Law Viewer

Back Home

ENFORCEMENT DECREE OF THE FAIR TRANSACTIONS IN SUBCONTRACTING ACT

Wholly Amended by Presidential Decree No. 22297, Jul. 21, 2010

Amended by Presidential Decree No. 22455, Oct. 18, 2010

Presidential Decree No. 22746, Mar. 29, 2011

Presidential Decree No. 22989, jun. 27, 2011

Presidential Decree No. 23267, Oct. 28, 2011

Presidential Decree No. 23282, Nov. 1, 2011

Presidential Decree No. 23864, jun. 19, 2012

Presidential Decree No. 24436, Mar. 23, 2013

Presidential Decree No. 24673, Jul. 22, 2013

Presidential Decree No. 24697, Aug. 27, 2013

Presidential Decree No. 24883, Nov. 27, 2013

Presidential Decree No. 25050, Dec. 30, 2013

Presidential Decree No. 25174, Feb. 11, 2014

Presidential Decree No. 25495, Jul. 21, 2014

Presidential Decree No. 25840, Dec. 9, 2014

Presidential Decree No. 26369, jun. 30, 2015

Presidential Decree No. 26438, Jul. 24, 2015

Presidential Decree No. 26933, Jan. 22, 2016

Presidential Decree No. 27115, Apr. 29, 2016

Presidential Decree No. 27367, Jul. 19, 2016

Presidential Decree No. 27444, Aug. 11, 2016

Presidential Decree No. 27702, Dec. 27, 2016

Presidential Decree No. 27751, Dec. 30, 2016

Presidential Decree No. 28353, Sep. 29, 2017

Presidential Decree No. 28471, Dec. 12, 2017

Presidential Decree No. 28848, Apr. 30, 2018

 Article 1 (Purpose)
The purpose of this Decree is to prescribe matters delegated by the Fair Transactions in Subcontracting Act and matters necessary for the enforcement thereof.
 Article 2 (Scope, etc. of Small and Medium Entrepreneurs)
(1) For the purpose of the main sentence of Article 2 (2) 2 of the Fair Transactions in Subcontracting Act (hereinafter referred to as the "Act"), "annual sales" means sales indicated in the income statement for the business year immediately preceding the business year in which a subcontract is concluded: Provided, That if the business commenced in the immediately preceding business year, it means the annual equivalent of the sales for that year, and if the business commenced in the same year as the subcontract is concluded, it means the annual equivalent of the sales accumulated from the starting date of the business until the day on which the subcontract is concluded.
(2) For the purpose of the main sentence of Article 2 (2) 2 of the Act, "the total amount of assets" means total assets indicated in the balance sheet as of the last day of the business year immediately preceding the business year in which a subcontract is concluded: Provided, That if the business commenced in the same business year as the contract is concluded, it means the total assets indicated in the balance sheet as of the date on which the business commenced.
(3) Deleted. <by Presidential Decree No. 26933, Jan. 22, 2016>
(4) For the purpose of the proviso to Article 2 (2) 2 of the Act, "small or medium business entrepreneurs whose annual sales are equal to the amount prescribed by Presidential Decree" means any of the followings:
1. In cases of entrustment with manufacturing and repair: Any small and medium business entrepreneur whose annual sales are below two billion won;
2. In cases of entrustment with construction: Any small and medium entrepreneur whose amount of appraised construction capacity is below three billion won;
3. In cases of entrustment with service: Any small and medium entrepreneur whose annual sales are below one billion won.
(5) For the purpose of Article 2 (7) of the Act, "goods prescribed by Presidential Decree" means ready-mixed concrete; and "regions, including a Special Metropolitan City and Metropolitan City prescribed by Presidential Decree" means Daegu Metropolitan City, Gwangju Metropolitan City, Daejeon Metropolitan City, Sejong Metropolitan Autonomous City, Gangwon-do, Chungcheongbuk-do, Chongchenongnam-do, Jeollabuk-do, Jeollanam-do, Gyeongsangbuk-do, Gyeongsangnam-do, and Jeju Special Self-Governing Province, in whichever a subcontractor’s place of business is situated. <Amended by Presidential Decree No. 24673, Jul. 22, 2013>
(6) For the purpose of Article 2 (9), excluding the subparagraphs, of the Act, "construction work prescribed by Presidential Decree" means any of the following construction works:
(7) For the purpose of Article 2 (9) 5 of the Act, "business entities prescribed by Presidential Decree" means any of the following business entities: <Amended by Presidential Decree No. 23267, Oct. 28, 2011; Presidential Decree No. 26438, Jul. 24, 2015; Presidential Decree No. 27444, Aug. 11, 2016>
1. Registered business entities under Article 4 of the Housing Act;
4. Registered business entities under Article 37 of the Energy Use Rationalization Act;
(8) For the purpose of Article 2 (15) of the Act, "data prescribed by Presidential Decree" means any of the following: <Amended by Presidential Decree No. 27702, Dec. 27, 2016>
1. Data related to intellectual property rights, such as patent rights, utility model rights, design rights, copyrights;
2. Data which are technically useful and have an independent economic value for the production and business activities of subcontractors, such as research data for construction work, development of products, etc., and research and development reports
 Article 3 (Matters to Be Specified in Documents)
For the purpose of Article 3 (2) of the Act, "matters prescribed by Presidential Decree, such as the conditions, method, procedures, etc. of adjusting the subcontract consideration" means the following matters:
1. The date of entrustment, and the details of the task entrusted to the subcontractor (hereinafter referred to as "subject matter, etc.");
2. Time and place of the delivery, transfer, or provision of the subject matter, etc. to the prime contractor;
3. Method and time of the inspection of the subject matter, etc.;
4. Subcontract consideration (including advance payment, progress payment, and adjusted amount if the subcontract consideration is adjusted pursuant to Article 16 of the Act: hereinafter the same shall apply), method and time of the payment thereof;
5. If a prime contractor intends to provide a subcontractor with the raw materials, etc. necessary to manufacture, repair, construct, or provide services for the subject matter, etc., names, quantity, date of supply and price of such raw materials, etc. and the method and date of payment of the price;
6. Requirements, methods, and procedures to adjust the subcontract consideration in accordance with a change in prices of raw materials, etc. after having entrusted manufacturing, repair, construction, or services for the subject matter, etc.
 Article 4 (Verifying Details of Entrustment)
For the purpose of Article 3 (5) of the Act. "matters prescribed by Presidential Decree, such as the details of subcontract, subcontract consideration, and other relevant matters" means the following matters:
1. Details of the task entrusted by the prime contractor;
2. Subcontract considerations;
