August 2017
The requirement that a claim to return unjust enrichment shall not be asserted under Article 180, Subparagraph 3 of the Civil Code is only limited to circumstances where debt payment is deliberately made with clear awareness(Taiwan)
Jenny Chen
The Supreme Court rendered the 105-Tai-Shang-229 Civil Decision of February 4, 2016 (hereinafter, the "Decision"), holding that the requirement that a claim to return the unjust enrichment shall not be asserted under Article 180, Subparagraph 3 of the Civil Code is only limited to circumstances where debt payment is deliberately made with clear awareness.
According to the facts underlying this Decision, the Appellant asserted that Company A had been awarded the Appellee's project contract at issue. To provide a bond, Company A applied to the Appellant for a letter of guarantee for performance bond (hereinafter, the "Guarantee at Issue") as the guarantee. Later on due to serious construction delay of Company A, the Appellee informed the Appellant that the contract had been terminated and requested payment of the bond, which was fully paid by the Appellant. However, it was later found that Company A completed 50% of the construction and that the bond could have been reduced accordingly. Therefore, the Appellant requested that the excessive bond received by the Appellee be returned pursuant to provisions concerning unjust enrichment under the Civil Code.
According to the Decision, the Guarantee at Issue was a guarantee contract with an independent payment commitment. If the contract contains rescission terms which stipulate that the bond should be reduced on a pro rata basis when the project at issue has progressed to a certain stage as determined by the original trial court, the rescission terms should have been fulfilled when the construction progress was determined to have reached 50% and the bond should have been reduced on a pro rata basis. Therefore, the excessive bond received by the Appellee could probably constitute unjust enrichment. According to this Decision, Article 180, Subparagraph 3 of the Civil Code provides that when payment is made to repay a debt when the payer is obviously aware that the payment obligation does not exist, the return of the payment shall not be claimed. This is limited to circumstances where payment is made when it is deliberately decided that the debt exists. As for circumstances where a debt which does not exist is erroneously believed to exist, even though the erroneous belief is attributed to negligence or gross negligence, this is still not debt repayment out of willfulness. Therefore, such subparagraph does not apply. It was further pointed out in the Decision that whether the Appellant was clearly aware that it had no payment obligation and deliberately waived its claim for a return at the time of payment in this matter should be further clarified and confirmed. Therefore, the original decision was reversed and remanded.
The Supreme Court rendered the 105-Tai-Shang-229 Civil Decision of February 4, 2016 (hereinafter, the "Decision"), holding that the requirement that a claim to return the unjust enrichment shall not be asserted under Article 180, Subparagraph 3 of the Civil Code is only limited to circumstances where debt payment is deliberately made with clear awareness.
According to the facts underlying this Decision, the Appellant asserted that Company A had been awarded the Appellee's project contract at issue. To provide a bond, Company A applied to the Appellant for a letter of guarantee for performance bond (hereinafter, the "Guarantee at Issue") as the guarantee. Later on due to serious construction delay of Company A, the Appellee informed the Appellant that the contract had been terminated and requested payment of the bond, which was fully paid by the Appellant. However, it was later found that Company A completed 50% of the construction and that the bond could have been reduced accordingly. Therefore, the Appellant requested that the excessive bond received by the Appellee be returned pursuant to provisions concerning unjust enrichment under the Civil Code.
According to the Decision, the Guarantee at Issue was a guarantee contract with an independent payment commitment. If the contract contains rescission terms which stipulate that the bond should be reduced on a pro rata basis when the project at issue has progressed to a certain stage as determined by the original trial court, the rescission terms should have been fulfilled when the construction progress was determined to have reached 50% and the bond should have been reduced on a pro rata basis. Therefore, the excessive bond received by the Appellee could probably constitute unjust enrichment. According to this Decision, Article 180, Subparagraph 3 of the Civil Code provides that when payment is made to repay a debt when the payer is obviously aware that the payment obligation does not exist, the return of the payment shall not be claimed. This is limited to circumstances where payment is made when it is deliberately decided that the debt exists. As for circumstances where a debt which does not exist is erroneously believed to exist, even though the erroneous belief is attributed to negligence or gross negligence, this is still not debt repayment out of willfulness. Therefore, such subparagraph does not apply. It was further pointed out in the Decision that whether the Appellant was clearly aware that it had no payment obligation and deliberately waived its claim for a return at the time of payment in this matter should be further clarified and confirmed. Therefore, the original decision was reversed and remanded.
