Supreme Court: Veterans Association Guarantee May Cover Funeral Service Obligations

South Korea's Supreme Court has ruled that a guarantee issued by the Korea Veterans Association could be interpreted as covering funeral service obligations, not just monetary debts.

The ruling establishes a precedent that the scope of payment guarantees cannot be limited solely to financial obligations.

According to legal circles on Wednesday, the Supreme Court's Second Division (presiding Justice Eom Sang-pil) recently overturned a lower court decision in a lawsuit filed by the National Credit Union Federation of Korea against the Korea Veterans Association seeking confirmation of guarantee obligations. The case was remanded for retrial.

The case originated when a funeral service company established by the Veterans Association entered into a partnership agreement with the credit union federation for recruiting funeral service members. During this process, the Veterans Association issued several payment guarantee letters stating it would "take responsibility if the agreement is not fulfilled."

Notably, a 2013 board resolution explicitly stated that the association would guarantee the funeral service company's obligations if it failed to provide funeral services.

The key issue was whether the payment guarantee was limited to monetary debts such as fees payable to the credit union federation, or whether it extended to the responsibility of providing funeral services to credit union members.

The lower court ruled that the Veterans Association's guarantee was limited to monetary debts owed to the credit union federation, rejecting the plaintiff's claim that funeral service obligations were included.

The Supreme Court disagreed, stating that interpretation of payment guarantees "should not be bound by formal wording alone but should examine the true intentions of the parties." The court found sufficient grounds to conclude that the Veterans Association had agreed to guarantee the funeral service company's service obligations when considering the payment guarantee letters and board resolutions together.

The court specifically cited the 2013 board resolution that explicitly mentioned "guarantee of funeral service fulfillment" and the fact that the Veterans Association itself had recognized this as a service guarantee.