3. Date of entrustment by the prime contractor;
4. Names and addresses (including the address stated on the corporate register certificate, and the address of the place of business; hereinafter the same shall apply) of the prime contractor and the subcontractor;
5. Other details entrusted by a prime contractor.
 Article 5 (Methods, etc. of Notification and Replies)
(1) Notification and replies under Article 3 (5) and (6) of the Act shall be made by any of the following means: <Amended by Presidential Decree No. 24673, Jul. 22, 2013>
1. Content-certified mail;
2. Electronic documents defined under subparagraph 1 of Article 2 of the Framework Act on Electronic Documents and Transactions, which shall meet either of the following requirements:
(a) An electronic document shall contain an official digital signature defined under subparagraph 3 of Article 2 of the Digital Signature Act;
(b) An electronic document shall be transmitted to an official electronic address defined under subparagraph 8 of Article 2 of the Framework Act on Electronic Documents and Transactions;
3. Other means by which the details of the notification and replies and whether the notification and replies are received can be objectively confirmed.
(2) Notification and replies under paragraph (1) shall be sent to the addresses (including electronic mail addresses and official electronic addresses referred to in paragraph (1) 2 (b)) of a prime contractor and a subcontractor. <Amended by Presidential Decree No. 24673, Jul. 22, 2013>
(3) The Fair Trade Commission may prescribe and supply necessary forms for the notification and replies under paragraph (1).
 Article 6 (Retention of Documents)
(1) Documents concerning subcontract transactions to be retained under Article 3 (9) of the Act shall be those prescribed in Article 3 (1) of the Act and the following documents or those stating the following matters (including those which are prepared, transmitted, or stored in any electronic form by an apparatus with data processing capabilities, such as a computer; hereafter the same shall apply in this Article): <Amended by Presidential Decree No. 24673, Jul. 22, 2013>
1. Certificates of receipt under Article 8 (2) of the Act;
2. Outcomes of inspections of the subject matter, etc. under Article 9 of the Act, and the date when such inspections are completed;
3. Date, amount, and means of payment of the subcontract consideration (including the date of issuance, amount and due date of the bills, if the subcontract consideration is paid in bills);
4. If any advance and late-payment interest prescribed in Article 6 of the Act, any bill discount commission, fees, and late-payment interest prescribed in Article 13 (6) through (8) of the Act, or the refund of the customs duties, etc. and late-payment interest prescribed in Article 15 of the Act are paid, the date and amount of such payment;
5. If a prime contractor provides a subcontractor with raw materials, etc. required to manufacture, repair, construct, or provide services for the subject matter, etc., and deducts the price thereof from the subcontract consideration, the details of such raw materials, etc., and date and amount of and reasons for the deduction;
5-2. If the subcontract consideration is reduced pursuant to the proviso to Article 11 (1) of the Act, a copy of a document describing matters specified in Article 7-2;
5-3. If it is required to provide technical data pursuant to the proviso to Article 12-3 (1) of the Act, a copy of a document describing matters specified in Article 7-3;
6. If the subcontract consideration is adjusted pursuant to Article 16 of the Act, the adjusted amount and the reasons for the adjustment;
7. If any of the following persons files an application for the adjustment of the subcontract consideration according to a change in prices of raw materials pursuant to Article 16-2 of the Act, the details of the application and consultations, the adjusted amount, and the reasons for the adjustment:
(a) A subcontractor;
(b) A small and medium enterprise cooperative under Article 3 (1) 1 or 2 of the Small and Medium Enterprise Cooperatives Act (hereinafter referred to as “cooperative”);
8. Documents related to a decision on subcontract considerations, such as bid specifications, requests for consultations on the decision of a successful bidder, estimates, site descriptions, design specifications, etc.: Provided, That the site descriptions and design specifications are only applicable to the entrustment of construction.
(2) Documents referred to in paragraph (1) shall be retained for three years from the date transactions under Article 23 (2) of the Act are completed.
 Article 6-2 (Agreements Deemed Unfair Special Agreements)
"Agreements specified by Presidential Decree, such as an agreement that restricts a subcontractor’s interests, which shall be protected by this Act, or that shifts an obligation imposed upon a prime contractor to a subcontractor" in Article 3-4 (2) 4 of the Act means any of the following agreements:
1. An agreement that imposes any of the following costs or liabilities on the subcontractor:
(a) A cost incurred in connection with authorization, permission, environmental management, or quality management that is specified as the prime contractor's obligation by any relevant statute;
(b) A cost incurred as a consequence of a change made by the prime contractor (including the person placing the order) to the design or the scope of works;
(c) A cost incurred by a cause for which the subcontractor is not liable, in relation to reworking, additional works, or repairs performed according to the prime contractor's instructions (referring to the prime contractor's expression of his/her intention for reworking, additional works, or repairs; demand, request, or whatsoever it is called);
(d) Liability for defects warranty, or liability for damages, which the prime contractor shall take in accordance with relevant statutes, the agreement between the person placing the order and the prime contractor, etc.;
2. An agreement that unreasonably shifts to the subcontractor the liability arising in connection with an event unforeseeable either by the prime contractor or the subcontractor as at the time of subcontracting, such as the extension of the period of performance due to a natural disaster, the discovery of a buried cultural heritage, hacking, or a computer virus;
3. An agreement that uniformly limits the extent of acceptable overhead expenses (referring to expenses determined by subtracting material cost, direct labor cost, and direct expenses from the subcontract price) without considering the characteristics of each subcontracting transaction: Provided, That this shall exclude any agreement that stipulates the same extent of acceptable overhead expenses as stipulated in the agreement entered into by the person placing an order and the prime contractor;
