Administrative Notice on Contract Penalty Waiver Postponed to Social Distancing Level 2

Fair Trade Commission Announces Administrative Notice on Proposed Revisions to Consumer Dispute Resolution Standards for 4 Industries from 14th to 23rd
Establishes Penalty Fee Standards for Infectious Disease Occurrences in Travel, Aviation, Accommodation, and Food Service Sectors

[Image source=Yonhap News]

[Asia Economy Reporter Moon Chaeseok] The Fair Trade Commission announced on the 14th that it will hold an administrative notice from the 14th to the 23rd regarding the revision (draft) of the Consumer Dispute Resolution Standards for four service sectors: travel, aviation, accommodation, and dining. The key point is the establishment of standards for penalty fee reductions in the event of a large-scale infectious disease outbreak.

Travel, Aviation, and Accommodation Industries: Establishment of Exemption and 50% Penalty Fee Reduction Standards

On the 9th, when the Hangul Day holiday began, the domestic terminal of Gimpo Airport in Gangseo-gu, Seoul, was bustling with travelers. Photo by Kim Hyun-min kimhyun81@

For the travel, aviation, and accommodation industries, standards for exemption and a 50% reduction in penalty fees have been established. Since these sectors mostly involve family travel, considerations were made based on the levels of domestic social distancing measures and overseas travel alerts issued by the Ministry of Foreign Affairs.

In cases of exemption, contracts can be canceled without penalty fees if contract fulfillment becomes impossible due to ▲declaration of special disaster areas ▲administrative orders such as facility closures or suspension of operations ▲suspension of flights or other transportation ▲prohibition of activities other than essential social and economic activities under social distancing level 3 measures.

For reductions, if contract fulfillment is difficult due to ▲declaration of a disaster situation ▲recommendations to refrain from movement under social distancing level 2 measures, contract terms can be changed without penalty fees or penalty fees can be reduced.

For aviation and accommodation, if both parties agree on schedule changes, contract terms can be modified without penalty fees. If no agreement is reached and the contract is canceled, penalty fees are reduced by 50% compared to normal times. For travel, penalty fees are reduced by 50% compared to normal times upon contract cancellation.

Dining Services: 40% Exemption and 20% Penalty Fee Reduction

[Image source=Yonhap News]

Among dining services, the 'banquet facility operation business' is considered a multi-use facility sector, so exemption (40%) and penalty fee reduction (20%) standards were established similarly to the wedding industry. These standards are not applied to dining businesses other than banquet facility operations.

In cases of exemption, contracts can be canceled without penalty fees if contract fulfillment becomes impossible due to ▲administrative orders such as facility closures or suspension of operations at banquet facilities or regions ▲declaration of special disaster areas.

For reductions, if contract fulfillment is difficult due to ▲administrative orders such as gathering restrictions or operational limitations at banquet facilities ▲recommendations of quarantine rules following the issuance of a severe-level infectious disease alert, contract terms can be changed without penalty fees or penalty fees can be reduced.

If both parties agree on postponing event dates or adjusting minimum guaranteed attendance, contract terms can be changed without penalty fees. If no agreement is reached regarding contract changes, the contract can be canceled. In this case, penalty fees may be reduced depending on the risk of infectious disease and the level of government measures.

When administrative orders such as gathering restrictions or facility operation limitations make contract fulfillment significantly difficult (social distancing level 2), penalty fees are reduced by 40%.

When a severe infectious disease crisis alert is issued and quarantine rule recommendations make contract fulfillment difficult (social distancing level 1), penalty fees are reduced by 20%.

Shin Dong-yeol, head of the Consumer Policy Division at the Fair Trade Commission, said, "Through this revision, we expect that disputes over penalty fees between consumers and businesses caused by large-scale infectious diseases will be resolved promptly." He added, "The Fair Trade Commission plans to finalize and implement the revision after fully gathering opinions from stakeholders and related ministries during the administrative notice period and going through the commission's resolution process."

This content was produced with the assistance of AI translation services.