Supreme Court: "'Courier Branch Integration' Headquarters' Demand Constitutes Contract Termination Notice... Compensation Required"

Supreme Court, Seocho-gu, Seoul. Photo by Honam Moon munonam@

[Asia Economy Reporter Kim Daehyun] The Supreme Court has ruled that the company's demand to consolidate delivery branches is a form of contract termination notice, and the company must compensate for related damages.

On the 15th, the Supreme Court's 3rd Division (Presiding Justice Kim Jaehyung) announced that it upheld the appellate court's partial ruling in favor of the plaintiff in the appeal case where Mr. A, who operated a delivery branch, sued delivery company B for damages amounting to about 72 million won.

Previously, Mr. A had signed a contract with company B in 1995 and operated a delivery branch in Gyeongnam. In 2018, as the contract period was about to expire, company B notified Mr. A that it would consolidate his branch with a company-operated branch.

Mr. A claimed that this proposal was effectively a notice of contract termination and filed for damages. On the other hand, company B argued, "The company was experiencing financial difficulties and proposed consolidation with the company-operated branch after receiving a request for commission increase from Mr. A's side."

The first trial court ruled that company B must pay Mr. A about 55 million won. The court stated, "The defendant, as the franchisor, clearly indicated no intention to fulfill the contract, forcing the plaintiff, who could no longer operate the branch as a franchisee, to terminate operations."

The appellate court also sided with Mr. A. The court pointed out, "Since the plaintiff and defendant are essentially separate business entities, the branch consolidation excludes the plaintiff's independent business operation and constitutes contract termination." However, it calculated Mr. A's expected business profits lower than the first trial and reduced the compensation amount to about 36 million won.

The Supreme Court also agreed with this judgment. The court stated, "The appellate court did not err in its legal reasoning regarding set-off of profits and losses and limitation of liability."

This content was produced with the assistance of AI translation services.