4. An agreement that restricts the subcontractor's right to request adjustment of the subcontract price under Article 16-2 of the Act during the period of the contract;
5. Other agreements similar to those referred to in any of subparagraphs 1 through 4, specified and publicly notified by the Fair Trade Commission as agreements that unfairly restrict, or deprive a subcontractor of, the subcontractor's rights and interests recognized or protected by the Act.
[This Article Newly Inserted by Presidential Decree No. 25174, Feb. 11, 2014]
 Article 7 (Prohibition of Decision of Unjust Subcontract Consideration)
(1) For the purpose of Article 4 (2) 6 of the Act, "total amount direct construction expenses prescribed by Presidential Decree" shall be the sum of the costs for materials, direct labor, and expenses, incurred by the contract and paid by the prime contractor: Provided, That from among the expenses, the cost items borne by the prime contractor under an agreement between the prime contractor and the subcontractor, and the statutory cost to be borne by the prime contractor shall be excluded.
(2) "Justifiable reasons" under Article 4 (2) 6 of the Act shall be determined based on the conditions of the construction site, the subcontractor’s construction capacity, etc.: Provided, That it shall be presumed that there exists a justifiable reason in any of the following cases:
1. Where a subcontractor has technical prowess backed by intellectual properties such as a patent for construction method, etc.;
2. Where the person placing an order deems that the details, etc of a contract is reasonable after examining the propriety of the subcontract pursuant to Article 31 of the Framework Act on the Construction Industry.
 Article 7-2 (Matters to Be Specified in Documents when Reducing Subcontract Considerations)
For the purpose of Article 12-3 (2) of the Act, "matters prescribed by Presidential Decree, such as the reason and standard for reduction and other details" means the following matters:
1. Reasons and criteria for reduction;
2. Quantity of the subject matter, etc. eligible for reduction;
3. Amount to be reduced;
4. Methods of reduction, such as deduction, etc.;
5. Other matters proving that reduction by a prime contractor is legitimate.
[This Article Newly Inserted by Presidential Decree No. 22989, Jun. 27, 2011]
 Article 7-3 (Matters to Be Specified in Documents when Requesting for Technical Data)
For the purpose of Article 12-3 (2) of the Act, "matters prescribed by Presidential Decree, such as the purpose of request, confidentiality provisions, reversion of rights, a cost, etc." means the following matters:
1. Purposes for which the technical data is requested;
2. Matters concerning confidentiality of the requested technical data, such as ways, etc. to maintain confidentiality;
3. Reversion of rights related to the requested technical data;
4. Cost of the requested technical data and the payment method thereof;
5. Name and scope of the requested technical data;
6. Date of request, and date and method of provision;
7. Other matters proving the legitimacy of the prime contractor’s request for technical data.
[This Article Newly Inserted by Presidential Decree No. 22989, Jun. 27, 2011]
 Article 7-4 (Criteria for Annual Sales of Middle-Standing Enterprises Deemed Subcontractors)
“Amounts prescribed by Presidential Decree” referred to in the former part Article 13 (11), excluding its subparagraphs, of the Act means the annual sales, as classified in attached Table 1, by main business type of a relevant middle-standing enterprise.
[This Article Newly Inserted by Presidential Decree No. 26933, Jan. 22, 2016]
 Article 7-5 (Sales Criteria for Business Entity Deemed as Prime Contractor)
“Amount prescribed by Presidential Decree” referred to in Article 13 (11) 2 of the Act means two trillion won.
[This Article Newly Inserted by Presidential Decree No. 26933, Jan. 22, 2016]
 Article 8 (Performance Guarantees for Construction Subcontracts and for Payment of Consideration)
(1) For the purposes of the proviso to Article 13-2 (1) of the Act, “case ... which is prescribed by Presidential Decree" means any of the following cases: <Amended by Presidential Decree No. 24697, Aug. 27, 2013; Presidential Decree No. 24883, Nov. 27, 2013; Presidential Decree No. 27702, Dec. 27, 2016>
1. Where a prime contractor entrusts a construction project with a subcontractor and the cost of the construction project does not exceed ten million won;
2. Where a prime contractor’s credit rating is evaluated as at least equivalent to the standard determined and publicly notified by the Fair Trade Commission by a credit rating company authorized as a credit rating business under Article 335-3 of the Financial Investment Services and Capital Markets Act;
3. Where a person placing an order must directly pay the subcontract consideration pursuant to Article 14 (1) 2 of the Act;
4. Where a person placing an order pays subcontract consideration to a prime contractor by utilizing a system operated to manage the payment of subcontract consideration electronically (hereinafter referred to as "subcontract consideration payment management system") without going through an account established in the name of the prime contractor.
(2) For the purposes of Article 13-2 (5) 5 of the Act, "guarantee institutions prescribed by Presidential Decree" means the Electric Constructors' Financial Cooperative under the Electric Constructors' Financial Cooperative Act, the Information and Communications Financial Cooperative under the Information and Communications Construction Business Act, the Korea Housing and Urban Guarantee Corporation under the Housing and Urban Fund Act, and the Fire-Fighting Industry Cooperative under the Fire-Fighting Industry Promotion Act. <Amended by Presidential Decree No. 26369, Jun. 30, 2015; Presidential Decree No. 26933, Jan. 22, 2016; Presidential Decree No. 28353, Sep. 29, 2017>
(3) For the purposes of the proviso to Article 13-2 (6) of the Act, "if there is a difference in opinions on whether the requirements for the payment of an amount of guarantee are satisfied or there is any other event or cause beyond control specified by Presidential Decree" means either of the following cases: <Newly Inserted by Presidential Decree No. 25174, Feb. 11, 2014; Presidential Decree No. 26933, Jan. 22, 2016; Presidential Decree No. 28353, Sep. 29, 2017>
1. Where it is unclear whether the prime contractor and the subcontractor have performed a contract during a guarantee period, necessitating supplemental documents;
2. Where opinions differ between the prime contractor and the subcontractor regarding payable progress payments (referring to the payments to be made as consideration in return for the performance of a contract, irrespective of whatsoever it is called).
