economic recession and business recession. Cancelling a deceit that causes harm to creditors and restoring transacted properties to chargeable properties is an important function that not only resolves private disputes, but also establishes legal justice. Furthermore, protecting well-meaning beneficiaries or third party acquirers is also important to protect the safety of transactions. Accordingly, it is appropriate to make a legislative approach to CRC-involving transactions, which are important and diverse. More specifically, it is suggested to create provisions governing the requirements of deceits, and CRS's effects and scope, based on Articles 406 and 407 of the civil law.

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