Laws Applicable to Business in South Korea

The assignment discusses the various laws that need to be followed while conducting business in South Korea. It covers topics such as agency law, contract law, intellectual property law, employment law, and tort law. The document also sheds light on the different sources of law applicable in South Korea.

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MGMT6018
Business Law & International Contexts
13-Mar-18
(Student Details: )

MGMT6018
Introduction
Located in the southern part of Korean Peninsula, South Korea is a sovereign state in the
East Asia (Kim, 2012). The nation encourages the foreigners to invest in the economy of South
Korea (SK), in both direct and indirect manner. The foreign investment in SK is promoted
through the Foreign Investment Promotion Act, 1988. There are a number of incentives given to
the investors for making investments in SK. These take the form of tax relief, financial support,
supporting the industrial locations, providing cash grants, and certain other incentives.
In SK, there are two types of business organizations. These include the private
businesses and the corporations. There are further four subtypes of corporations. These are the
limited liability corporation, i.e., Yuhan Hoesa; the joint stock corporation, i.e., Chusik Hoesa;
the limited liability partnership, i.e., Hapja Hoesa; and the general partnership, i.e., Hapmyeong
Hoesa (Angloinfo, 2018a). This discussion focuses on the different legislations, based on
different legal concept, which apply on the businesses carried on in SK.
Legal Concepts Applicability in SK
Legal System The legal system of SK is based on two key sources of law. These
include the primary sources and the secondary sources. The primary
sources of law cover the legislation, rules, regulations and treaties. The
secondary source of law covers the law reviews, archives, cases and
journals (Latest Laws, 2018). The precedents or the ruling of the court
are not given the status of being a law. However, in practice, these
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precedents carry a strong value with them, specifically under the
Supreme Court of Korea. There are six basic codes in SK and these
include the constitution, code of civil procedure, civil code, and code of
criminal procedure, criminal code, and commercial code (Chan & Yo,
2017).
The other type of written law covers the National Assembly
passes statutes, the Presidential or Enforcement decrees, treaties under
Article 6(1) of the constitution, rules made by Supreme Court of Korea,
the ministerial ordinances which supplement the general statutes, and
the directives, rules, and notices which the government ministers or
officers propagate, even when these are not law technically, yet are
deemed responsible for regulation of activities of public servants, who
are the issuing parties of such directives, rules or notices (Chan & Yo,
2017).
Contract In businesses which are conducted in any part of the world, the
contracts are deemed as important document. Likewise, in SK, the
business contracts are deemed as important documents and they
denote the initiation point, in place of being the end of negotiations. SK
considers the contracts as being the agreement of gentlemen, which
requires more negotiations, there are a range of laws which apply on
the contracts created in SK and the applicability of these law depend on
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the contents of such contract. There is a higher value given to the
business relations in SK, in place of the legal implications which such
contract has (Santander, 2018).
Through Part III of the Civil Code, the claims can be made under
the contract (Statues of the Republic of Korea, 2013). In SK, the contract
law provides that the creation of any contract involves different aspects.
These aspects cover the acceptance, offer, invitation; defects of consent
including duress, incapacity, undue influence, mistake, illegality, absence
of intent to create legal obligation, sham transactions and deception;
performance factors including set-off, novatio/ variation, deposit in
court, accord and satisfaction, late performance, repudiation,
incomplete performance, and breaches which include material
contravention; remedies covering restitutionary awards, damages and
termination; and the contracts being discharged through frustration as a
result of the incident, risk and the impossibility or incapability of
performing the contract (Lawlec, 2018).
Sale of Goods In SK, the sale of goods comes with sales tax rates for consumers.
These tax rates are based on the services or the goods being purchased.
Presently, the rate at which the specified services and goods are taxed in
the nation is 10% (Trading Economics, 2018). The registered
commissioned agents in the nation are appointed in the name of the
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registered trading company. These agents even undertake the work of
establishing the branch sales office, which have the staff of the nation
(Global Trade, 2010).
There is the applicability of Commercial Act, 2010 on the sale of
goods. There are five different classifications under this legislation.
These include the commercial activities, insurance, maritime commerce,
companies and general provisions. These parts are not only defined, but
the provisions related to these parts are also detailed. The act also
covers addendums in the end. Part II of this act, which covers the
commercial activities, provides the different aspects which revolve
around the sale of moveable properties, and also on the activities like
advertisements, and agency, amongst the many others activities as have
been provided (Ministry of Legislation, 2018).
Agency and
Employment Law
There is a lack of separate rule in South Korea for the commercial
agency agreements. However, the provisions which apply on the
relationship present between the commercial agents and principal is
provided through the Korean Commercial Code. This code also gives the
definition of the commercial agent. It provides that the commercial
agents are independent under the eyes of law from their principal, who
undertakes the arrangements for direct business transaction between
the consumer and their principle. And for doing so, the commercial
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agent is paid the commission. The commercial agents are restricted
