Anti-social behavior resulting from abuse of economic status

This article examines the validity of the Korean Supreme Court's February 23, 2023 decision (2022da287383) regarding anti-social order acts under Article 103 of the Civil Code caused by abuse of economic status. It reviews the Supreme Court's decisions on contract freedom and self-determination, the issue of disparities in economic power between parties, and the trend of Supreme Court decisions on the abuse of economic status. Additionally, the relationship between the abuse of transactional status under the Fair Trade Act and Article 103 of the Civil Code is examined. The anti-social nature of the abuse of economic status is based on the fact that it restricts an individual's freedom of economic activity by imposing excessive counterperformance and violates the fair market transaction order. Contracts concluded under circumstances where the parties' self-determination is not guaranteed due to differences in economic power fail to meet the prerequisites of contractual freedom and thus require regulation. However, the criteria for such regulation are ambiguous, and there is a risk that it could be easily applied in any case, potentially constituting a significant infringement on contractual freedom, which must be guarded against. In the subject judgment, two companies with significant differences in capital and duration entered into the contract in question, stipulating that the plaintiff would be liable for damages caused by intentional or negligent acts during the brokerage and agency services. However, the case involved a separate agreement imposing joint guarantee obligations and subrogation obligations on the plaintiff for the default of the loan agreement user. The subject judgment determined that even though the parties had already established procedures for contractual liability through the contract to ensure objectivity and fairness, imposing additional liability through a separate agreement beyond such procedures could be deemed unfair and violate Article 103 of the Civil Code. It thus introduced a new specific type of case where abuse of economic status constitutes an act contrary to public order. Whether there was an abuse of economic position ultimately depends on whether the primary cause leading the party to engage in the legal act was the economic disparity between the parties, from the perspective of whether the party's decision-making was restricted. The unfairness that serves as the basis for anti-social conduct should be determined by assessing whether the content of the legal act violates public economic order, taking into account the motives and purposes of the legal act, the extent of the economic disparity between the parties, the benefits obtained by one party and the nature and extent of the consideration borne by the other party, and the practices of similar transactions. The Supreme Court has adopted a cautious approach in recognizing violations of Article 103 of the Civil Code due to the abuse of economic status, while seeking to establish specific types of cases where antisocial conduct is recognized, as in the subject judgment. This approach appears to reflect an effort to prevent the arbitrary abuse of Article 103 of the Civil Code in legal transactions between parties with economic disparities, while ensuring predictability regarding abstract standards.