[비즈한국] Seoul Milk has achieved a final victory in a damages lawsuit surrounding the failed acquisition of a carton pack business. According to legal circles, the Supreme Court's First Civil Division dismissed Samyoung's appeal on the 2nd of this month regarding the return of deposits and damages lawsuit filed against Seoul Milk, citing a lack of grounds for review. Consequently, the second-instance ruling, which did not recognize any legal liability for Seoul Milk, has been confirmed.
The dispute originated from Seoul Milk's review and eventual withdrawal from the acquisition of Samyoung's carton pack business unit. Samyoung had been producing carton packs since 1986 and supplying them to companies including Seoul Milk. Around 2020, Samyoung proposed that Seoul Milk acquire its pack business unit and Gumi factory to focus its resources on its chemical division. Following this, both parties drafted a letter of intent for the acquisition, and in January 2022, Seoul Milk's extraordinary delegates' meeting approved an agenda to allocate 15 billion won for the related budget. Subsequently, on-site due diligence and valuation were conducted.
However, the acquisition was not finalized. In September 2023, the acquisition agenda was rejected at Seoul Milk's extraordinary delegates' meeting. Afterward, Samyoung sold its Gumi factory to Nongshim004370 and ceased carton pack production. In February 2024, Samyoung filed a lawsuit claiming 3.6 billion won in damages, arguing that Seoul Milk had withdrawn its intention to acquire without valid reason, causing losses. Samyoung claimed that it had terminated contracts with other clients based on its trust in Seoul Milk's acquisition process, resulting in an operating profit decline of approximately 3.4 billion won.
The courts ruled in favor of Seoul Milk from the lower instance. The first-instance court judged that it was difficult to conclude that Seoul Milk had given Samyoung a legitimate expectation that the contract would be certainly concluded during the business acquisition negotiation phase. The reasoning included the fact that Seoul Milk's final decision-making structure required approval from its board of directors and delegates' meeting, and that price negotiations for the business transfer, which were core conditions of the acquisition, had not been concluded. The first instance did, however, recognize a partial liability for the return of 265 million won out of the contract deposit.
However, the second-instance court did not recognize any legal liability for Seoul Milk's withdrawal from the acquisition and reversed the partial return of the contract deposit recognized by the first instance. Ultimately, Samyoung's claims were not accepted, and with the Supreme Court dismissing the appeal, Seoul Milk's victory was confirmed. A dismissal without a hearing is a procedure where the court concludes an appeal without merit review, finding no significant legal violations in the original judgment.
This ruling is interpreted as a case reaffirming that even if negotiations for an acquisition or business transfer have progressed significantly, it is difficult to see that definitive trust regarding the conclusion of a contract has been formed if final decision-making procedures remain and negotiations on core conditions have not been completed. Supreme Court precedents also hold that the mid-term breakdown of contract negotiations does not immediately lead to liability for damages; rather, liability for reliance damages is only established when one party breaks off negotiations without valid reason, contrary to good faith, and has given the other party firm trust in the contract's conclusion.
Regarding the ruling, Seoul Milk stated, "As the uncertainty has been resolved through the court's fair judgment, we will continue to focus on our primary role of stably supplying high-quality, fresh milk to consumers."