from undertaking transactions, for a third party or even on their own
account, which fall in the category of business being performed by the
principal, without having the express permission from principal. Where
such an activity is undertaken, the agent is required to transfer to the
principal the profits made by them, by undertaking such acts (Fox
Williams LLP, 2016).
Article 93 of the Labour Standards Act of Korea provides that any
employer, who employs a minimum of ten employees, is required to
arrange and preserve rules of employment which control the
employment rules for the employees in a uniform manner. Further, such
rules become an aspect of the relationship present between the
employer and their employees (Kim & Bae, 2017). This act also provides
for the minimum term and conditions for any employment. It is crucial
that the employment contract is created in writing. Furthermore, such
employment contract has to cover the employment details, which
covers the work location, job description, salary, holiday entitlement,
working hours, and the details of the company and employee, amongst
the other things (Angloinfo, 2018b).
Intellectual
Property
In order to carry on business in the nation, there are a number of
factors which have to be carefully taken care of. Amongst these factors
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is the protection of intellectual property. The laws of SK regarding
copyright have their foundation in the Korean Copyright Act, 1957. This
act has been created based on Berne convention for Protection of
Literary and Artistic Works. In 2011, this legislation had been amended
for preparing for the Free Trade Agreement between Korea and
European Union. In SK, there is no requirement of getting the copyright
registered. The trademarks are protected through the Trademark Act
and are registered and regulated by Korean Intellectual Property Office.
In order to protect and govern the patents in SK, the Korean Intellectual
Property Office makes use of the Patent Act and the Utility Model Act.
The similarity between the two result in utility model being provided
with the same protection as the patents. The products and the methods
can be patented. However, only the products are granted protection
through the utility model right (Youngsun, 2015).
Laws of Torts In SK, the tort law is regulated by Civil Code. Under Article 750 of
this code, a tort is defined as an unlawful act of an individual resulting in
loss, or inflicting injury, to another person, which was undertaken in
negligent or wilful manner. Such individual is required to compensate
the injured parties. Part I of this code covers general provisions, which
provide the definitions. Under Part III, the claims related to contract are
covered, along with the same for tort. This part, particularly in context
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of torts, covers the definition of damages and tort, along with the other
definitions (Statues of the Republic of Korea, 2013).
In order to make a claim under tort law, there is limitation period
of three years, from the time where the individual became aware of
tortious act, or for ten years from the time such act was undertaken.
Three different claims are covered under tort and these cover the direct
or active loss, e.g. hospital bills; indirect or passive loss, e.g. lost wages;
and psychological pain or suffering, e.g. mental pain resulting from bad
experience. As all these claims are deemed as separate claim, the claim
for each of these can be filed separately. Tort is considered as a concept
in SK, which is broader than crime itself. For instance, even though
adultery is a tortious act in SK, it is not deemed as a crime in the nation
(Kang, 2018).
Conclusion
Thus, in the previous segments, the different laws applicable in SK, which have to be
carefully followed while conducting business in the nation, have been briefed upon. These
included the discussion on tort law, agency law, contract law, intellectual property law, and the
employment law. This discussion also shed light on the different sources of law. Thus, it is
important to consider all these laws while undertaking business in SK, for avoiding a possible
breach of law.
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References
Angloinfo. (2018a). Starting a Business in South Korea. Retrieved from:
https://www.angloinfo.com/how-to/south-korea/working/starting-a-business
Angloinfo. (2018b). Employment Contracts in South Korea. Retrieved from:
https://www.angloinfo.com/how-to/south-korea/working/employment/employment-
contracts
Chan, H.C., & Yo, S.M.Y. (2017). Psycho-Criminological Perspective of Criminal Justice in Asia:
Research and Practices in Hong Kong, Singapore, and Beyond. Oxon: Routledge.
Fox Williams LLP. (2016). Agency Law in Korea. Retrieved from:
http://www.agentlaw.co.uk/site/global/south_korea.html
Global Trade. (2010) Selling in South Korea. Retrieved from:
http://www.globaltrade.net/f/business/text/South-Korea/Selling-Selling-in-South-
Korea.html
Kang, J. (2018). The Statute of Limitations for Tort Claims (under Korean Law). Retrieved from:
https://klawguru.com/2017/01/02/the-statute-of-limitations-for-tort-claims-under-
korean-law/
Kim, D. O., & Bae, J. (2017). Employment relations and HRM in South Korea. Oxon: Routledge.
Kim, J. (2012). A History of Korea: From "Land of the Morning Calm" to States in Conflict.
Indiana: Indiana University Press.
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Latest Laws. (2018). Legal System in South Korea. Retrieved from:
http://www.latestlaws.in/law-worldwide/legal-system-in-south-korea/
Lawlec. (2018). Korean Contract Law I. Retrieved from: http://lawlec.korea.ac.kr/?page_id=224
Ministry of Legislation. (2018). Commercial Act (Republic of Korea). Retrieved from:
http://unpan1.un.org/intradoc/groups/public/documents/apcity/unpan011485.pdf
Santander. (2018). South Korea: Legal Environment. Retrieved from:
https://en.portal.santandertrade.com/establish-overseas/south-korea/legal-
environment
Statues of the Republic of Korea. (2013). Civil Act. Retrieved from:
https://elaw.klri.re.kr/eng_service/lawView.do?hseq=29453&lang=ENG
Trading Economics. (2018). South Korea Sales Tax Rate | VAT. Retrieved from:
https://tradingeconomics.com/south-korea/sales-tax-rate
Youngsun, C. (2015). Intellectual Property Law in South Korea. The Netherlands: Kluwer Law
International.
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