Fair Trade Commission: "Korea GM's 'Termination Reasons for Sales Agency Contracts' Are Excessively Broad... Correction Recommended"

[Sejong=Asia Economy Reporter Joo Sang-don] The Fair Trade Commission has recommended that Korea GM amend the termination clauses in its automobile sales dealership contracts. The reason is that the termination clauses are excessively vague and broad, yet allow immediate contract termination without any prior notice or demand for correction, raising concerns about unfair contract termination.

On the 14th, the Fair Trade Commission announced that it had recommended Korea GM to amend the unfair terms in its dealership contracts.

Previously, Korea GM dealerships reported that Korea GM had issued termination notices and warnings based on unfair termination clauses in the automobile sales dealership contracts, putting the dealerships' business rights and livelihoods, which had been established over decades, at risk of being stripped away. In response, the Fair Trade Commission, after consulting the Advisory Committee on Terms Review, determined that the reported contract clauses violated the "Act on the Regulation of Terms and Conditions" and recommended Korea GM to make corrections.

The Fair Trade Commission judged that Korea GM's termination reasons were overly broad and lacked any prior notice procedures, making them unfair. A Fair Trade Commission official explained, "The phrase 'acts harmful to Korea GM's interests' in Korea GM's terms is difficult to predict what interests it refers to and could be interpreted to include even minor harms to Korea GM's interests. Also, the phrase 'if deemed inappropriate' is not considered a serious enough reason to immediately terminate the contract, and even if the appropriateness is not objectively clear, Korea GM can use its judgment of inappropriateness as grounds for termination." Furthermore, Korea GM did not establish any prior notice procedures such as demands for correction when termination reasons occurred, allowing immediate contract termination.

The Fair Trade Commission plans to complete consultations with Korea GM regarding the correction of the relevant contract clauses within 60 days after the recommendation.

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