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Fair Transactions in Subcontracting Act — Article 16 (Adjustment of subcontract payment due to change in design)

하도급거래 공정화에 관한 법률 제16조

This English translation is based on the Korean text effective 2025-12-17. The Korean law has since been amended (current version effective 2026-10-02) — check the Korean original.

(1) Where a prime contractor falls under both of the following cases after entrusting manufacturing, etc., he or she shall increase subcontract price in accordance with the contents and rate of the increase in the contract value he or she has received from the person placing an order; provided, the prime contractor may decrease the subcontract price if the person placing an order has decreased the contract value, in accordance with the contents and rate of the decrease: <Amended on Jan. 25, 2010; Nov. 26, 2019>

1. Where the contract value is increased due to any change in design, timing for delivery, etc. of the subject matter, etc., or economic situation or other reasons;

2. Where additional costs are incurred in completing or finishing subject matter, etc. for the reasons referred to in subparagraph 1.

(2) Where subcontract price is increased or decreased pursuant to paragraph (1), the prime contractor shall notify the relevant subcontractor of the reasons for and details on such increase or decrease within 15 days from the date he or she receives an increase or decrease of the contract value from the person placing an order; provided, this shall not apply where the person placing an order directly notifies the relevant subcontractor of such reasons and details. <Added on Jan. 25, 2010>

(3) An increase or decrease in the contract value under paragraph (1) shall be made within 30 days after the person placing an order has increased or decreased such consideration. <Amended on Jan. 25, 2010>

(4) If additional subcontract price is paid after 15 days from the date the prime contractor receives additional money from the person placing an order in accordance with the increase in the contract value under paragraph (1), Article 13 (8) shall apply mutatis mutandis to the interest, and if additional subcontract price is paid with a bill or means of payment in place of a bill, Article 13 (6), (7), (9), and (10) shall apply mutatis mutandis to the bill discount commission, payment of commission, discount rate for bill and commission rate. In such cases, "60 days from the date such subject matter, etc. have been received" shall be deemed "15 days from the date the additional money has been received". <Amended on Jan. 25, 2010>[This Article Wholly Amended on Apr. 1, 2009]

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