(4) For the purposes of the proviso to Article 13-2 (6) of the Act, "period specified by Presidential Decree" means 30 days: Provided, That the period may be extended only once, by up to 15 days by agreement with the subcontractor. <Newly Inserted by Presidential Decree No. 25174, Feb. 11, 2014; Presidential Decree No. 26933, Jan. 22, 2016; Presidential Decree No. 28353, Sep. 29, 2017>
(5) For the purposes of Article 13-2 (6) 5 of the Act, "if the prime contractor is unable to pay the subcontract consideration due to a cause or event specified by Presidential Decree as similar to incapability of payment referred to in subparagraph 1 through 4" means where the prime contractor is unable to pay the subcontract price due to any of the following: <Newly Inserted by Presidential Decree No. 25174, Feb. 11, 2014; Presidential Decree No. 26933, Jan. 22, 2016; Presidential Decree No. 27115, Apr. 29, 2016; Presidential Decree No. 28353, Sep. 29, 2017>
1. Where the prime contractor files a petition to commence administrative litigation under Article 5 (2) of the Corporate Restructuring Promotion Act;
2. Where a third-party creditor has obtained an attachment or provisional attachment of the prime contractor's claim for the payment of contract consideration against the person placing an order or the prime contractor has assigned such claim for the payment of contract consideration to a third party;
3. Where the prime contractor fails to pay subcontract price to a credit card company or a financial institution after the credit card company or financial institution pays the subcontract price by a redeemable means of payment in lieu of a bill under Article 2 (14) of the Act;
4. Where a bill delivered by the prime contractor to the subcontractor as payment of the subcontract price is dishonored;
5. Where the prime contractor fails to pay the subcontract price even after the receipt of demand notices for payment, from the subcontractor at least twice after the due date for the payment.
(6) The Fair Trade Commission shall determine and publish types of subcontract consideration payment management system eligible for exemption from the obligation to guarantee the payment of consideration prescribed under paragraph (1) 4. <Newly Inserted by Presidential Decree No. 27702, Dec. 27, 2016>
 Article 9 (Direct Payment of Subcontract Consideration)
(1) Any request from a subcontractor for direct payment under Article 14 (1) of the Act shall take effect when the expression of intention thereof reaches a person placing an order, and the fact that said expression of intention has reached that person shall be evidenced by the relevant subcontractor.
(2) When directly paying the subcontract consideration, a person placing an order may make a deposit pursuant to the relevant statutes if any ground for deposit under Article 248 (1), etc. of the Civil Execution Act exists.
(3) A person placing an order shall bear the obligation to directly pay the subcontract consideration within the extent of obligation to pay the price to the prime contractor.
(4) Where the requirements for directly paying the subcontract consideration are met and the subcontract consideration has been finally set for the part manufactured, repaired, or constructed by the subcontractor, a person placing an order shall pay the subcontract consideration to the subcontractor pursuant to the provisions of the relevant subcontract.
 Article 9-2 (Cooperative's Requests, etc. for Adjustment of Subcontract Considerations)
(1) For the purposes of the main sentence of Article 16-2 (2) of the Act, "a prime contractor specified by Presidential Decree" means either of the following persons: <Newly Inserted by Presidential Decree No. 24883, Nov. 27, 2013; Presidential Decree No. 25495, Jul. 21, 2014; Presidential Decree No. 26933, Jan. 22, 2016>
1. A member company of a business group subject to limitations on cross shareholding under Article 9 (1) of the Monopoly Regulation and Fair Trade Act;
2. A middle-standing enterprise defined under subparagraph 1 of Article 2 of the Special Act on the Promotion of Growth and the Strengthening of Competitiveness of Middle-Standing Enterprises, the annual sales of which in the immediately preceding business year (referring to a total sum of amounts assessed for construction capability which are the most recently publicly notified as at the time a subcontract is concluded in cases of a transaction to which the provisions governing an assessed amount for construction capability shall apply pursuant to relevant Acts, or total assets in cases where there do not exist either the annual sales or the amount assessed for construction capability) is at least 300 billion won.
(2) Pursuant to Article 16-2 (2) of the Act, upon request from a member subcontractor, a cooperative may negotiate with the prime contractor for adjustment of the consideration for a subcontract if 60 days have passed since the execution date of the subcontract (referring to the date of the immediately preceding adjustment if a contract price has been adjusted after executing a subcontract, or the date of bidding if the subcontract was awarded through competitive bidding; hereafter the same shall apply in this Article) and if any of the following events occurs: <Amended by Presidential Decree No. 24673, Jul. 22, 2013; Presidential Decree No. 24883, Nov. 27, 2013>
1. Where the price of the raw materials constituting at least ten percent of the subcontract price, has risen by at least ten percent since the subcontract is executed;
2. Where the difference in the price of raw materials caused by inflation since the subcontract is executed, is at least three percent of the subcontract price for the remaining subject matters, etc.
(3) In any of the following cases, upon request from a member subcontractor, a cooperative may negotiate with the prime contractor for adjustment of the consideration for a subcontract even before the lapse of 60 days from the execution date of the subcontract, notwithstanding paragraph (2): <Newly Inserted by Presidential Decree No. 24883, Nov. 27, 2013>
1. Where the subcontract period of the subcontractor does not exceed 60 days and an event referred to in any subparagraph of paragraph (2) occurs;
2. Where an increase in the price of raw materials caused by inflation after the subcontract is executed, is at least five percent of the subcontract price.
(4) A subcontractor who intends to make a request under the main sentence of Article 16-2 (2) of the Act shall submit a written request, with the following documents, to the cooperative of which he/she is a member: <Newly Inserted by Presidential Decree No. 24883, Nov. 27, 2013>
1. A document evidencing that the requirements under paragraph (2) or (3) are met;
2. A copy of a subcontract (including a document evidencing that the contract price has been adjusted, if so);
3. A document evidencing that a subcontract was awarded through competitive bidding, if so;
4. Other documents necessary for adjusting the subcontract price with the prime contractor.
