Hyoung Seok Kim, A Partner’s Right of Recourse Upon Discharging a Partnership’s Debt, Korean Lawyers Association Journal, Vol. 73, No. 2(2024.4), pp. 236–258 .
<Abstract>
This article examines the relationship in which a partner who has discharged the partnership's debt in light of the Supreme Court's May 26, 2022, ruling (Official Gazette 2022, 1277). In this case, the Supreme Court ruled that since a partnership's debt belongs to all partners collectively, if one of them discharges the debt, he or she can exercise the right of recourse under Article 425(1) of the Korean Civil Code against the other partners. However, this ruling raises questions in cases where the debt is divided among the partners, and furthermore, it has the limitation that it cannot be relied upon for obtaining recourse from the partnership's property itself. This article aims to propose a reasonable interpretation by comprehensively examining the recourse relationship arising from the partnership. The contents are as follows:
1. Partners bear dual liability for the partnership's debts: liability as an association and individual liability as its member. While the dominant doctrine and case law understand the relationship between these two liabilities as parallel, it is more appropriate to interpret the partner's individual liability as subsidiary to the liability as an association.
2. A partner who has paid off the partnership's debt may have a full recourse claim against the partnership itself in the form of contractual reimbursement of expenses, and a partial recourse claim against the other partners according to the ratio of loss sharing. If the partners are jointly and severally liable for the partnership's debt, the right of recourse under Article 425(1) of the Civil Code shall be added.
3. A recourse claim against the other partners is subsidiary to a claim against the partnership itself.
<Keywords>
partnership, partner, partnership's debt, management, recourse
Hyoung Seok Kim, A Partner’s Right of Recourse Upon Discharging a Partnership’s Debt, Korean Lawyers Association Journal, Vol. 73, No. 2(2024.4), pp. 236–258 .
<Abstract>
This article examines the relationship in which a partner who has discharged the partnership's debt in light of the Supreme Court's May 26, 2022, ruling (Official Gazette 2022, 1277). In this case, the Supreme Court ruled that since a partnership's debt belongs to all partners collectively, if one of them discharges the debt, he or she can exercise the right of recourse under Article 425(1) of the Korean Civil Code against the other partners. However, this ruling raises questions in cases where the debt is divided among the partners, and furthermore, it has the limitation that it cannot be relied upon for obtaining recourse from the partnership's property itself. This article aims to propose a reasonable interpretation by comprehensively examining the recourse relationship arising from the partnership. The contents are as follows:
1. Partners bear dual liability for the partnership's debts: liability as an association and individual liability as its member. While the dominant doctrine and case law understand the relationship between these two liabilities as parallel, it is more appropriate to interpret the partner's individual liability as subsidiary to the liability as an association.
2. A partner who has paid off the partnership's debt may have a full recourse claim against the partnership itself in the form of contractual reimbursement of expenses, and a partial recourse claim against the other partners according to the ratio of loss sharing. If the partners are jointly and severally liable for the partnership's debt, the right of recourse under Article 425(1) of the Civil Code shall be added.
3. A recourse claim against the other partners is subsidiary to a claim against the partnership itself.
<Keywords>
partnership, partner, partnership's debt, management, recourse