Hello, this is Attorney Bae Gi-hyung from Cheongchul Law Firm.
Ordinary repayment refers to the act of a debtor paying back a debt. If a debtor repays when there is no debt, this is referred to as "repayment of non-existent debt," and it can be reclaimed.
However, Article 742 of the Civil Act states, "If the debtor repays knowing that there is no debt, a claim for return cannot be made," thus providing specific regulations regarding repayment of non-existent debt. The so-called 'malicious repayment of non-existent debt' indicates that a claim for return cannot be made.
It may seem improbable that someone would repay a non-existent debt, but surprisingly, malicious repayment of non-existent debt under Article 742 of the Civil Act is often addressed in lawsuits.
In this post, I will explain in detail the requirements and application cases of repayment of non-existent debt, focusing on case law.
[Question]
What is repayment of non-existent debt, and in what cases is a claim for return impossible?
[Answer]
If repayment was made 'knowing' there is no debt, a claim for return is not allowed.
Article 742 of the Civil Act stipulates that if repayment was made with the awareness that there is no debt, a claim for return of the corresponding amount cannot be made. Conversely, if repayment was made without knowledge of having no debt, a claim for unjust enrichment return is possible. Specifically, claims for return may also be recognized in scenarios where there is a compulsory situation or when it is expected that failing to repay would lead to disadvantages.
However, in practice, case law has recognized the requirement of “not having known there is no debt” as slightly more expansive. Naturally, cases where the debtor was unaware of the debt are included, but there are also exceptions allowing for unjust enrichment claims even when the debtor was aware there was no debt.
When classified by type, it is as follows:
1. When reserving the right to claim return: There is no debt, but repayment is made with a reservation that it is conditional. 2. When there is an objective circumstance that reasonably acknowledges the repayment: Repayment made against free will. |
In practice, disputes often arise over whether "2. repayment was made against free will."
Let’s look at an actual Supreme Court ruling.
Case 1: Factory electricity bill repayment case (Supreme Court ruling February 9, 1988, 87Da432)
Fact: A purchased a factory, but there were unpaid electricity bills left by the previous owner, B. The electricity supplier notified that if the unpaid bills were not resolved, the electricity supply would be suspended, and A had no choice but to repay B’s unpaid bills to operate the factory.
Key element: Concern over electricity supply suspension
Supreme Court ruling: The Supreme Court viewed A’s repayment as “forced repayment.” Since it was impossible to operate the factory without repayment, it ruled that A could claim a return of the amount already paid.
Case 2: Severance pay repayment based on labor office instructions (Supreme Court ruling November 27, 1979, 78Da2487)
Fact: C paid severance pay following the labor office's instructions, but it was later revealed that there was no obligation to pay that severance.
Key element: Repayment as a result of labor office instructions
Supreme Court ruling: The Supreme Court found it difficult to recognize coerciveness based solely on the labor office’s instructions and concluded that C could not reclaim the severance pay already made. Simply being a recommendation or instruction from a public institution does not automatically make it a forced repayment.
Case 3: Repayment due to concern over bounced checks (Supreme Court ruling July 28, 1992, 92Da18535)
Fact: D issued a check for payment of the principal and interest of a promissory note, mistakenly believing that the endorsed signature was legitimate, and only realized the endorsement was forged after receiving the promissory note, but fearing criminal liability due to a bounced check, D repaid the check amount.
Key element: Risk of criminal liability due to bounced checks
Supreme Court ruling: The Supreme Court stated that if repayment was made out of concern for criminal liability arising from a check bouncing, Article 742 of the Civil Act would not apply, and a claim for return would be possible.
From the above Supreme Court rulings, it can be concluded that the criteria for determining malicious repayment of non-existent debt differentiate between 'simple recommendations' and 'serious circumstances of anticipated disadvantages.' However, because issues of repayment of non-existent debt can often arise from unexpected situations, it is safer to seek legal advice rather than arbitrarily applying judgment criteria.
Repayment of 'non-existent debts' typically occurs in unusual situations. It arises in cases where the transaction relationships are complex, or the existence of the debt is unclear, particularly under time constraints and urgent circumstances.
Always thoroughly verify the actual debt relationship before making repayments, and if repayment is unavoidable in a situation where the existence of a debt is unclear, clearly express your intention to reserve or leave evidence of enforced repayment to reduce potential disputes later. Please keep this in mind.
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