(5) When a cooperative intends to negotiate with a prime contractor to adjust a subcontract price, it shall refer the case to a general meeting or the board of directors’ meeting for resolution, and shall submit the resolution to the prime contractor, with the following: <Amended by Presidential Decree No. 24883, Nov. 27, 2013>
1. Documents specified in paragraph (4) 1 through 4;
2. Copies of the minutes of the general meeting or the board of directors' meeting;
3. A list of member subcontractors that meet the requirements under paragraph (2) or (3);
4. through 6. Deleted. <by Presidential Decree No. 24883, Nov. 27, 2013>
[This Article Newly Inserted by Presidential Decree No. 22989, Jun. 27, 2011]
 Article 9-3 (Grounds for Requesting Mediation to Subcontract Dispute Mediation Council)
For the purposes of Article 16-2 (8) 3 of the Act, "causes specified by Presidential Decree, such as cases where either the prime contractor or the subcontractor manifests his/her intention to discontinue negotiations" means any of the following cases: <Amended by Presidential Decree No. 24883, Nov. 27, 2013>
1. Where either the prime contractor or the subcontractor (including the cooperative, in cases of negotiations on adjustment under Article 16-2 (3) of the Act) expresses his/her intention to discontinue negotiations;
2. Where the adjusted amount proposed by either the prime contractor or the subcontractor (including the cooperative, in cases of negotiations on adjustment under Article 16-2 (3) of the Act) is at least double or half the adjusted amount proposed by the other party;
3. Where delay in agreement is likely to severely frustrate business activities or cause a severe loss to either the prime contractor or the subcontractor;
4. Where any other similar causes exist.
[This Article Newly Inserted by Presidential Decree No. 22989, Jun. 27, 2011]
 Article 9-4 (Grounds for Recognition of Payment in Substitutes)
"Cause prescribed by Presidential Decree by which it is deemed that a prime contractor cannot help but make payment in kind" means cases where a council of financial creditors adopts a resolution to commence joint administrative proceeding against a prime contractor in accordance with the Corporate Restructuring Promotion Act and the proceeding is underway.
[This Article Newly Inserted by Presidential Decree No. 28353, Sep. 29, 2017]
 Article 9-5 (Documents to Be Presented Prior to Payment in Substitutes, Methods of Presentation, and Other Necessary Matters)
(1) The documents that a prime contractor shall present to a subcontractor under Article 17 (3) of the Act shall be as specified in the following subparagraphs:
1. If the goods to be delivered for payment in substitutes are goods over which rights and obligations shall be registered or recorded in an official register in accordance with the relevant statutes: Certified transcripts of such official register (including photocopies);
2. If the goods to be delivered for payment in substitutes are goods other than those provided for in subparagraph 1: Notarial deeds stating rights and obligations over the goods (referring to a deed made under the Notary Public Act).
(2) Documents provided for in paragraph (1) shall be presented in any of the following methods. If the documents presented in such cases are not printed on paper, a means shall be provided to enable them to be printed on paper:
1. Delivery, in person or by mail, of documents printed on paper or documents stored in an electronic file format in a magnetic disc (including a magnetic tape or any other medium, the contents of which can be recorded, stored, and printed in a similar manner);
2. Transmission of an electronic file, in which documents referred to in paragraph (1) are stored, to the subcontractor's e-mail address: Provided, That the foregoing shall apply only where the prime contractor uses a computer with a device for the notice of automatic receipt that makes it possible to verify the time when an e-mail is dispatched or arrives.
(3) If any of the rights and obligations on goods referred to in Article 17 (2) of the Act is changed before payment is made in substitutes, after the documents referred to in paragraph (1) are presented, the prime contractor shall re-present the documents under paragraph (1) to the subcontractor, without delay, after reflecting such change in the documents.
(4) A prime contractor shall prepare a document stating following details therein, without delay, after presenting the documents under paragraph (2) or (3), and deliver the document to the subcontractor, and the prime contractor and the subcontractor shall keep the document, respectively:
1. The date on which the prime contractor presented the documents;
2. Main details of the documents;
3. The fact that the subcontractor has received the documents;
4. The names, places of business, and telephone numbers of the prime contractor and the subcontractor;
5. Signatures or seals affixed by the prime contractor and the subcontractor.
[This Article Newly Inserted by Presidential Decree No. 25174, Feb. 11, 2014]
 Article 10 (Reports and Notifications of Violations)
(1) A person who intends to file a report pursuant to the former part of Article 22 (1) of the Act shall clearly state the following: <Amended by Presidential Decree No. 27367, Jul. 19, 2016>
1. Name and address of the reporter;
2. Name or title of the reported person (including the name of its representative, in the case of a juristic person);
3. Details of violations and data to attest them.
(2) Within 15 days from the date on which the Fair Trade Commission receives a report as prescribed in the former part of Article 22 (1) of the Act, the Fair Trade Commission shall deliver or send by mail (including electronic mail) a document directly to the reporting person to verify whether he/she give consent to the following: <Amended by Presidential Decree No. 26933, Jan. 22, 2016; Presidential Decree No. 27367, Jul. 19, 2016>
1. Consent that the Fair Trade Commission will notify the prime contractor of the fact that the report has been received;
2. Where notification is made pursuant to subparagraph 1, consent that the reporter and the content will be also notified.
(3) Where a reporting person fails to notify the Fair Trade Commission of his/her consent in writing within 15 days from the date he/she receives a document delivered or sent by mail (including electronic mail) by the Fair Trade Commission as prescribed in paragraph (2), he/she shall be considered not giving his/her consent required under paragraph (2). <Amended by Presidential Decree No. 27367, Jul. 19, 2016>
(4) Where the Fair Trade Commission is notified as prescribed in paragraph (3), it shall deliver or send by mail (including electronic mail) a document directly to the prime contractor, stating the fact of receiving a report, the person who filed the report, and the details of the report within seven days from the date of such notice. <Newly Inserted by Presidential Decree No. 27367, Jul. 19, 2016>
