Open Decision Ledger · Civil obligations & remedies
Defect damage as covered loss under a construction performance bond
Supreme Court, Apr. 24, 2025, 2024Da297643 (judgment)
No holding summary · checked against points at issue. The official text publishes no summary of the holding for this decision. The quotation and factors in this record are copied verbatim from the points at issue; the evidence for each axis is taken from the points at issue, the order and the reasons.
Case name: 구상금
Official text on the National Law Information Center
Question
Where a contractor has carried out part of the works and defects remain in that part, is the resulting damage damage from non-performance of the construction contract, and so covered by the performance (contract) guarantee insurance, even though the construction contract treats the defect-repair guarantee as a separate guarantee?
Holding
Yes. The loss the employer suffers from defects in the part of the works the contractor carried out is loss from the contractor's non-performance of the construction contract, and so falls within the scope of the guarantee. Treating the defect-repair guarantee as a separate guarantee does not exempt the liability that was originally the object of the contract guarantee, and where the policy does not exclude loss from defects in the works performed, that loss remains covered.
Points at issue, verbatim
갑이 공사를 수행한 부분에 하자가 발생하여 을 등이 손해를 입었다면 이는 갑의 공사계약 불이행으로 을 등이 입은 손해에 해당하므로 보증계약의 보증대상이고, 공사계약에서 하자보수보증을 별도의 보증으로 다루고 있다고 하더라도 하자로 인한 손해는 여전히 보증계약의 보증대상이 된다고 한 사례
Unofficial English translation
if defects occurred in the portions of the work performed by A and B and others thereby suffered losses, such losses fall within the losses suffered by B and others due to A's non-performance of the construction contract and are therefore subject to the guarantee under the guarantee contract, and even though the construction contract treats the defect repair guarantee as a separate guarantee, the losses caused by the defects remain subject to the guarantee under the guarantee contract
Disposition
Reversed and remanded Stated in the decision
원심판결을 파기하고, 사건을 서울중앙지방법원에 환송한다.
Unofficial English translation
The judgment of the court below is reversed, and the case is remanded to the Seoul Central District Court.
Form of the test
Elements stated Read from the decision
계약보증의 대상이 되는 보증책임의 일부를 하자보수보증과 같이 별도의 보증으로 다루고 있다고 하여 원래 계약보증의 대상이 되는 보증책임이 면제되는 것은 아니다
Unofficial English translation
The fact that part of the guarantee liability subject to the contract guarantee is treated as a separate guarantee, such as a defect repair guarantee, does not exempt the guarantee liability originally subject to the contract guarantee
Factors
- 갑이 공사를 수행한 부분에 미시공 하자와 부실시공 하자가 존재한다는 이유로
- 갑이 공사를 수행한 부분에 하자가 발생하여 을 등이 손해를 입었다면 이는 갑의 공사계약 불이행으로 을 등이 입은 손해에 해당하므로 보증계약의 보증대상이고
- 공사계약에서 하자보수보증을 별도의 보증으로 다루고 있다고 하더라도 하자로 인한 손해는 여전히 보증계약의 보증대상이 된다고
Unofficial English translation
• on the ground that there existed non-performance defects and defective construction defects in the portions of the work performed by A
• if defects occurred in the portions of the work performed by A and B and others thereby suffered losses, such losses fall within the losses suffered by B and others due to A's non-performance of the construction contract and are therefore subject to the guarantee under the guarantee contract, and
• even though the construction contract treats the defect repair guarantee as a separate guarantee, the losses caused by the defects remain subject to the guarantee under the guarantee contract
Relation to precedent
Follows earlier decisions Stated in the decision
대법원 2006. 4. 28. 선고 2004다16976 판결(공2006상, 908)
Unofficial English translation
Supreme Court Decision 2004Da16976 decided April 28, 2006 (Gong 2006 Sang, 908)
Decisions referred to
[1] 대법원 2001. 12. 14. 선고 99다58129 판결, 대법원 2006. 4. 28. 선고 2004다16976 판결(공2006상, 908)
Burden of proof
Not addressed Not in the decision
Open question and revisit condition
Where the confirmed damages for defects exceed the guaranteed amount of KRW 51,000,000, how is the sum the insurer may recover from the contractor calculated?
The retrial judgment of the Seoul Central District Court, which must decide the matter again on the corrected law, will show how the scope of covered loss is applied to these amounts. Any amendment to Article 665, Article 666(ii) or Article 726-5 of the Commercial Act, or to Article 105 of the Civil Act, also requires this entry to be read again.
Cross-family AI independent reading & axis check
7 of 8 axes matched GPT-6 Astra (OpenAI, codex CLI) · 2026-10-26
A reader from another model family (GPT-6 Astra), given the official text but not the primary reading, agreed on 7 of the 8 axes; the readings differed on axis 4 (form of the test).
Axis 4 (Form of the test): Primary “Elements stated” vs Independent “Existing test applied”
The original text states both a general rule on the insurance accident and its use in the defective work facts, so one reading treats it as stating requirements and the other as applying law to facts.
갑이 공사를 수행한 부분에 하자가 발생하여 을 등이 손해를 입었다면 이는 갑의 공사계약 불이행으로 을 등이 입은 손해에 해당하므로 보증계약의 보증대상이고Raw responses and comparison record: Protocol · Blind readings (JSONL) · Axis comparison (JSONL) · SHA-256 (JSON)
Lower-court contrast & scope of application
Lower-court reading vs. Supreme Court holding
Lower-court context: The Seoul Central District Court, in its judgment of 25 September 2024 (2023Na56691), held that failing to complete the works and completing them with uncompleted or defective work must be distinguished, and that the performance (contract) guarantee bond exists to guarantee performance of the construction contract within the agreed period. It found only the KRW 66,550,000 of damage from the uncompleted defects in the first-stage work completed by the time the contract was terminated, held that this could not be seen as the actual loss arising from non-performance of the construction contract, and dismissed the insurer's claim for reimbursement.
