The Korea Fair Trade Commission (KFTC) announced on August 5 that it has revised the standard subcontracting contract for the construction industry to mandate payment guarantees from primary contractors, even when direct payment agreements are made at construction sites.
With the recent amendments to the subcontracting law, if a client agrees to pay a subcontractor directly instead of through the primary contractor, the primary contractor is still required to provide a payment guarantee. This revision aims to ensure that the legal changes are effectively implemented on-site and to enhance the protection of subcontractors' payments.
The revised standard direct payment agreement specifies that if the client fails to fulfill their direct payment obligations, the primary contractor will bear the ultimate responsibility for any unpaid subcontractor payments. This measure is expected to preemptively address potential disputes related to unpaid guarantees and to further strengthen the protection of subcontractors through the payment guarantee system.
The KFTC plans to publish the revised standard subcontracting contract on its website and encourage its active dissemination and use in construction sites through relevant associations and organizations.
* This article has been translated by AI.
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