 Article 10-2 (Payment of Monetary Rewards)
(1) A person eligible for monetary rewards under Article 22 (5) of the Act shall be a person who makes a report or provides information on any such violation of the Act as referred to in the Article 22 (5) of the Act (hereafter referred to as a “violation of the Act” in this Article) and first submits any data evidencing the violation of the Act.
(2) Notwithstanding paragraph (1), any of the following persons shall be excluded from the scope of persons eligible for monetary rewards:
1. A prime contractor who commits a relevant violation of the Act;
2. Deleted. <by Presidential Decree No. 28353, Sep. 29, 2017>
3. The subcontractor who suffers any damage caused by the relevant violation of the Act;
4. Deleted. <by Presidential Decree No. 28353, Sep. 29, 2017>
(3) The Fair Trade Commission shall pay monetary rewards within three months from the date on which it deems that any act on which a report has been made or information has been provided (where any objection is raised, it refers to the date of rendering a ruling on such objection) falls under a violation of the Act, and shall adopt a resolution to impose a disposition, such as corrective measure, on a prime contractor who has committed the violation of the Act.
(4) With respect to monetary rewards paid pursuant to paragraph (3), detailed payment standards by type of violations of the Act shall be determined and publicly notified by the Fair Trade Commission in consideration of the gravity of a violation of the Act, the level of evidence of the relevant violation, and so forth.
(5) A deliberative committee on monetary rewards for reporting may be established under the Fair Trade Commission to deliberate on the affairs relating to the payment of monetary rewards under paragraph (3).
(6) The matters concerning the establishment and operation of the deliberative committee on monetary rewards for reporting under paragraph (5), and other detailed matters concerning the standards, procedures, etc, of the payment of monetary rewards shall be determined and publicly notified by the Fair Trade Commission.
[This Article Newly Inserted by Presidential Decree No. 26933, Jan. 22, 2016]
 Article 11 Deleted. <by Presidential Decree No. 26933, Jan. 22, 2016>
 Article 12 (Reports on Deposit)
A person placing an order, or a prime contractor, who has made a deposit pursuant to Article 25-2 of the Act shall report it in writing to the Fair Trade Commission without delay. <Amended by Presidential Decree No. 27367, Jul. 19, 2016>
 Article 13 (Criteria for Imposition of Penalty Surcharges)
(1) The amount of a penalty surcharge under Article 25-3 of the Act shall be calculated by applying the standard prescribed in the attached Table 2.
(2) Deleted. <by Presidential Decree No. 26933, Jan. 22, 2016>
(3) Necessary matters concerning the imposition of a penalty surcharge, in addition to those provided for in this Decree, shall be determined by the Fair Trade Commission.
 Article 14 (Application Mutatis Mutandis)
The provisions of Article 61-2, Articles 62 through 64 and Articles 64-2 through 64-5 of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act shall apply mutatis mutandis to matters, such as imposition, payment, collection, and disposition on default of penalty surcharges, and additional dues on refunded amount of penalty surcharges under Article 25-3 of the Act. <Amended by Act No. 23864, Jun. 19, 2012>
 Article 15 (Criteria, etc. for Publication of Lists of Habitual Violators)
(1) "Criteria prescribed by Presidential Decree" in the main sentence of Article 25-4 (1) of the Act means four accumulated points in accordance with subparagraph 1 (d) of attached Table 3. <Amended by Presidential Decree No. 27702, Dec. 27, 2016>
(2) Matters to be published when publishing the lists of habitual violators are the name of the business entity (including the name of the corporation), the representative, and the address of the place of business.
(3) If the lists are posted on the Internet homepage of the Fair Trade Commission pursuant to Article 25-4 (5) of the Act, the period of posting shall be one year.
 Article 16 (Composition and Operation of Deliberative Committee on Publication of Lists of Habitual Violators)
(1) The Deliberative Committee on Publication of Lists of Habitual Violators (hereafter referred to as "the Deliberative Committee") referred to in Article 25-4 (3) of the Act shall be comprised of seven members, including one Chairperson.
(2) The Secretary General of the Fair Trade Commission shall be the chairperson of the Deliberative Committee (hereafter referred to as "Chairperson" in this Article), and the following persons shall be the members:
1. Three persons appointed by the Chairperson of the Fair Trade Commission from among public officials in general service belonging to the Senior Executive Service of the Fair Trade Service;
2. Three persons commissioned by the Chairperson of the Fair Trade Commission from among those who have extensive knowledge and experience in subcontract transactions.
(3) The term of office of the commissioned members referred to in paragraph (2) 2 shall be three years.
(4) Where any member commissioned pursuant to paragraph (2) 2 falls under any of the following subparagraphs, the Chairperson of the Fair Trade Commission may dismiss such member: <Newly Inserted by Presidential Decree No. 26933, Jan. 22, 2016>
1. Where he/she becomes unable to perform his/her duties due to a mental disorder;
2. Where it is found that he/she has been engaged in any misconduct in connection with his/her duties;
3. Where he/she is deemed unsuitable to serve as a member due to his/her neglect of duties, injury to dignity, or any other reason;
4. Where he/she declares his/her intention not to perform his/her duties for any inevitable reason.
(5) The Chairperson shall exercise general supervision and control over the affairs of the Deliberative Committee, but the member thereof nominated by the Chairperson shall, where the Chairperson is unable to perform his/her duties due to any inevitable reason, act on behalf of the Chairperson.
(6) A majority of the members of the Committee shall constitute a quorum, and any decision thereof shall require the concurring votes of at least a majority of those present.
(7) Except as provided for in paragraphs (1) through (6), other matters necessary for the composition and operation of the Deliberative Committee shall be determined by the Chairperson of the Fair Trade Commission through resolution by the Deliberative Committee. <Amended by Presidential Decree No. 26933, Jan. 22, 2016>
 Article 17 (Criteria, etc. for Imposition of Penalty Points)
(1) The criteria for imposition of penalty points by the Fair Trade Commission under Article 26 (2) of the Act shall be as specified in attached Table 3.
