Consideration and the Statute of Frauds Under Korean Contract Law
A contract, in Korea, is still binding on the parties, in most cases, even if the contract contains no consideration. Thus, a mere “gift” that contains no benefit to the giver may be an enforceable contract under Korean Law. However, in many international contacts (and even local contracts), it is best to still include the standard “consideration” clause, since enforcement of the contract could occur in another jurisdiction. For an article on the basics of Korean Contract Law please see: Korean Contract Law Basics.
While Korean courts shall not look to “consideration” it shall look to the situation leading to the execution of the contract and consider if the agreement was “voluntary” entered into by the parties. The fact that a Korean agreement contains no consideration may be a sign by a Korean court that a contract was not voluntarily entered into by the parties if other evidence exists, thus, it is best, as in Western jurisdictions, to carefully tailor all contracts in Korea to show a benefit and detriment to the parties and evidence that the contract was voluntarily entered into. For a list of the major business agreements in Korea see:
Korean Statute of Frauds
Korea has no Statute of Frauds. Thus, agreements between parties, in many cases, can be made in writing or orally. However, certain types of contracts must be in writing or the contracts are either void or voidable. For example, a writing is necessary in all Korean contracts in which the Korean government is a party (Article 11, Act on Contracts to Which the State is a Party); and under the Korean Installment Transactions Act and Korean Arbitration Act.
As you are likely aware, it is advisable in all but the most exceptional of cases to have an executed written agreement and have the agreement signed, sealed, and notarized. In many cases, it is advisable for the contract to be in the English and Korean languages if the agreement is between international parties.
For an article on “Material Breach” of contracts in Korea please see: Material Breach of Contracts in Korea: Primary Obligations vs. Secondary Obligations.
Sean Hayes is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw, and IPG Legal is consistently ranked Top Dispute Resolution Law for our litigation services.
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