1. Client's Crisis

The client (a solar power plant construction contractor) entered into a contract with the project owner to build a 999.6 kW solar power plant on a warehouse rooftop for a contract price of KRW 1.375 billion and completed the construction. However, when the project owner did not receive the expected 1.5x REC (Renewable Energy Certificate) weight and instead was only able to apply a 1.02x weight, it filed a damages lawsuit for about KRW 48 million, alleging that the client's statement in the proposal, "1.5x rooftop REC weight applied," constituted false or exaggerated advertising. At the same time, the project owner pressured the client by also asserting liability for breach of contract and tort.

2. Key Issues

The complex issues in this case that had to be contested were largely twofold. First, whether the phrase "1.5x REC weight" in the proposal constituted "advertising" under the Act on Fair Labeling and Advertising (the Fair Labeling and Advertising Act). The plaintiff argued that the proposal constituted false or exaggerated advertising, but because "advertising" under the Fair Labeling and Advertising Act refers to acts of widely informing an unspecified number of people, the key issue was whether a proposal submitted to a specific transaction counterparty fell within this definition. Second, whether the client had a duty to ensure that the project owner could receive a 1.5x REC weight. At the time the contract was signed, a 1.5x weight was possible under the then-current rules, but after the relevant guidelines were revised, the building requirements changed, and the project owner's warehouse no longer satisfied the revised requirements.

3. Defense Strategy

Attorney Partner Park Sang-jin analyzed the legal nature of the proposal, contract terms, and background of the regulatory change to design a defense.

First, we argued the proposal did not constitute "advertising" under the Fair Labeling and Advertising Act. The proposal was a document individually provided by the defendant to the plaintiff, not distributed to an unspecified public, and because it proposed the construction of a solar power plant tailored to the plaintiff's specific project site, it could not be viewed as advertising.

Second, even if a violation of the Fair Labeling and Advertising Act were not recognized, we demonstrated that the client had no contractual duty to guarantee a 1.5x REC weight. Under Article 2 of the contract, matters such as permitting for the power generation business were the project owner's responsibility; Article 12(2) excluded expected gains or anticipated profits from the scope of compensation; and Article 15 systematically established that the contract was the final agreement superseding the proposal. We also made clear that the change in REC weight requirements due to the revision of the relevant guidelines was not attributable to the client's fault.

4. Outcome and Recovery

The court fully accepted Attorney Park Sang-jin's arguments and dismissed all of the plaintiff's claims. The court found that the proposal did not constitute advertising under the Fair Labeling and Advertising Act and that, contractually as well, the client had no duty to guarantee a 1.5x REC weight. The client was able to fully escape the unjust damages claim.

Attorney in Charge: Park Sang-jin, Partner Attorney

For confidentiality purposes, this case has been partially de-identified within the scope that does not compromise the essence of the matter.