(2) "Where such penalty points exceed the criteria prescribed by Presidential Decree" in Article 26 (2) of the Act means where the points accumulated under subparagraph 1 (d) of attached Table 3 exceed the points specified in either of the following: <Amended by Act No. 23282, Nov. 1, 2011; Presidential Decree No. 24883, Nov. 27, 2013; Presidential Decree No. 26933, Jan. 22, 2016>
1. A request for limitation on participation in bidding: Five points;
2. A request for suspension of business operations on a ground specified in Article 82 (1) 7 of the Framework Act on the Construction Industry: Ten points.
(3) Details concerning the imposition and reduction of penalty points under attached Table 3 shall be determined and publicly notified by the Fair Trade Commission.
 Article 17-2 (Re-Examination of Regulation)
(1) The Fair Trade Commission shall examine the appropriateness of the scope, etc. of documents to be kept concerning subcontract transactions pursuant to Article 6 every five years (referring to the period that ends on the day before January 1 of every fifth anniversary) from the base date of January 1, 2014 and take measures for improvement, etc. <Amended by Presidential Decree No. 25174, Feb. 11, 2014>
(2) The Fair Trade Commission shall examine the appropriateness of the following matters every three years based on each of the following basic dates (referring to the day before the base date of every third anniversary) and take measures for improvement, etc.: <Amended by Presidential Decree No. 28471, Dec. 12, 2017>
1. The scope of goods and regions referred to in Article 2 (5) to which the provisions regarding entrustment with manufacture applies: January 1, 2017;
2. Matters to be specified in documents in Article 3: January 1, 2017;
3. Exemption from performance guarantees for construction subcontracts and for payment of consideration as prescribed in Article 8 (1) 1: January 1, 2017;
4. Criteria, etc. for publication of lists of habitual violators prescribed in Article 15: January 1, 2017.
(3) Deleted. <by Presidential Decree No. 28471, Dec. 12, 2017>
[This Article Newly Inserted by Presidential Decree No. 25050, Dec. 30, 2013]
 Article 18 (Criteria for Imposition of Administrative Fines)
The criteria for imposition of administrative fines provided for in Article 30-2 (1) through (4) of the Act shall be as specified in attached Table 4. <Amended by Presidential Decree No. 28848, Apr. 30, 2018>
[This Article Newly Inserted by Presidential Decree No. 22746, Mar. 29, 2011]
ADDENDA
Article 1 (Enforcement Date)
This Decree shall enter into force on July 26, 2010.
Article 2 (Transitional Measures concerning Criteria for Imposition of Penalty Points)
Where penalty points are imposed for violations that occur before this Act enters into force, the previous provisions shall apply.
Article 3 Omitted.
Article 4 (Relationship to Other Statutes)
If any statute cites the provisions of the previous Enforcement Decree of the Fair Transactions in Subcontracting Act as at the time this Decree enters into force and this Act includes provisions corresponding to the cited provisions, it shall be deemed that such statute cites the corresponding provisions of this Act in lieu of the previous provisions.
ADDENDA <Presidential Decree No. 22455, Oct. 18, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on October 24, 2010. (Proviso Omitted.)
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 22746, Mar. 29, 2011>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Transitional Measures concerning Administrative Fines)
Where administrative fines are imposed for violations that occur before this Act enters into force, the former provisions shall apply notwithstanding the amended provisions of attached Table 4.
ADDENDUM <Presidential Decree No. 22989, Jun. 27, 2011>
This Decree shall enter into force on June 30, 2011.
ADDENDA <Presidential Decree No. 23267, Oct. 28, 2011>
Article 1 (Enforcement Date)
This Decree shall enter into force on October 29, 2011.
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 23282, Nov. 1, 2011>
Article 1 (Enforcement Date)
This Decree shall enter into force on November 25, 2011. (Proviso Omitted.)
Articles 2 through 6 Omitted.
ADDENDA <Presidential Decree No. 23864, Jun. 19, 2012>
Article 1 (Enforcement Date)
This Decree shall enter into force on June 22, 2012.
Articles 2 through 7 Omitted.
ADDENDA <Presidential Decree No. 24436, Mar. 23, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 24673, Jul. 22, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability to Entrustment with Manufacturing of Ready-Mixed Concrete)
The amended provisions of Article 2 (5) shall apply starting from the cases where the manufacturing of ready-mixed concrete is entrusted after this Decree enters into force.
Article 3 (Applicability to Preservation of Documents)
The amended provisions of Article 6 (1) shall apply to subcontract transactions conducted after this Decree enters into force.
Article 4 (Applicability to Criteria for Imposition of Penalty Surcharges)
The amended provisions of subparagraphs 2 (1) (i) and 18 (f) of Table 2 attached hereto shall apply to violations that occur after this Decree enters into force.
Article 5 (Transitional Measures concerning Criteria for Imposition of Penalty Points)
(1) Notwithstanding the amended provisions of subparagraphs 1 (c) and 3 (a) (ii) of Table 3 attached hereto, the previous provisions shall apply to the computation of cumulative points for the completion of special educational courses provided by a contractor on subcontracting before this Decree enters into force and the criteria for the reduction of penalty points.
(2) Notwithstanding the amended provisions of subparagraphs 1 (c) and 3 (a) (iii) of Table 3 attached hereto, the previous provisions shall apply to the computation of cumulative points for commendations awarded to a contractor as an exemplary company in subcontracting transactions before this Decree enters into force and the criteria for the reduction of penalty points.
(3) Notwithstanding the amended provisions of subparagraphs 1 (d) and 3 (a) 4) of Table 3 attached hereto, the previous provisions shall apply to the criteria for the reduction of penalty points in consideration of the ratio of payment in cash and the ratio of payment in cash equivalent for the business year in which this Decree enters into force.
(4) Notwithstanding the amended provisions of subparagraph 3 (a) 5) of Table 3 attached hereto, the previous provisions shall apply to the criteria for the reduction of penalty points in consideration of the ratio of electronic tenders during the business year in which this Decree enters into force.
(5) Notwithstanding the amended provisions of subparagraph 3 (a) 6) of Table 3 attached hereto, the previous provisions shall apply to the criteria for the reduction of penalty points in consideration of a contractor’s performance of an agreement evaluated before this Decree enters into force.
