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## Initial Impossibility and the Revision of Art. 535 of Korean Civil Code

재산법연구 v.27 no.1 , 2010년, pp.241 - 284
김영두
###### 초록

According to Art. 535 of Korean Civil Code(KCC), the party who knows or should have known that the performance of contract was initially impossible is responsible for the reliance damages to the other party. Some writers are pointing out the facts that new Art. 311a of German Civil Code allows the creditor to demand expectation damages in case of initial impossibility unlike the old German Civil Code, and Principles of European Contract Law(PECL) and Principles of International Commercial Contract(PICC) make the initially impossible contract valid and allow expectation damages to the creditor. They think Art. 535 of KCC has some problems and should be revised.To decide whether it is necessary to revise Art. 535 of KCC, firstly it should be examined that it is necessary to allow the creditor to demand expectation damages in case of initial impossibility. The justification of revising Art. 535 of KCC depends on the need for allowing the creditor to demand expectation damages. In short, when the debtor knows or should have known the initial impossibility of performance, the creditor should have a right to demand expectation damages, because the act that the debtor have entered into contract or have not informed the creditor what is concerned with the initial impossibility even though it knows or should have known the initial impossibility, is as blamable as the act that the debtor have made the performance impossible subsequently which allows the creditor to damand expectation damages. There is no reason to differentiate the remedies between initial impossibility and subsequent impossibility.The second problem of the revision of Art. 535 of KCC is concerned with validity of contract in case of initial impossibility. Even though the contract is invalid in case of initial impossibility, there is a possibility that the creditor could have a right of damages such as loss of profit through tortious liability. However the creditor couldn't recover the damages such as the lost value of performance itself through tortious liability. Such damages is recoverable only through contractual liability. So to allow the creditor to recover the damages sufficiently, contract should be valid in spite of the initial impossibility.If contract is valid and the creditor could recover the expectation damages in case of initial impossibility, the third problem is what is the essence of the liability of expectation damages of debtor. Such liability cannot be a liability of breach of contract, for which the fault that is concerned with the act of debtor breaching the contract is needed. But it is impossible to think of the act which amount to the breach of contract and the fault of that act in case of initial impossibility, because the debtor has no duty to initially impossible performance. So the liability of intial impossibility should be based on the guarantee that the performance is initially possible.Under the conclusion that the creditor should have a chance to recover expectation damages and the contract should be valid in case of initial impossibility, and that such liability should be that of guarantee, directions and content of revision of Art. 535 of KCC should be organized.

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