(1) Where a prime contractor entrusts a subcontractor with manufacturing, etc., he or she shall pay the subcontract price by not later than the earliest date for payment fixed within the extent of 60 days from the date of receipt of subject matter, etc. (in cases of entrustment with construction, it refers to the date of taking over the subject matter, etc.; in cases of entrustment with service, the date the subcontractor has completed the performance of the service entrusted; and if the prime contractor and subcontractor agree to issue tax invoices on one or more occasions a month on certain days because of frequent delivery of goods, etc., it refers to such days; hereinafter the same shall apply); provided, this shall not apply to any of the following cases:
1. Where it is deemed that the prime contractor and subcontractor have fixed the date for payment on equal terms;
2. Where the date for payment is deemed reasonable in light of the characteristics of the business and economic conditions.
(2) Where the date for payment of subcontract price is not fixed, the date of receipt of subject matter, etc. shall be deemed the date for payment of the subcontract price, and where the date for payment is fixed past 60 days from the date of receipt of the subject matter, etc. (excluding cases falling under the proviso of paragraph (1)), the 60th day from the date of receipt of the subject matter, etc. shall be deemed the date for payment of the subcontract price, respectively.
(3) Where a prime contractor has entrusted a subcontractor with manufacturing, etc., he or she shall pay the subcontractor the subcontract price within 15 days from the date the work progress payment or amount completed, etc. was received (the date for payment, where the date for payment of the subcontract price arrives before then) when the prime contractor has received work progress payment, etc. following the completion of manufacturing, repair, construction or service performance from the person placing an order, and he or she shall pay the subcontractor an amount corresponding to the portion of manufacturing, repair, construction or service performance that has been performed within 15 days from the date the work progress payment or money corresponding to the completed portion of work, etc. was received (the date for payment, where the date for payment of the subcontract price arrives before then) when the prime contractor has received the completed portion, etc. according to the progress of manufacturing, repair, construction or service performance from the person placing an order.
(4) When a prime contractor pays the subcontract price to a subcontractor, he or she shall not pay less than the proportion of cash which he or she received from the person placing an order in connection with the entrustment of the manufacturing, etc. concerned.
(5) Where a prime contractor pays the subcontract price by a bill, he or she shall not draw a bill, the period of payment of which exceeds the period of payment (issuance date to due date) of the bill that the prime contractor has received from the person placing an order in connection with the entrustment of the manufacturing, etc. concerned.
(6) Where a prime contractor pays the subcontract price by a bill, the bill shall be one which can be discounted at any financial institution established by law and the discount commission for the period from the date of delivery and to the due date of the bill shall be paid to the subcontractor on the day on which the bill is delivered; provided, where the bill is delivered within 60 days after the subject matter, etc. are received (referring to the date for payment where the date for payment is fixed under the proviso of paragraph (1), and to the date referred to in paragraph (3) where work progress payment or money corresponding to the completed portion of work, etc. are received from the person placing an order; hereafter in this Article, the same shall apply), the discount commission for the period from the date 60 days pass after the date when the subject matter, etc. are received to the due date of the bill shall be paid to the subcontractor within 60 days from the date the subject matter, etc. are received.
(7) Where a prime contractor pays the subcontract price by means of payment in place of a bill, he or she shall pay commission (including interest for loan; hereinafter the same shall apply) on the date for payment for the period from the date for payment (referring to the date of approval of card settlement in cases of exclusive-use card for business purchases, to the date of transmission of details of delivery, etc. of goods in cases of loan against of security of credit card sales claims, and to the date of settlement of purchase funds in cases of purchase loans; hereinafter the same shall apply) to the date of repayment of the subcontract price to the subcontractor; provided, where it is paid by means of payment in place of a bill within 60 days from the date of receipt of subject matter, etc., commission for the period from the day on which 60 days pass from the date of receipt of subject matter, etc. to the due date of the bill shall be paid to the subcontractor within 60 days from the date of receipt of subject matter, etc.
(8) Where a prime contractor pays the subcontract price after 60 days pass from the date of receipt of subject matter, etc., he or she shall pay interest calculated by the interest rate fixed within the limit of 40/100 per annum and publicly notified by the Fair Trade Commission for the days elapsed in consideration of economic circumstances, such as late-payment interest rates, etc. applied by banks under the Banking Act. <Amended on May 17, 2010>
(9) The discount rate applied in paragraph (6) shall be fixed within the limit of 40/100 per annum and publicly notified by the Fair Trade Commission in consideration of the discount rate for commercial bills applied by financial institutions established by law.
(10) The commission rate applied in accordance with paragraph (7) shall be the commission rate fixed under an arrangement on a settlement means alternative to a bill which a prime contractor concludes with a financial institution (including a credit card business entity under subparagraph 2-2 of Article 2 of the Specialized Credit Finance Business Act). <Amended on Jul. 24, 2015>
(11) The provisions of paragraphs (1) through (10) shall apply to a middle-standing enterprise under subparagraph 1 of Article 2 of the Special Act on the Promotion of Growth and the Strengthening of Competitiveness of Middle-Standing Enterprises, the annual sales of which is less than any of the amounts as prescribed by Presidential Decree (referring to three hundred billion won in cases of transacting with any company under subparagraph 1), where such middle-standing enterprise is entrusted with manufacturing, etc. by any of the following persons. In such cases, the person who entrusts the manufacturing, etc. shall be deemed a prime contractor when applying paragraphs (1) through (10), and Article 19, 20, 23 (2), 24-4 (1), 24-5 (6), 25 (1) and (3), 25-2, 25-3 (1), 25-5 (1), 26 (2), 30 (1), 33 and 35 (1), and the middle-standing enterprise entrusted with manufacturing, etc. shall be deemed a subcontractor when applying paragraphs (1) through (10), and Article 19, 21, 23 (2), 24-4 (1), 25-2, and 33: <Added on Jul. 24, 2015; Mar. 29, 2016; Jan. 16, 2018; Dec. 29, 2020>
1. A member company of a business group subject to limitations on cross shareholding under Article 31 (1) of the Monopoly Regulation and Fair Trade Act;
2. A business entity which is not a company under subparagraph 1 and the annual sales of which exceeds the amount prescribed by Presidential Decree.[This Article Wholly Amended on Apr. 1, 2009]