(6) Notwithstanding the amended provisions of subparagraph 3 (a) of Table 3 attached hereto, the previous provisions shall apply to the criteria for the reduction of penalty points in consideration of the Fair Trade Commission’s criteria introduced and implemented by a contractor before this Decree enters into force.
ADDENDA <Presidential Decree No. 24697, Aug. 27, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on August 29, 2013. (Proviso Omitted.)
Articles 2 through 13 Omitted.
ADDENDA <Presidential Decree No. 24883, Nov. 27, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on November 29, 2013: Provided, That the amended provisions of Article 17 (2) shall enter into force on November 29, 2014.
Article 2 (Applicability to Performance Guarantees for Construction Subcontracts and Payment of Consideration)
The amended provisions of Article 8 (1) 1 shall apply starting from the cases where a construction project is entrusted after this Decree enters into force.
Article 3 (Transitional Measures, etc. concerning Application of Criteria for Accumulated Points)
(1) If the accumulated points, determined after the amended provisions of Article 17 (2) enter into force under the proviso to Article 1 of the Addenda, are composed only of penalty points imposed for violations committed before the amended provisions enter into force, the previous provisions shall apply, notwithstanding the amended provisions.
(2) If the accumulated points, determined after the amended provisions of Article 17 (2) enter into force under the proviso to Article 1 of the Addenda, include the penalty points imposed for violations committed after the amended provisions enter into force, the amended provisions shall apply.
Article 4 (Transitional Measures concerning Criteria for Imposition of Penalty Surcharges)
Notwithstanding the amended provisions of subparagraph 2 (a) 1 of attached Table 2, the previous provisions shall apply to the criteria for imposition of penalty surcharges for violations committed before this Decree enters into force.
ADDENDUM <Presidential Decree No. 25050, Dec. 30, 2013>
This Decree shall enter into force on January 1, 2014. (Proviso Omitted.)
ADDENDUM <Presidential Decree No. 25174, Feb. 11, 2014>
This Decree shall enter into force on February 14, 2014.
ADDENDA <Presidential Decree No. 25495, Jul. 21, 2014>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 22, 2014.
Article 2 Omitted.
ADDENDA <Presidential Decree No. 25840, Dec. 9, 2014>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2015.
Articles 2 through 16 Omitted.
ADDENDA <Presidential Decree No. 26369, Jun. 30, 2015>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 1, 2015.
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 26438, Jul. 24, 2015>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 29, 2015.
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 26933, Jan. 22, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 25, 2016: Provided, That the amended provisions of Article 13 (2) and attached Table 2 shall enter into force on July 25, 2016.
Article 2 (Applicability to Reporting of Violations)
The amended provisions of Article 10 (2) shall also apply to the reports which have been received before this Decree enters into force.
Article 3 (Applicability, etc. to Criteria for Imposition of Penalty Points)
(1) The amended provisions of subparagraph 2 (a) (iv) and subparagraph 2 (c) of attached Table 3 shall apply beginning from cases where a corrective order or warning disposition is imposed or where any of the councils mediates a dispute after this Decree enters into force.
(2) Notwithstanding the amended provisions of the subparagraph 3 (a) (vi) of attached Table 3, the previous provisions shall apply to the agreements concluded before this Decree enters into force.
Article 4 (Transitional Measures concerning Criteria for Imposition of Penalty Surcharges)
Notwithstanding the amended provisions of Article 13 (2) and attached Table 2, the previous provisions shall apply where penalty surcharges are imposed for violations that occur before the enforcement date under the proviso to Article 1 of the Addenda.
ADDENDA <Presidential Decree No. 27115, Apr. 29, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 27367, Jul. 19, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability, etc. to Reporting and Notification of Violations)
(1) The amended provisions of Article 10 shall also apply to reports received (excluding reports filed by subcontractors) before this Decree enters into force.
(2) Notwithstanding the amended provisions of Article 10, the previous provisions shall apply to reports filed by subcontractors before this Decree enters into force.
ADDENDA <Presidential Decree No. 27444, Aug. 11, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on August 12, 2016.
Articles 2 through 8 Omitted.
ADDENDA <Presidential Decree No. 27702, Dec. 27, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 8 (1) 4, paragraph (6) of the same Article, and subparagraph 3 (a) (viii) of attached Table 3 shall enter into force six months after its promulgation.
Article 2 (Applicability to Criteria for Imposition of Penalty Points)
(1) The amended provisions of subparagraph 1 (d) of attached Table 1 shall apply starting from the cases where penalty points are imposed after this Decree enters into force.
(2) The amended provisions of subparagraph 2 (a) (vii) of attached Table 3 shall apply starting from the cases where penalty points are imposed for violations committed after this Decree enters into force.
ADDENDA <Presidential Decree No. 27751, Dec. 30, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2017. (Proviso Omitted.)
Articles 2 through 12 Omitted.
ADDENDA <Presidential Decree No. 28353, Sep. 29, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Articles 9-4 and 9-5 shall enter into force on October 19, 2017.
Article 2 (Applicability to Persons Eligible for Payment of Monetary Rewards)
The amended provisions of Article 10-2 (2) 2 and 4 shall apply to the cases where a person reports, or informs, and submits data evidencing any violation of an Act that occurs before this Decree enters into force.
ADDENDA <Presidential Decree No. 28471, Dec. 12, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2018.
Article 2 Omitted.
ADDENDA <Presidential Decree No. 28848, Apr. 30, 2018>
Article 1 (Enforcement Date)
This Decree shall enter into force on May 1, 2018.
Article 2 (Transitional Measures concerning Administrative Fines)
(1) Where administrative fines are imposed for violations that occur before this Act enters into force, the former provisions shall apply notwithstanding of the amended provisions of Table 4.
(2) Impositions of administrative fines for violations that occur before this Act enters into force shall not be taken into account in the number of violations calculated under the amended provisions of Table 4.