"Construction Costs Cannot Be Increased Despite Rising Prices"… Fair Trade Commission Issues Corrective Order to Shintae Yang Construction for Unfair Contract Terms

Shin Taeyang Construction, Unfair Contract Terms Set and Written Documents Not Issued

[Sejong=Asia Economy Reporter Joo Sang-don] Shintaeyang Construction, which set an unfair special clause stating 'No increase in construction costs due to inflation after the contract under any circumstances,' has been sanctioned by the Fair Trade Commission.

The Fair Trade Commission announced on the 30th that it issued a corrective order regarding Shintaeyang Construction's unfair special clause and warned the company for instructing additional work without issuing written documents.

According to the Fair Trade Commission, in December 2016, Shintaeyang Construction entrusted a subcontractor with the 'aluminum window and other metal works for the apartment complex in Singwan-dong, Gongju,' during which it set unfair special clauses and failed to issue written documents.

Shintaeyang Construction established an unfair special clause under the name of a 'confirmation letter,' separate from the subcontract agreement, stating that 'no increase in construction costs will be requested even if prices rise.' This violates the Subcontracting Act by restricting the subcontractor's right to request payment adjustments from the primary contractor due to raw material price fluctuations or by transferring the burden imposed on the primary contractor to the subcontractor.

Additionally, Shintaeyang Construction instructed 14 instances of additional work (worth 254 million KRW) beyond the subcontracted work and failed to issue written documents reflecting these changes.

Accordingly, the Fair Trade Commission issued a corrective order for Shintaeyang Construction's unfair special clause and a warning for the failure to issue written documents.

A Fair Trade Commission official stated, "This action is significant as it sanctions the setting of unfair special clauses that restrict subcontractors' rights to request payment adjustments from primary contractors due to raw material price fluctuations," adding, "We plan to continuously monitor violations such as primary contractors denying subcontractors' requests to reflect raw material price increases or refusing to negotiate payment adjustments."

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