Fair Trade Commission Imposes Fine on Heunghwa for Unfair Contract Terms with Supply Contractors

On the 6th, the Fair Trade Commission imposed a fine of 32 million KRW and a corrective order on Heunghwa for setting unfair special terms for subcontractors without issuing written documents.

Specifically, around July 2019, the company entrusted the "Samsung Electronics Pyeongtaek Material Building Extension Electrical Work" to a subcontractor and set unfair special terms excluding the settlement of additional costs arising from extra work not included in the drawings, unexpected situations, and urgent work.

[Image source=Yonhap News]

Additionally, from July 2019 to August 2020, the company instructed the same subcontractor to carry out a total of 10 additional or changed works but did not issue written subcontract contracts detailing the work content, duration, and payment before the start of the construction.

In this regard, when the subcontractor who completed the work around May 2020 requested payment, Heunghwa refused to pay the construction fee, citing a lack of settlement supporting documents despite being responsible for not issuing written documents containing the unit price and quantity necessary for settlement, and based on the special terms excluding the settlement of additional construction costs. Accordingly, the Fair Trade Commission imposed a corrective order and a fine of 32 million KRW for the failure to issue written documents to establish fair subcontracting transaction order and prevent similar or identical legal violations in the future, and also issued a corrective order for the act of setting unfair special terms.

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