K&P Law Firm successfully argued that the statute of limitations for commercial transactions applies when a CEO assumes responsibility for company debt.
Case Details:
- The defendant was serving as CEO of both a Chinese company A and Korean company B.
- In February 2012, the plaintiff lent RMB XX to Company A for a Korea-China exchange event in Jeju.
- At the time of the loan, the plaintiff and Company A signed an investment protection agreement stating that the plaintiff would invest RMB XX in Company A with a contract period from February 23, 2012 to August 22, 2012, and Company A would transfer 25% of its shares to the plaintiff as a condition.
- From April 26, 2013 to June 14, 2013, Company A borrowed a total of RMB XX as business funds through the plaintiff's acquaintances (hereinafter "the Borrowed Funds").
- On April 30, 2014, regarding repayment of the RMB XX loan and the Borrowed Funds, an agreement was made that Company B, where the defendant served as CEO, would transfer the commission fee (10% of the total sponsorship amount) from its February 13, 2014 Incheon Asian Games sponsorship contract to Company A for repayment by May 22, 2014, and use the remaining amount to acquire the plaintiff's shares in Company A for RMB XX.
- However, Company B's sponsorship contract was not executed, and consequently, Company A failed to repay the Borrowed Funds by the deadline and could not purchase the plaintiff's shares.
- On August 11, 2014, the defendant gave the plaintiff a cash receipt certificate stating "I promise and confirm to pay KRW XX received from the plaintiff by August 30, 2014" and a memorandum stating "The cash receipt certificate dated August 11, 2014 shall be for receiving KRW XX by August 30, 2014, and the remaining KRW XX by September 30. Note: The cash receipt certificate is for external use only."
Plaintiff's Argument:
The plaintiff invested in Company A along with acquaintances but failed to recover the investment. The defendant provided a memorandum promising to repay the plaintiff's investment and the Borrowed Funds. Therefore, the defendant is obligated to pay the agreed amount plus delay interest according to the memorandum.
K&P Law Firm's Defense:
- The agreed amount in the memorandum was for business funds invested in Company A's operations, constituting a commercial transaction subject to a 5-year statute of limitations. The plaintiff filed for filing a suit on March 29, 2024, more than 5 years after the September 30, 2014 due date, so the defendant's debt obligation under the memorandum has expired.
- The 5-year statute of limitations under Commercial Act Article 64 applies not only to claims arising from acts that constitute commercial transactions for both parties but also to claims where only one party's act constitutes a commercial transaction. Commercial transactions include both basic commercial acts under Article 46 and auxiliary commercial acts conducted by merchants for business purposes. Acts by merchants are presumed to be for business purposes.
- Company A's borrowing of funds from the plaintiff and acquaintances constitutes an auxiliary commercial act, making it a commercial obligation. The defendant's memorandum promising to repay was based on investment and loan contracts between Company A and the plaintiff/acquaintances, with the purpose of recovering existing commercial claims.
- Therefore, claims under the memorandum are commercial claims subject to a 5-year statute of limitations. The plaintiff filed suit on March 29, 2024, more than 5 years after the September 30, 2014 due date.
- * Thus, the plaintiff's claim for the agreed amount against the defendant had already expired before this lawsuit was filed.
Court's Decision:
The court accepted K&P Law Firm's argument that the statute of limitations had expired on the plaintiff's claim and dismissed the case.
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