A suit to recover a performance bond after termination of a construction subcontract

After the subcontractor on a road construction project stopped work and the subcontract was terminated, the general contractor claimed the performance bond from the Construction Guarantee Cooperative.

The Cooperative argued that the right to claim the bond had been waived, relying on an official letter the general contractor had previously sent withdrawing its bond claim, and the court of first instance accepted this and dismissed the claim. Attorney Jaehoon Lee represented the general contractor, a construction company, on appeal.

The central issue was whether a statement "withdrawing" the performance bond claim meant a waiver of the right to claim the bond itself, and how the wording of the related letter, the circumstances in which it was written and the parties' intentions should be interpreted.

The legal relationship between the advance payment bond and the performance bond, the guarantor's liability for the subcontractor's nonperformance, and the losses caused by construction delays were also at issue.

Attorney Lee analyzed the subcontract and the bond terms and conditions, the circumstances of the work stoppage and termination, the official letters on the bond claim, and the discussions between the parties.

In particular, he challenged the first-instance court's interpretation of the expression of intent, centering on the point that withdrawing a bond claim and waiving the right must be legally distinguished.

He also reviewed the results of the witness examinations and analyzed the additional site management costs caused by the subcontractor's delays and the additional work costs incurred to shorten the construction period, arguing that the client had no reasonable reason to waive its right to claim the performance bond.