Preventing Legal Risk through a Swift Response to Impersonation Transactions

The client company recently faced a situation in which an unrelated third party impersonated the client's name to conclude a transaction. Although this individual was neither an employee nor an agent of the client, it was confirmed that they had forged documents such as the business registration certificate and a copy of the corporate bank account and, by deceiving the counterparty, concluded a large-scale supply-of-goods contract. As a result, the counterparty was exposed to the legal risk of having entered into a contract with a person who had no actual authority.

The crux of the matter was whether the contract constituted an unauthorized agency act unrelated to the client, and the determination of who bore legal liability.

On the basis of Articles 130 and 135 of the Civil Act, our law firm made clear that the client had no intention whatsoever of ratifying the transaction, and notified that no legal liability or obligation to pay arose.

In addition, we explained that the counterparty could be a victim of fraud and document forgery, and presented the legal grounds on which the contract could be rendered void.

We also informed the counterparty that the client intended to independently proceed with criminal proceedings, and guided the counterparty, as a victim, on how it could file a criminal complaint and claim civil damages.

Through this response, the client was able to clearly avoid legal liability arising from an unauthorized agency contract in which it had not been involved, and the counterparty was also able to preemptively block the possibility of making an erroneous claim against the client. Furthermore, by promptly guiding the criminal response procedures against the suspected perpetrator, the spread of harm was prevented and the restoration of transactional order was furthered. This case demonstrates how a company should respond to the risks of impersonation and forgery that can arise in external transactions, and confirms how important it is to clearly state one's legal position in advance.