Legal Frameworks In South Korea For Business Transactions

Legal Concepts

Applicability in South Korea

Legal System

In South Korea, there are two key sources of law which apply to the country which include primary and secondary sources. In the primary sources of law, treaties, rules, legislation, and regulations are included. The secondary sources include cases, journals, law reviews and archives. In South Korea, the ruling or precedent of the court is not considered as a law. However, these rulings carry strong values under the Supreme Court. In South Korea, there are six basic codes in its legal system which includes criminal code, commercial code, civil code, code of criminal procedure, code of civil procedure and constitution (LOC, 2018).

Other than these codes, there are various other written laws in South Korea as well. These laws include rules made by Supreme Court, directions, rules, notices of government ministers, enforcement or Presidential decrees, the National Assembly passes statutes, treaties under article 6 (1) of the constitution and ministerial ordinances (Latestlaws, 2018). Although these are not considered as law, however, they govern the functions of public servants.

Intellectual Property

 The Korean Copyright Act 1957 is the legislation which provides provisions regarding copyright protection. This act was introduced in the Berne Convention which was happened for the Protection of Literary and Artistic Work (WIPO, 2018). Moreover, this act was amended by the government of South Korea in 2011. The reason for amendment was preparing it as per the terms of the Free Trade Agreement which is formed between European Union and South Korea.

Organisations did not have to get their copyright registered in South Korea, and their trademarks are protected by the Trademark Act. The parties have to register these in the Korean Intellectual Property Office. In the case of patents, the Utility Model Act and the Patent Act provides provisions which are used by the Korean Intellectual Property Office for their protection (Yoon, 2015). Parties can get a patent for both products and methods; however, protection is available for products by the Utility Model Act.

Sale of Goods

The Sale of Goods provides the provisions regarding imposition of sales tax rates for customers in South Korea. This tax is imposed on the services which are purchased by customers. Currently, the tax rate which is imposed on services of customers is 10 percent (Trading Economics, 2018). In South Korea, various registered commissioned agents are appointed as registered trading company which perform the work of establish branch sales offices and hiring staff members.

Moreover, the provision of the Commercial Act 2010 applies to the guidelines given under the Sale of Goods. Under this legislation, five classifications are made on which the tax is imposed which include maritime commerce, general provisions, insurance, companies, and commercial activities. The commercial activities are governed under Part II of this act. In this part, provisions regarding sales of movable properties are given along with agency and advertisement activities (Lee, 2017). Thus, it is a key legal framework which provides key provisions regarding implementation of tax on services consumed by customers.

Law of Torts

The Civil Code provides key provisions which govern the law of torts in South Korea. Article 750 of the act defines torts as an unlawful act of a person which resulted in causing an injury or loss to another person, and such damages are a result of negligence or willful conduct (Hyeon, 2011). Liability is imposed on the party to compensate the aggrieved party for the loss suffered by them. The definition and general provisions are included in Part I of the act, and Part III provides key provisions which cover claims regarding contracts. Under Part III, provisions regarding definition of damages caused due to torts are given.

As per this act, the parties who suffered a loss due to torts can make a claim within a period of three year when they become aware regarding the tortious act or within ten years since the act has been conducted. Under the claim for damages suffered due to torts, different claims are included which include loss of wages, direct or active loss, physical or psychological pain, indirect or passive loss and others (IPFS, 2018). The parties have to make a separate claim for these issues, and they have to file them separately as well. In South Korea, the law of torts is considered as a broad concept than compared to the crime itself. For example, adultery is considered as a tortious act in South Korea, and it is not considered a crime in the country.

Contract Law

Contracts are referred to legally binding agreements which are a key part of the business world. In case of South Korea, contracts are considered as significant documents because they denote beginning and end of negotiations between business organisations. In South Korea, contracts are considered as agreements of gentlemen, and they require more negotiations. Various laws govern the contracts in South Korea, and these laws are applied based on the type of contracts (Lawlec, 2018). Various legal implications are imposed on those contracts which govern business relationships in South Korea. Contractual parties have the right to make a claim under a contract through Part III of the Civil Code. There are certain elements which must be present in order to form a valid contract between parties. These elements include offer, acceptance, consideration, intention of parties, and competence of parties.

Consent is not considered as valid in case elements such as undue influence, deception, mistake, incapacity, duress, absence of intent and sham transactions. The performance factors of a contract include late performance, incomplete performance, set off, variation, repudiation, satisfaction, and violation of the terms of the contract which are considered as material (Krishna, 2018). In case the contractual terms are not fulfilled by the parties, then various remedies are available for aggrieved parties which include damages, specific performance, rescission, discharge through frustration, incapability to performance, and injunction.  

Agency and Employment Law

 In South Korea, a separate law is not enacted by the government for commercial agency agreements; however, these agreements are governed under the provisions given by the Korean Commercial Code. Under this code, the definition of a commercial agent is given. As per the agent, it is referred to agent is referred to a party who perform the business transactions between customers and their principal and who is independent under the eyes of the law from the principal (Kim & Bae, 2017). For performing these activities, commission is paid to the agent. In case the commercial agents did not have expressed authority from their principal then they are restricted from entering into any transactions which are performed by the principal.

Moreover, the profits made in the transaction must be transferred by the agent to the principal. As per Article 93 of the Labour Standards Act, an employer who has hired a minimum of ten employees has to comply with employment rules in a uniform manner. These rules govern the relationship between the employer and the employee. Moreover, the act also provides provisions regarding minimum terms and conditions which are necessary to be followed in employment (Collins, 2017). As per this act, the contract for employment must be written in which details regarding the employment which includes salary, working hours, job description, holiday policies and other are included.