Fair Trade Commission: "Myeongga Togeon, Cancellation of Consignment Due to Duplicate Contracts is Illegal... Correction Order Issued"

Termination of Contract with Subcontractor Without Fault Violates Subcontracting Act
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[Sejong=Asia Economy Reporter Joo Sang-don] The Fair Trade Commission announced on the 6th that it has decided to issue a corrective order against Myeongga Togeon Co., Ltd. for unilaterally terminating part of the subcontracted interior work (tile work) while entrusting interior construction to a subcontractor.

According to the Fair Trade Commission, around August 2018, Myeongga Togeon entrusted a subcontractor with "interior construction inside units of a newly built officetel in Hwagok-dong, Gangseo-gu." However, the following month, Myeongga Togeon sent a document to the subcontractor stating that "since there was a double contract with another company, the contract with your company, which was signed later, will be canceled (priority given to the earlier contracted company)," thereby terminating the subcontract for the tile work within the interior construction.

A Fair Trade Commission official explained, "Myeongga Togeon did not engage in sufficient consultation with the subcontractor or provide proper compensation when notifying the termination of the subcontract. Such actions by Myeongga Togeon constitute an unfair cancellation of entrustment prohibited under the Subcontracting Act, as there was no reason to hold the subcontractor responsible, yet the entrustment was arbitrarily canceled without adequate consultation or compensation for losses."

Accordingly, the Fair Trade Commission decided to issue a recurrence prevention order to Myeongga Togeon to prevent repetition of the same or similar acts in the future.

The Fair Trade Commission official added, "This measure is significant in clarifying that circumstances such as double contracting with another company do not constitute grounds to hold the subcontractor responsible, and that unilaterally terminating a subcontract for such reasons violates the Subcontracting Act. Moving forward, the Fair Trade Commission will continue to monitor unfair subcontracting practices such as unjust entrustment cancellations and impose strict sanctions on violating businesses."

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