Fair Trade Commission: "Le Garden unilaterally canceled subcontract contracts and failed to provide written notice for additional work... Correction order and surcharge imposed"

[Asia Economy Reporter Joo Sang-don] The Fair Trade Commission announced on the 24th that it has decided to issue a corrective order and impose a fine of 360 million KRW on Le Garden for unilaterally canceling a construction subcontract after commissioning mechanical equipment work to a subcontractor and failing to issue a contract for additional work despite its occurrence.

According to the Fair Trade Commission, Le Garden engaged in unfair subcontracting practices after commissioning mechanical equipment work to a subcontractor during the construction of Le Garden 8th phase in Hannam-dong, Yongsan-gu, Seoul, around June 2018.

First, around March 2019, Le Garden unilaterally instructed the subcontractor to withdraw from the construction site despite no particular fault on the subcontractor’s part. As a result, the subcontractor was forced to leave the site against their will, and Le Garden did not provide proper compensation related to the cancellation of the subcontract.

Such actions by Le Garden constitute an unfair cancellation of subcontracting prohibited under the Subcontracting Act, as the cancellation was made arbitrarily without sufficient consultation despite no grounds to blame the subcontractor.

Le Garden also failed to issue written documents regarding additional work. Around March 2019, although there were additional and modified works such as changing the angle of the kitchen exhaust duct, Le Garden did not provide the subcontractor with written documents reflecting these changes.

The Subcontracting Act requires the primary contractor to issue relevant written documents to the subcontractor before the subcontractor begins additional or modified work. This clarifies the contract terms between parties and serves as basic evidence for fact verification in case of future disputes, preventing disadvantages to the subcontractor caused by unclear subcontracting details and preemptively avoiding post-dispute conflicts between parties.

A Fair Trade Commission official stated, "This measure is expected to contribute to improving the construction industry’s wrongful practices of unilaterally canceling subcontract contracts or failing to issue written documents for additional work despite no fault of the subcontractor." The official added, "The Fair Trade Commission will continue to monitor unfair subcontracting practices such as unjust cancellation of subcontracting and impose strict sanctions on violating businesses."

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