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Fair Transactions in Subcontracting Act — Article 4 (Prohibition against fixing unreasonable subcontract payment)

하도급거래 공정화에 관한 법률 제4조

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) When a prime contractor entrusts a subcontractor with manufacturing, etc., he or she shall not fix an unreasonable consideration for a subcontract at a price lower than the consideration ordinarily paid for a subject matter identical with or similar to the subject matter of the subcontract (hereinafter referred to as "fixing unreasonable subcontract price") or compel the subcontractor to accept such subcontract. <Amended on May 28, 2013>

(2) Any of the following acts conducted by a prime contractor shall be deemed fixing unreasonable subcontract price: <Amended on May 28, 2013>

1. Fixing subcontract price by indiscriminately reducing the unit price without good cause;

2. Fixing subcontract price by deducting an amount after allotting unilaterally such amount under some pretext, such as a request for cooperation, etc.;

3. Fixing subcontract price by discriminating against a specific subcontractor without good cause;

4. Fixing subcontract price by causing a subcontractor to make an error regarding the terms and conditions of a transaction, such as order quantity, etc., or by deceiving a subcontractor in such a way as to show him or her the quotations of another business entity or false quotations to take advantage of it;

5. Fixing subcontract price unilaterally by a prime contractor at a low price;

6. Fixing subcontract price at a price lower than the total amount of direct construction expenses prescribed by Presidential Decree without good cause when a private subcontract is concluded;

7. Fixing subcontract price at a price lower than the lowest tender price without good cause in concluding a subcontract through competitive bidding;

8. Fixing subcontract price unfavorable to a subcontractor for a subcontract on continuing transactions on the pretext of an event for which no subcontractor shall be held liable, such as a prime contractor’s deficit in business or the fall of sale prices.[This Article Wholly Amended on Apr. 1, 2009]

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