Fair Trade Commission "Mijin General Construction, Unfair Special Clauses and Arbitrary Cancellation of Subcontract Contracts... Correction Order and Fine"

[Sejong=Asia Economy Reporter Joo Sang-don] The Fair Trade Commission announced on the 17th that it has decided to issue a corrective order and impose a fine of 225 million KRW on Mijin General Construction for setting unfair special clauses and arbitrarily canceling subcontracting contracts while entrusting civil engineering work to subcontractors.

According to the Fair Trade Commission, Mijin General Construction set unfair contract conditions in subcontract agreements and special conditions when entrusting the above construction work to subcontractors from April 7, 2018, to July 30, 2019. Specifically, ▲ design changes were applied only if the contract amount changed by more than 3% ▲ subcontractors bore full responsibility for safety management and industrial accidents ▲ even if there were fluctuations in prices or quantities after signing the subcontract, the contract amount was changed only if the change exceeded 3% of the contract amount.

Such actions by Mijin General Construction constitute unfair special clause setting, as they restricted the interests of subcontractors or shifted obligations imposed on the original contractor onto subcontractors.

Additionally, after entrusting the construction work to subcontractors on April 7, 2018, Mijin General Construction entered the subcontract contract termination date as May 24, 2018, on the Subcontract Keeper website. The next day, it sent a certified letter stating that it could not agree to the subcontractor’s contract termination request and urged the resumption of construction.

Subsequently, on June 7 of the same year, Mijin General Construction sent a certified letter terminating the subcontract contract, citing reasons such as the subcontractor’s submission of a construction abandonment letter, failure to conduct site surveying and civil engineering work, and failure to submit a construction plan, thereby canceling the entrustment.

The Fair Trade Commission judged that Mijin General Construction’s actions constituted unfair entrustment cancellation, as it arbitrarily canceled the entrustment without sufficient consultation or prior notice procedures for contract termination, despite there being no grounds to hold the subcontractor responsible.

A Fair Trade Commission official stated, "We expect this measure to contribute to improving the practice in the construction industry of setting unfair special clauses and canceling entrustments without prior consultation or notice procedures, even when subcontractors are not at fault. Going forward, we will continue to monitor unfair subcontracting trade practices such as original contractors unfairly shifting costs like industrial accident expenses and complaint handling fees to subcontractors, as well as unfair entrustment cancellations, and impose strict sanctions on violators."

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