Hello. This is Lawyer Lee Yeong-gyeong from Cheongchul Law Firm.

Today, I will explain the Supreme Court's judgment regarding the provision of security for dedicated vehicles by transportation companies and the establishment of the crime of breach of trust.

I. Overview of the Case

1. Progress of the Case

To summarize the progress of this case in chronological order:

2. Main Content of the Contract

Looking at the contractual relationship in this case, first, the company purchased the second bus on April 21, 2015, and the first bus on January 11, 2016, and registered them in the company's name. Subsequently, in May 2018, Victim 1 purchased the first bus and in July of the same year, Victim 2 purchased the second bus from the company while signing a dedicated contract at the same time.

In examining the specific details of the sales contract, the sale price of each bus was set at 155 million won, of which 30 million won was paid as a deposit at the time of contract signing, and the remaining amount was agreed to be paid in installments over 60 months verbally. Notably, these sales contracts and dedicated contracts were all made verbally without a formal written agreement.

On the other hand, the victims initially paid the installment payments according to this contract but later stopped paying. It was confirmed that there was no special agreement to receive ownership or disposal rights before fully paying the sales price. The characteristics of this contractual relationship became an important consideration in the Supreme Court's determination of whether the crime of breach of trust was established.

II. Supreme Court's Judgment

1. Basic Legal Principles of Breach of Trust

The Supreme Court first stated the basic legal principles of breach of trust as follows:

"Breach of trust is established when a person handling another's affairs obtains property benefits in violation of their duties or allows a third party to obtain such benefits, causing damage to the principal, thus the subject of this crime must be in a position to handle another's affairs. To be considered as someone 'handling another's affairs,' it must be in a situation where they act on behalf of another in managing the entire or part of another's property, with the essential content of the contractual relationship exceeding the typical adversarial relationship in normal contracts and based on a trust relationship to protect or manage another's property."

2. Development of Legal Principles in Dedicated Relationships

The Supreme Court’s precedents on the establishment of breach of trust in dedicated relationships have developed as follows:

(1) 2021 Judgment (2018Do14365)

"When a dedicated vehicle operator enters into a dedicated contract with a dedicated company regarding a vehicle that they actually own or have disposal rights over, unless there are special circumstances, the dedicated company is handling property affairs related to the dedicated vehicle, which is the operator's substantial property, with a certain authority. Thus, the essential content of the contractual relationship exceeds the typical adversarial relationship in regular contracts, based on the trust relationship, and protects or manages another's property, so the operator of the dedicated company assumes the position of 'a person handling another's affairs' in relation to the dedicated operator."

(2) New Legal Principles from This Judgment

"When a dedicated vehicle operator purchases a vehicle owned by the dedicated company in installments and enters into a dedicated contract regarding that vehicle, unless there are special circumstances, it is difficult to see the dedicated vehicle as the operator's substantial property until they fully pay the installment amount. Therefore, it cannot be said that merely having entered into a dedicated contract automatically places the operator of the dedicated company in the position of 'a person handling another's affairs' regarding the property affair related to the dedicated vehicle in relation to the dedicated operator."

3. Specific Judgment on This Case

The Supreme Court denied the establishment of breach of trust in this case and developed meticulous reasoning as follows.

First, the Supreme Court closely examined the transaction relationship between the victims and the company. According to the ruling, "The victims allege that after entering into sales and dedicated contracts regarding the buses with the company, they have not paid the entire sales price according to the sales contract, and there are no materials to recognize that the victims had agreed to receive the ownership or disposal rights related to each bus before fully paying the sales price. Therefore, it is difficult to see the victims as having substantial ownership or disposal rights over each bus."

Specifically, the victims only paid the deposit of 30 million won out of the sales price of 155 million won per bus and agreed to pay the remaining amount in installments over 60 months, but they stopped the installment payments. Additionally, there was no special agreement to transfer ownership or disposal rights before fully paying the installment amount.

Furthermore, the Supreme Court also carefully examined the legal nature of the dedicated contract. "In this case, where no dedicated contract was written between the victims and the company, there are no circumstances to consider that the company agreed to protect or manage the buses as the victims' property based on a trust relationship, going beyond the typical adversarial relationship in standard contracts."

Considering these factual circumstances, the Supreme Court drew four key elements:

1) The installment payments have not been fully paid.

2) There were no agreements for early transfer of ownership or disposal rights.

3) No formal dedicated contract was created.

4) No special trust relationship exceeding typical contractual relationships was evidenced.

Based on these elements, the Supreme Court concluded, "It is difficult to see the defendant, as the operator of the dedicated company, in the position of 'a person handling another's affairs' in relation to the dedicated operator victims."

Moreover, the Supreme Court pointed out issues with the original ruling, stating, "The original court judged the facts of this case as guilty, regarding the defendant as being in the position of 'a person handling another's affairs' based only on the reasons stated. Such a judgment was erroneous for violating the principles of logic and experience in not conducting a necessary review, thereby exceeding the limits of free discretion or misunderstanding the law concerning the establishment of breach of trust, influencing the verdict."

This judgment by the Supreme Court is significant as it establishes that in a dedicated contract involving the purchase of vehicles in installments, merely having concluded a dedicated contract does not constitute the establishment of breach of trust, highlighting that the actual rights relationship and the existence of a special trust relationship between the parties must be closely examined.

III. Practical Implications

This Supreme Court ruling is significant in clarifying the scope of potential criminal liability that may arise in dedicated relationships in the transportation industry. Specifically, looking at practical matters that require attention:

First, from the perspective of dedicated vehicle operators, careful attention is needed at the time of concluding the contract. As confirmed in this judgment, when entering into a dedicated contract while purchasing a vehicle in installments, it may be difficult to be recognized as the actual owner until fully paying the installments. Therefore, it is crucial to ensure a formal dedicated contract is written, and if necessary, explicitly stipulate in the contract that the ownership or disposal rights can be exercised under certain conditions even before the full payment of installments.

Furthermore, the terms regarding restrictions on the provision of collateral for the vehicle should also be clearly specified in the contract. Although this case ruled that the crime of breach of trust was not established, it is advisable to state in the contract that the company cannot arbitrarily provide collateral, and the procedures for obtaining consent when collateral provision is necessary should be clearly established.

From the transportation company’s perspective, meticulous attention is needed to prevent potential criminal liability arising from the relationship with dedicated vehicle operators. In particular, it is important to define restrictions on disposal rights or collateral provision regarding the vehicle in the contract clearly, and if collateral for the vehicle is necessary, the procedure for obtaining consent from the dedicated vehicle operator should be established. Additionally, clarifying the relationship between installment contracts and dedicated contracts, as well as the rights and obligations arising from each contract, is necessary to reduce future disputes.

These considerations are vital not only to avoid criminal liability but also to prevent civil disputes and maintain smooth transaction relationships. Especially in the transportation industry, where dedicated relationships form the basis of business, it is necessary to fully understand the intent of this Supreme Court ruling and reflect it in practice.

Cheongchul Law Firm has extensive experience and expertise in criminal cases. If you are contemplating a case related to this, please feel free to contact us.