The Supreme Court rendered the 104-Tai-Shang-125 Civil Decision of January 22, 2015 (hereinafter, the "Decision"), holding that since the bidder's bid bond and performance bond were forfeited simply because of one violation in a procurement project, the court should certainly assess if it is appropriate to include them in the default penalty.
According to the facts underlying the Decision, the Appellant asserted as follows. He participated in the Appellee's publicly arranged procurement at issue and submitted a performance bond of NT$1.98 million. However, the Appellee cancelled the bid award, rescinded the procurement contract at issue, and forfeited the Appellant's performance bond on the ground that the Appellant engaged in bid rigging in collusion with the representative of Yong Chi Co., who was not a party to this matter, in violation of the Government Procurement Law. Since such action was taken to evade the Appellee's contractual obligations, it was invalid and the Appellant requested to recover the bond so forfeited.
According to the Decision, whether a default penalty is appropriate should be determined based on general objective facts, social economic conditions and the injury to the party concerned. In addition, if the agreed-upon default penalty is too high, the court may by its authority reduce the penalty to an appropriate amount pursuant to the above requirements except for the circumstance whether no request can be made to refund the default penalty since it has been voluntarily paid out of the free will of the obligor and thus can be perceived as the obligor's voluntary performance pursuant to the contract. Therefore, in a procurement case in which a bidder was penalized for any act detrimental to the fairness of the procurement at the time of bidding by an administrative agency by canceling the bid ward, forfeiting the bid bond, rescinding the procurement contract at issue and forfeiting the performance bond, if the bidder's bid bond and performance bond were forfeited simply for one violation, the court should by its authority examine all circumstances around the bidder's injuries to determine if such penalty is too high.
According to the Decision, the original trial court was inappropriate for its failure to by its authority examine all circumstances around the Appellee's injuries to determine if the penalty was excessive. Moreover, no reason was provided as to why the Appellant's assertion that the penalty should have been reduced since the Appellee was not objectively injured was not accepted in the original decision rendered against the Appellant. Since the original decision violates the law for lack of valid basis, it was reversed and remanded.