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Basis and Scope of Liability for Damages Caused by Breaking-Off of Contract Negotiation

Park, YoungMok 1

1순천대학교

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ABSTRACT

The termination of contract negotiations is in principle free from unlawfulness due to freedom of contract. However, it is the court's position that it is illegal to give damage to a contract partner by refusing to conclude a contract without any good reason after giving reasonable trust to partner. The court referred to this as tort, and pursuant to Article 535 of Korean Civil Code with regard to the scope of damages. Several questions can be raised regarding this judgment. First, it is a question of whether the basis of liability for torts is causing false trust or refusing to sign a contract. The second question is whether it is reasonable to reimburse the reliance interest based on tort. The third problem is the question of what the standard is in the case of compensating the performance interest. The Korean Supreme Court concluded that only reliance damages are allowed in cases of unfair dismissal of contractual negotiations. If the basis of responsibility is the cause of false trust, it is in accordance with the general theory of tort. However, while the basis of responsibility is refusing to sign a contract, rewarding reliance damages is not match with a causal relationship. This attitude of the court can be justified in the sense that damages should not have the same effect as the conclusion of the contract. Even if the termination of the contractual negotiations is unreasonable, it should not create the same status as the conclusion of the contract by compensation of damages. Therefore it can be said that the range of compensation of torts is modified within this range in order to adjust the interests of both parties. However, there is a need for further clarification on matters that have compensated for performance interest. This can be explained by the fact that the terminator of contract negotiations has benefited from the input cost of partner. Anyone who enjoys the performance interests from the expenses of the other party that he/she has caused has to compensate for the performance damages because it is reasonable to compensate the corresponding gains. This is in contrast to other cases where expenditure costs are in vain. Therefore, in case of termination of contractual negotiation, it is possible to explain the position of the case law as that: in principle, irrespective of the grounds of the illegality, the offender must compensates for the reliance interest but the offender who has earned the contractual benefit should compensate for the performance interest.

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