The Supreme Court ruled that Samsung C&T is not liable to compensate a wholesaler and retailer who said they suffered losses after the company exited its textile business. The reason was that the contract between Samsung C&T and the operator did not contain a clause requiring damages in such a case.
The Supreme Court's First Division (presiding Justice Roh Tae-ak) said on Feb. 17 that on the 8th it overturned the appellate ruling that had found Samsung C&T liable for damages in a damages lawsuit filed by fabric wholesaler and retailer A against Samsung C&T, and remanded the case to the Seoul Central District Court.
The Samsung group produced fabric at Cheil Industries starting in 1956. Cheil Industries merged into Samsung C&T in Sept. 2015. Since then, Samsung C&T's fashion division has produced fabric. However, as losses mounted, on Mar. 10, 2022, it decided to halt the textile business that makes fabric.
A signed a sales agency agreement with Samsung C&T on Nov. 28, 2011. Under the agreement, Samsung C&T delegated to A the authority to sell women's apparel fabric and would pay a commission in return. The contract term was one year and was automatically renewed each year.
On Mar. 10, 2022, Samsung C&T sent A an email saying, "As we are exiting the textile business, proceed only with orders already received, and cancel any other order volumes."
A then filed a lawsuit seeking 120 million won, saying the sales agency agreement was valid until Oct. 31, 2022, but Samsung C&T unilaterally terminated the contract, causing losses by depriving A of commission income. A estimated the expected order sales from March to October of the same year at 2.998 billion won, with commissions on that amount estimated at 120 million won.
The first trial rejected A's claim. The first trial panel said, "It is difficult to find Samsung C&T's business judgment and decision unlawful, so it is reasonable to see that no obligation to compensate is recognized."
By contrast, the second trial ruled that Samsung C&T must pay A 50 million won. The appellate panel found that under the contract between Samsung C&T and A, termination would take effect in June 2022, three months after the email notice, and determined the damages during that period to be 50 million won.
The Supreme Court found that under the sales agency agreement between Samsung C&T and A, Samsung C&T has no liability to compensate A. According to the contract, either party may terminate with three months' prior written notice, and there is no provision in the contract requiring compensation for the other party's losses in that case.