Supreme Court standard: The Supreme Court held that the insurer compensates the loss the employer suffers from the contractor's failure to perform the obligations set in the main contract, and that damage from defects in the works the contractor carried out is such loss and therefore covered. The policy did not exclude loss from defects in the performed works, so the separate defect-repair guarantee in the construction contract left that loss covered. It found that the court below had misapprehended the law on the insurance event in a performance guarantee contract, an error affecting the judgment, and, without examining the remaining grounds, reversed the judgment and remanded the case to the Seoul Central District Court on the unanimous opinion of the participating Justices.
Distinguishing conditions
- A construction contract and policy whose terms expressly exclude loss from defects in the works performed from the covered loss, since the Court relied on the policy's not excluding it.
- A loss arising from non-completion of the works without attributable default, where the clause making the insurance event the failure to perform the main contract without just reason is not met.
- A claim brought under a defect-repair guarantee dealt with as a guarantee in its own right, rather than under the performance guarantee insurance.
Record verification notes
Read the policy terms, the endorsement and the main contract together, since the Court decided what the insurance event is from those documents as a whole. Then obtain the final judgment that fixed the contractor's liability for the defects and its amounts, as the related judgment of the Suwon District Court, Ansan Branch, of 20 July 2022 (2021Gadan79936, 2022Gadan70752) became final on 23 August 2022 here. Keep the guaranteed amount in view: the insurer paid KRW 51,000,000, being 10 per cent of the contract price of KRW 510,000,000.
From the official text
Points at issue
[1] 계약이행보증보험에서 보험사고가 구체적으로 무엇인지 결정하는 기준 / 공사도급계약에서 통상 수급인이 도급인에게 지급하는 계약보증금 또는 계약이행보증금을 대신하는 보증보험증권의 보증 대상 및 계약보증의 대상이 되는 보증책임의 일부를 하자보수보증과 같이 별도의 보증으로 다루고 있는 경우, 원래 계약보증의 대상이 되는 보증책임이 면제되는지 여부(소극) [2] 갑이 을 등으로부터 공사를 도급받으면서 병 보증보험회사와 체결한 이행(계약)보증보험계약에서 병 회사는 갑이 공사계약에서 정한 채무를 이행하지 않음으로써 을 등이 입은 손해를 보상한다고 정하였는데, 갑이 공사를 수행한 부분에 미시공 하자와 부실시공 하자가 존재한다는 이유로 갑의 손해배상책임을 인정하는 판결이 확정되자 병 회사가 을 등에게 보험금을 지급한 후 갑을 상대로 구상금을 구한 사안에서, 갑이 공사를 수행한 부분에 하자가 발생하여 을 등이 손해를 입었다면 이는 갑의 공사계약 불이행으로 을 등이 입은 손해에 해당하므로 보증계약의 보증대상이고, 공사계약에서 하자보수보증을 별도의 보증으로 다루고 있다고 하더라도 하자로 인한 손해는 여전히 보증계약의 보증대상이 된다고 한 사례
Unofficial English translation
[1] The criteria for determining what specifically constitutes an insured event under a contract performance guarantee insurance / The subject matter of the guarantee in a guarantee insurance policy that takes the place of the contract deposit or contract performance deposit that a contractor ordinarily pays to the ordering party under a construction contract, and whether the guarantee liability originally subject to the contract guarantee is exempted where part of the guarantee liability subject to the contract guarantee is treated as a separate guarantee, such as a defect repair guarantee (negative) [2] In a case where, when A was commissioned by B and others to perform construction work, A entered into a performance (contract) guarantee insurance contract with C, an insurance company, under which C agreed to indemnify B and others for losses they suffered due to A's failure to perform the obligations set forth in the construction contract; a judgment holding A liable for damages on the ground that there existed non-performance defects and defective construction defects in the portions of the work performed by A became final and conclusive; and C, having paid the insurance proceeds to B and others, sought reimbursement from A, a case holding that if defects occurred in the portions of the work performed by A and B and others thereby suffered losses, such losses fall within the losses suffered by B and others due to A's non-performance of the construction contract and are therefore subject to the guarantee under the guarantee contract, and that even though the construction contract treats the defect repair guarantee as a separate guarantee, the losses caused by the defects remain subject to the guarantee under the guarantee contract
Summary of the holding
The official text publishes no summary of the holding for this decision. The quotation and factors in this record are copied verbatim from the points at issue; the evidence for each axis is taken from the points at issue, the order and the reasons.
Order
원심판결을 파기하고, 사건을 서울중앙지방법원에 환송한다.
Unofficial English translation
The judgment of the court below is reversed, and the case is remanded to the Seoul Central District Court.
Provisions referred to
[1] 상법 제665조, 제666조 제2호, 제726조의5, 민법 제105조 [2] 상법 제665조, 제666조 제2호, 제726조의5, 민법 제105조
Read 2026-10-26 · Cross-read 2026-10-26. All quotes matched against the official text. The Chinese-character placeholders the court used for anonymised parties are given in their Korean readings, and parenthetical Chinese-character glosses are omitted.
Every entry is published only after all quotes have been matched character by character against the official text, and audited by an independent second reading from a different model family across all eight axes. Both agreed axes and text-grounded interpretive divergences are recorded openly. The ledger is a research record, not an assessment of the court or advice on any matter.
Back to the ledger