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Verbal Contracts Are Binding: Complete Victory via "Encumbered Gift" theory

26-04-28 155

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1. Case Overview

The plaintiff was operating a restaurant in a leased first-floor commercial space. At the request of the defendant, who was both the landlord and the plaintiff’s aunt, the plaintiff vacated the premises early. The defendant requested this to facilitate the sale or re-leasing of the building, promising in return to pay 2.5 million KRW every month for as long as the plaintiff’s mother was alive. Relying on this promise, the plaintiff shut down operations and moved out. However, the defendant later changed her stance and unilaterally stopped the payments.


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2. Case Specifics

Because this was a verbal agreement between family members, it was structured in a way that is typically difficult to resolve. Many assume such arrangements are mere favors or simple gifts lacking legal enforceability. However, this case was legally distinct because the plaintiff performed a specific "burden" - early eviction. Therefore, it was not a simple gift, but an "Encumbered Gift" or a binding contract.


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3. Legal Strategy and Assistance

The key was defining the legal structure beyond a family spat. We reconstructed the case around the fact that the plaintiff had already fulfilled the obligation to vacate. We emphasized that the defendant’s promise was a reciprocal agreement, not a one-sided favor. We secured specific evidence, including call recordings and text messages, to argue the legal principle that an encumbered gift cannot be unilaterally revoked once the burden is performed.


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4. Outcome

The court accepted the plaintiff's arguments and ordered the defendant to pay 30 million KRW in unpaid funds plus delayed interest. Furthermore, the court ordered the payment of 2.5 million KRW on the 25th of every month until the plaintiff’s mother passes away. The defendant was also ordered to cover all litigation costs. This is a complete victory, securing both past damages and future recurring payments.


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