Initial Impossibility and the Revision of Article 535 of the Korean Civil Code

This paper dealt with the issue of revising Article 535 of the Korean Civil Code (hereinafter “KCC”) regarding initial impossibility by reviewing Civil Codes of other countries and international model laws to analyze the international trends in prescribing the legal relationships arising from initial impossibility. The paper also elucidated the 2013 and 2024 revision proposals for Article 535 and discussed the legal issues related to initial impossibility. The contents of this paper could be summarized as follows: First of all, the 2024 revision proposal, like the 2013 revision, maintains that it is appropriate to abolish the doctrine of initial impossibility, which holds that a contract is invalid merely because at the time it was concluded performance of the obligation assumed was impossible. This argument is well-founded in that there is no justifiable reason to treat initial impossibility differently from supervening impossibility, and the initial impossibility of performance does not relate to the validity of the contract. Secondly, unlike the 2013 revision proposal, the 2024 proposal does not include a separate provision for damages based on initial impossibility. The debtor's failure to satisfy their duty to provide information about initial impossibility can be encompassed within the negligence under Article 390 of the KCC, and non-performance due to initial impossibility can also fall under the category of "non-performance of obligations" under Article 390. Accordingly, the 2024 revision's position is justifiable. Thirdly, the 2024 revision proposal clarifies that the creditor can claim expectation interest in cases of initial impossibility. Since a contract leading to initial impossibility is deemed valid, it can be legally justifiable for the creditor to expect the debtor to carry out the performance specified in the contract and the creditor's expectation interest can be included as damages under Article 393 of the KCC. Finally, the 2013 revision proposal included a clause that exempted the debtor from liability if the creditor knew about the initial impossibility. However, the 2024 revision does not include such an exemption. If a creditor knew about the initial impossibility, it implies that the creditor intended to bear the risk associated with it. Therefore, even if the debtor failed to inform such a creditor about the impossibility, it is difficult to argue that the debtor was negligent. Hence, it would be appropriate to include an exemption clause as in the 2013 revision proposal.