1. Overview of the case

 

1) Who did Barun Law represent? We represented a defendant on appeal. The defendant is a domestic exclusive importer of a famous Dutch coffee product.

 

2) Background of the case: The defendant was exclusively importing certain coffee products (the "Product") manufactured by a Dutch headquarters pursuant to a domestic exclusive distribution agreement (the "Exclusive Distribution Agreement") with a corporation located in the Netherlands (the "Dutch Company"). The defendant entered into a supply contract with the plaintiff (the "Supply Contract") and supplied the Product to the plaintiff. The plaintiff arbitrarily combined the Product with competitors' products and sold them on online distribution channels. As a result of the plaintiff's violation of the Exclusive Distribution Agreement and the Supply Contract, the defendant notified the plaintiff that it would not renew the Supply Contract.

 

3) Litigation: The plaintiff sought confirmation of contractor status against the defendant, stating that the contractual relationship between the plaintiff and the defendant had not been terminated. The plaintiff claimed that only the plaintiff should sell the Product in the domestic online distribution channel according to the effect of the Supply Contract, and the defendant should not sell the product in the domestic online distribution channel. The issues in the case were: whether the Supply Contract was terminated due to the plaintiff's breach of contract, the defendant's refusal to renew it, and the termination of the Exclusive Distribution Agreement between the defendant and the Dutch Headquarters; and the meaning and scope of the defendant's exclusive domestic sales right under the Exclusive Distribution Agreement between the defendant and the Dutch Headquarters and the plaintiff's right to sell the Product through its domestic online distribution channel under the Supply Contract between the plaintiff and the defendant. The court of first instance ruled in favor of the plaintiff, and the defendant appealed the decision.

 

2. Decision

The court of second instance accepted our arguments and cancelled the trial court's judgment in its entirety, dismissing the contractor status claim and the restraint of trade claim among the claims made by the plaintiff.

 

3. Basis of the decision

It is the same as set forth in Section 4 below.

 

4. Our argument and role

Representing the defendant on appeal, we argued that the plaintiff's claim for confirmation of contractor status was improper because there was no benefit to confirmation on the basis of the following arguments: (i) the Supply Contract should be interpreted as having been terminated by the defendant's refusal to renew it, in accordance with the rules of interpretation of dispositive documents and the principles of good faith; (ii) the effect of the Exclusive Distribution Agreement between the defendant and the Dutch Headquarters was to extend to the plaintiff, and he Supply Contract between the plaintiff and the defendant was also terminated for breach of contract by the plaintiff, (iii) the Supply Contract, which was a continuous contract, was terminated due to the destruction of trust between the parties due to the plaintiff's breach of contract, and (iv) the Supply Contract was also terminated at the same time as the Exclusive Distribution Agreement was terminated. Meanwhile, we argued that the plaintiff had no right to sell the Product since the Supply Contract was terminated, and that even if this were not the case, the plaintiff could not be said to have the exclusive right to sell the Product through the online distribution channel based on the interpretation of the content of the Supply Contract, and therefore, the plaintiff's claim for an injunction to prohibit the defendant from selling the Product was also without merit. In particular, in presenting the above arguments, we found new evidence in favor of the Dutch Headquarters, which was a party to the Exclusive Distribution Agreement, and highlighted issues that the defendant had not argued in the trial court.

 

5. Significance of the decision

The above decision once again confirms the method of interpretation of legal acts when there is a disagreement between the parties over the interpretation of a contract and the interpretation of the parties' intentions expressed in the contract document is in question. In addition, in recent years, as various types of distribution contracts other than the typical contracts envisaged by traditional contract law have been utilized, domestic exclusive importers often enter into supply agreements with sub-distributors based on exclusive distribution agreements with overseas manufacturers, specifying distribution channels and sales methods. In addition, as the ways of transacting goods with consumers have diversified, disputes between domestic exclusive importers and sub-distributors over the sales entity or sales method in a particular distribution channel have frequently arisen. The significance of the above decision is that in determining the effect of a supply agreement between a domestic exclusive importer and a sub-distributor, the court considered the contents of the exclusive distribution agreement between the domestic exclusive importer and the overseas manufacturer, which is the legal relationship underlying the supply agreement.

 

​□ Attorneys in charge: Park Sang-oh and Gu Na-yul