Hello, I am Attorney Baek Gi-hyung from the law firm Cheongchul.

This post is the fourth topic on 'Legal Relations Surrounding Name Leasing in the Construction Industry', focusing on 'The Effectiveness of Name Leasing Contracts and the Validity of Rental Fee Agreements and Introduction Fee Agreements related to it.

Typically, since name leasing contracts involve the risk of administrative sanctions and criminal penalties, it is common for those who take the risk to lease their name in the construction industry to receive a promised compensation at a certain level. Similarly, because illegal name leasing in the construction industry cannot be easily traded in the market, it sometimes happens that those who mediate or introduce parties involved in name leasing receive an introduction fee.

However, due to the nature of the construction industry, which is a 'contract award industry', the name leasing fee or introduction fee is mostly determined to be paid as part of the construction payment received after securing the project, and it is rare for the rental fee or commission to be paid before actually receiving the construction payment.

But if the name borrower later does not pay the rental fee or commission, can this be claimed through litigation? The answer depends on whether the rental fee payment agreement and introduction fee payment agreement that accompany the name leasing contract in the construction industry are valid.

[Question ①]

Is the name leasing contract in the construction industry itself valid?

[Answer ①]

The name leasing contract where a construction business licensed contractor leases the name to someone without a construction business license is invalid (Supreme Court Decision 86DaKa2452, December 27, 1988).

[Question ②]

Is the agreement to pay a name leasing fee in return for name leasing valid?

[Answer ②]

Since the name leasing contract in the construction industry is invalid, the agreement for the payment of name leasing fees as compensation for the name leasing is also invalid (Supreme Court Decision 86DaKa2452, December 27, 1988).

[Question ③]

Is the agreement to pay an introduction fee for introducing name leasing valid?

[Answer ③]

Since the name leasing contract in the construction industry is invalid, the agreement for the payment of the introduction fee for introducing name leasing is also invalid (Supreme Court Decision 86DaKa2452, December 27, 1988).

In conclusion, 'It is not possible to claim the payment of rental fees or introduction fees from the name borrower.'

If a malicious name borrower receives the name lease and also receives the construction payment, even if they evade paying the rental fee or introduction fee, there is no legal way for the name lender or intermediary to claim these payments.

This seems to be because, as a policy to block name leasing contracts, it is necessary to eliminate the possibility of financial gains through name leasing itself, not just to deny the effect of name leasing.

Attorney Baek Gi-hyung has extensive experience and skills in providing legal advice on the entire process of state contracts and construction projects, including large-scale construction projects, national defense facility projects, and SOC construction projects, as he worked in the construction/real estate team of the Defense Facilities Agency and major law firms. If you need assistance related to government projects, private construction projects, public procurement contracts, state property, local property, or public property, please feel free to contact us.

The law firm Cheongchul consists only of attorneys from Korea's top four large law firms: Kim & Chang, Gwangjang, Taepyungyang, and Sejong, and a single attorney is not assigned to a case; instead, specialized attorneys in the relevant fields form a team to respond. Cheongchul provides comprehensive solutions beyond just resolving specific issues, focusing on ultimately achieving what the client desires. If you need assistance in achieving your goals, do not hesitate to contact Cheongchul.