Background
In the pre-sale of office units, purchasers who chose the "expanded" configuration — combining several units into one — signed a request that "no partition walls be installed between the units," receiving a gift (gold) in return. They later sued, arguing that the request form was a "standard term" unilaterally prepared by the developer which had not been properly explained and was therefore void, and seeking damages equal to the cost of the partition wall work not carried out. Changchun represented the developer.
The Issue — Was the Request Form a "Standard Term" or an "Individually Negotiated Agreement"?
The starting point of the dispute was the "legal character" of the request form. The Act on the Regulation of Terms and Conditions applies its strong regulation — the duty to specify and explain (art. 3) and the invalidity of unfair clauses (art. 6) — only to standardized provisions prepared in advance and unilaterally by a business operator for contracting with many counterparties ("standard terms," art. 2). If the form is treated as standard terms, the developer must separately face scrutiny over whether it explained the content adequately and whether the clause is unfairly disadvantageous to the customer. If, by contrast, it is an "individually negotiated agreement" settled by the parties through discussion, the Act does not apply at all. The questions were therefore, in turn, ① whether the request form was standard terms, and ② if so, whether it was void for breach of the duty to explain or for unfairness.
How Changchun Helped
Changchun (attorneys Jaesun Yoon and Donghwan Shin) applied the facts with precision to the principle the Supreme Court has established — that even where a form is prepared in advance by a business operator, a provision becomes an individually negotiated agreement rather than standard terms if it was subject to individual negotiation with the counterparty (that is, where the counterparty had an opportunity to adjust its own interests) (Supreme Court, Dec. 22, 2000, 99Da4634; Supreme Court, June 12, 2014, 2013Da214864, among others).
We made a point-by-point showing, supported by evidence, that ① the request form left the applicable units and conditions blank, so negotiation was contemplated, and it was in fact completed differently according to the number and configuration of units purchased; ② the marketing and consultation materials highlighted "use as an expanded unit" as an advantage, so purchasers could readily anticipate choosing for themselves at the contracting stage whether to take the expanded configuration; ③ the request form was a separate one-page document written in plain terms, so even assuming it were standard terms it would be hard to find a breach of the duty to explain; and ④ because the purchasers chose the expanded configuration themselves and received a gift for it, its content could not be said to have lost fairness contrary to the principle of good faith.
Conclusion
The court held that the request form was an individually negotiated agreement to which the Act on the Regulation of Terms and Conditions did not apply, and that even treating it as standard terms there was no breach of the duty to explain and no unfairness. It dismissed the claims, and the appeal was likewise dismissed (Seoul High Court 2024Na2029749), giving the developer a complete victory.
The same form of document yields entirely different governing law and conclusions depending on whether it is "standard terms" or an "individually negotiated agreement." The case shows that carefully establishing how a document came to be signed and how it was negotiated decides pre-sale disputes. (Outcomes may differ depending on the facts of each matter.)