International Aircraft Sale Agreement: Reviewing Contract Validity and Representative Authority under Korean Law
Legal Opinion Delivered
Client Company
Key Summary
For a Korean company that entered into an aircraft sale agreement with an overseas company, we reviewed the purchasing corporation’s authority to enter into the agreement and its internal approval procedures, the agreement’s validity under Korean law, and foreign exchange matters, and provided an English legal opinion to fulfill the contractual conditions precedent.
Case Overview
The client, Company A, needed an English legal opinion to satisfy the contractual conditions precedent in the course of entering into an aircraft sale agreement with an overseas company.
Given the nature of an international sale agreement, it was necessary to confirm the Korean purchasing corporation’s legal status, its representative’s authority to enter into the agreement, and whether its internal approval procedures had been duly completed.
In addition, the binding effect of the agreement under Korean law and regulatory matters concerning overseas payments had to be reviewed separately from the law governing the agreement.
The client therefore engaged Decent Law Firm to review the key Korean-law issues based on the relevant corporate documents and sale agreement and to provide an English legal opinion.
Key Issues
1. The Korean Purchasing Corporation’s Authority to Enter into the Agreement
The key issues were whether the aircraft sale agreement fell within the scope of the business purposes in the articles of incorporation and whether the representative had lawful authority to enter into the agreement on behalf of the company.
2. Internal Approval Procedures and the Agreement’s Legal Effect
It was necessary to review whether the internal decision-making and approval procedures required to enter into the agreement had been duly completed and whether the agreement was legally binding under Korean law.
3. Legal and Regulatory Review of the International Transaction
Taking into account that the agreement was governed by foreign law, it was necessary to distinguish the scope of the Korean-law review and examine foreign exchange procedures and matters concerning recognition and enforcement of international arbitral awards in Korea.
Decent’s Strategy
1. Review of Corporate Capacity and Business Purposes
Decent Law Firm examined relevant materials, including the certificate of corporate registered matters and articles of incorporation, to review whether the Korean purchasing corporation had been lawfully established and remained in existence.
We also analyzed whether the aircraft purchase fell within the business purposes stated in the articles of incorporation and the scope of related business activities, confirming the corporate capacity and authority needed to enter into the agreement.
2. Review of Representative Authority and the Legality of Internal Approval Procedures
We reviewed the representative’s authority to enter into the agreement based on the Commercial Act and the client’s articles of incorporation.
We also examined documents concerning internal approvals to determine whether the decision to enter into the agreement had been duly made, and set out the legal conclusions to be presented to the overseas counterparty.
Relevant legislation: Article 383 of the Commercial Act (Number and Term of Office)
3. Review of the International Sale Agreement’s Effect under Korean Law
Given that the agreement designated foreign law as its governing law, we distinguished the interpretation of the agreement from the scope of the Korean-law review of the Korean purchasing corporation’s capacity and representative authority.
In particular, we reviewed legal matters concerning the agreement’s binding effect under Korean law and the recognition and enforcement of international arbitral awards in Korea, and reflected them in the English legal opinion.
Relevant legislation: Article 30 of the Act on Private International Law (Legal Persons and Organizations)
Relevant legislation: Article 39 of the Arbitration Act (Foreign Arbitral Awards)
4. Review of Foreign Exchange Transactions and Legal Restrictions on Contract Performance
In relation to overseas payment of the purchase price, we reviewed procedures under the Foreign Exchange Transactions Act and any reporting requirements that might apply depending on the transaction method.
We also examined, within the scope of the materials provided, the need for licenses or permits at the contracting stage and legal restrictions that could materially affect performance of the agreement.
Results and Significance
Decent Law Firm reviewed the key Korean-law issues concerning the international aircraft sale agreement and prepared and provided an English legal opinion to fulfill the contractual conditions precedent.
1. Legal Conclusions on Authority to Contract and Internal Approval Procedures
We reviewed materials concerning the client’s corporate capacity, business purposes under its articles of incorporation, and representative authority, and presented Korean-law conclusions on its authority to enter into the agreement and its internal approval procedures.
2. Clarifying the Scope of Korean-Law Review in an International Transaction
For an agreement governed by foreign law, we distinguished the Korean-law issues applicable to the Korean purchasing corporation and set out matters concerning the agreement’s binding effect and the recognition and enforcement of international arbitral awards in Korea.
3. Providing a Legal Opinion to Fulfill Contractual Conditions Precedent
The findings of our review of the relevant corporate documents and contractual terms were reflected in the English legal opinion.
This enabled the client to obtain the materials needed to present the Korean purchasing corporation’s authority to enter into the agreement and the Korean-law conclusions to the overseas counterparty.
Frequently Asked Questions (FAQ)
Q1. Is a Korean-law legal opinion needed for an aircraft sale agreement with an overseas company?
A Korean-law legal opinion may be needed if required as a condition precedent under the agreement.
In international sale agreements with overseas companies, a legal opinion from a Korean lawyer may be requested to confirm the Korean corporation’s authority to enter into the agreement, internal approval procedures, and legal status, separately from the law governing the agreement.
Q2. Even if the agreement is governed by foreign law, is the Korean corporation’s representative authority reviewed under Korean law?
Corporate-law matters such as the legal status and representative authority of a corporation established in Korea are, in principle, reviewed under Korean law.
However, the formation and interpretation of the agreement itself and the parties’ rights and obligations must be assessed separately under the designated governing law, so it is important to clearly distinguish the scope of the legal opinion.
Q3. Does obtaining an English legal opinion resolve all legal risks in an aircraft sale agreement?
No. A legal opinion presents professional conclusions on specific legal issues based on a defined scope of review and the materials provided.
It does not guarantee that the transaction will actually close or any outcome of a future dispute, so further review may be needed depending on the transaction stage and contractual terms.
