Abstract

30 years has passed since the Fair Transactions in Subcontracting Act took effect, but most subcontracts are still executed orally, and unfair practices such as delaying in paying subcontract consideration still continue. Nevertheless, subcontractors are afraid of reporting such unfair practices in fear that big companies may cut off transactions and take a retaliatory action. Against this backdrop, the government is stepping up its efforts to prepare the system and policy to make fair subcontract transactions to take roots in order to vitalize economy. The Fair Trade Commission has made lots of endeavors so far to eradicate unfair transactions. Such endeavors have brought some improvement to unfair subcontract transactions through the actual condition survey and statistical analysis of subcontract transactions. This study examined the matters regulated in subcontract transactions from the stage entering into a contract to the stages of implementing the contract, delivering the object, paying consideration and completing transactions through the decisions of the Fair Trade Commission which ordered a principal contractor to correct violations against a subcontractor and pay penalty. In addition, in a recent case, the Supreme Court made a judgment that it should be deemed as an unreasonable decision of subcontract consideration in the event that a principal contractor decides subcontract consideration by reducing unit prices uniformly without due reason or at low unit prices unilaterally without agreement with a subcontractor. Even though the Fair Trade Commission prepared the Standard Form Subcontract and pushes for mandating or requesting to legislate its use, the Standard Form Subcontract is subject to many variables whenever construction related laws and systems change and depending on different conditions of construction site. Therefore, it is not desirable to obligate the use of the Standard Form Subcontract and it is more realistic to achieve the policy goal similar to obligating the use of the Standard Form Subcontract. In most cases where the Standard Form Subcontract has an unfair special agreement, the decisions of the Fair Trade Commission found them in violation with the Fair Transactions in Subcontracting Act, resulting in ordering correction, penalty and reporting to the prosecution. To solve this problem, it was examined to add a clause to invalidate any provision falling under unfair special agreements, and the Paragraph 3 of Article 5 of the Act on Contracts to Which the State is a Party, which was recently promulgated, added a clause to invalidate any unfair special agreement etc. Thus, it can be proposed to revise the Fair Transactions in Subcontracting Act and add a new clause to invalidate any unfair special agreement just like the Act on Contracts to Which the State is a Party. In particular, as opposed to the Monopoly Regulation and Fair Trade Act, the Fair Transactions in Subcontracting Act reflects the nature of mediating the disputes between the parties to subcontract transactions, and in this respect, it is not contradictory in legal system to prescribe the provision of the Fair Transactions in Subcontracting Act as a compulsory provision. Finally, the more capitalistic the society becomes today, the more specialization becomes the driving force of economic growth of companies and the differentiation between companies tend to be more specialized. At the same time, with the size of large companies expanding and the number of small and medium sized enterprises increasing in the market economy, the integration into large companies and the differentiation of small and medium sized enterprises are taking place together. As such, the driving force of economic growth today can expect reasonable economic growth when competition and cooperation exist in proper harmony and seek a win-win effect. And mutual synergy effect can be expected only when fair subcontracting is established at the center.

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