SOUTH KOREA Law and Practice Contributed by: Byung Chang Lee, D&A LLC
Degree of the Recognition of Stolen Goods Recognition that goods are stolen does not require definitive knowledge; it is sufficient if there is con - scious negligence to the extent that the person sus - pects the item may be stolen. In the context of an ordinary transaction, where there are grounds for sus - picion as to whether an item is stolen – for example, where an expensive luxury item is offered without a certificate of authenticity, or where it is priced signifi - cantly below the market rate – the acquisition of such an item may give rise to criminal liability for handling stolen goods. From a civil law perspective, acts that assist or facili - tate another person’s fraudulent conduct may consti - tute a tort. A person who provides such assistance or facilitation may be held jointly and severally liable for damages arising from the fraud. 1.4 Limitation Periods Limitation Periods and Preparation of a Civil Claim The limitation periods of a tort claim in Korea are three years from the date of recognition of the illegal acts and damage amounts, or ten years from the date of the occurrence of the illegal acts. From a crimi - nal perspective, the limitation period depends on the maximum possible sentence period for each specific violation. The criminal limitation period for fraud is ten years, and, if the perpetrator fled abroad for the purpose of avoiding punishment, the statute of limita - tions regarding prosecution is suspended during the avoidance period, beginning again the moment they return to Korea. Typically, the victim of fraud files a criminal complaint first, and waits for the result of the investigation before preparing a civil complaint against the perpetrators. However, sometimes investigating criminal matters can take a long time, especially in high-profile cases. It is therefore important to ensure that the minimum three-year limitation period is not overlooked when preparing to bring a tort claim. 1.5 Proprietary Claims Against Property Cancellation of a Contract due to Fraud Generally The misrepresentation of material facts in a transac - tion, carried out in a manner that is contrary to the principle of good faith, may be regarded as unlaw -
ful deception. Furthermore, a causal link between the deceptive conduct and the formation of the contract is deemed to exist where, but for the deception, the contract would either not have been concluded at all or would not have been concluded on the same terms. In such circumstances, the contract may be rescinded on the basis of fraudulent inducement. Pursuant to Article 110 (2) of the Civil Act, a declaration of intention concerning the transfer of interests, which is induced by fraud or by a fraudulent omission on the part of the other party, may be cancelled or revoked. However, this right may be limited where there is a bona fide third-party beneficiary who has acquired a legitimate interest in the property concerned. Where a contract is rescinded on the ground of fraud, it is treated as void ab initio, with the result that any bene- fits received by the parties must be restored as unjust enrichment in accordance with the law. Creditor’s Right of Revocation Pursuant to Article 406 of the Civil Act, a claimant can seek the recovery of property when the debtor inten - tionally transferred their interest knowing this transfer may harm their creditors. However, they can also be restricted when there is a bona fide third-party benefi - ciary or the person who purchased the property from the vendor who had no knowledge of the fraudulent acts. In such circumstances, the claimant is generally unable to recover the misappropriated property direct - ly from the current title holder. Instead, the claimant may seek restitution from the perpetrator of the fraud, typically in the form of recovery of the proceeds of sale, reflecting principles analogous to unjust enrich - ment recognised in common law systems. Even if the proceeds of fraud are invested success - fully, the claimant can only request the return of the sale price; however, they cannot request the return of the total proceeds invested. Also, there is a limitation period of one year from the date of recognition of the fraud, or five years from the date of the occurrence of the fraudulent acts. Fraudulent Transactions of Real Estate With a Mortgage If a transaction related to real estate falls under a fraudulent act, in principle, the fraudulent act must
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