Hello, this is Attorney Park Jong-han from the Cheongchul Law Firm.

In the case of a construction contract, it is generally understood that payment for the completed object is made simultaneously with its delivery, according to civil law. On the other hand, a mandate contract is not aimed at completing a task but rather at performing a service.

Even if a contract is established under the name of a service contract, the obligations of the service provider vary depending on whether the substance is a construction contract or a mandate contract. Generally, in the case of construction contracts or supply contracts for manufactured goods, the nature of a contract for work applies. Therefore, it is necessary to examine how the fulfillment by the contractor is recognized in the context of a construction contract.

[Question]

Criteria for determining the completion of a construction contract

[Answer]

Construction refers to an agreement where one party promises to complete a task and the other party agrees to pay for the results of that task (Civil Code Article 664), and mandate is a contract established when one party entrusts the other with the execution of a task and the other party accepts it (Civil Code Article 680).

To claim that a construction contract has been established, there must be an agreement on standards and methods that can be specifically identified in the future, even if there is no specific agreement on the content of the task to be completed by the contractor and the compensation to be paid by the client (refer to the Seoul High Court decision 2024. 11. 20, case number 2023Na2061043).

In such a construction contract, the contractor's obligation to complete the work is acknowledged. If the essential structural parts of the object are constructed as agreed and possess performance generally required by social norms and the final scheduled work is completed, it should be considered that the work is complete. Once the object is complete, it is consistent with the intention of the parties and the purpose of the law to process defects of the object according to civil law provisions on defect liability. Whether the final scheduled work was completed in individual cases is objectively judged in light of the specific content of the contract and the principle of good faith without being influenced by the parties' claims (refer to the Supreme Court decision 2019. 9. 10, case numbers 2017Da272486, 272493).

In a construction contract, the burden of proof regarding the completion of the work lies with the contractor who claims payment for the results of the work. To claim that the work has been completed in a supply contract, it is insufficient to simply state that the final scheduled work has been completed; the essential structural parts of the object must be constructed as agreed and possess performance generally required by social norms. Therefore, the contractor claiming payment for the supply of the object must not only assert that the final scheduled work has been completed as specified in the contract but also that the essential structural parts of the object have been constructed as agreed and possess performance generally required by social norms (refer to the Supreme Court decision 2006. 10. 13, case number 2004Da21862).

As we have briefly examined the criteria for determining completion of a construction contract, it is important to note that disputes related to national contracts and public procurement involve very complex laws and frequent amendments. Knowledge and experience in this area are necessary. It is also essential to be well-informed about the interpretive rulings and decisions of administrative agencies, not just court judgments. Therefore, we strongly recommend you seek assistance from Attorney Park Jong-han, who possesses expertise in national contract laws and has experience in resolving various national contract and procurement disputes.

The Cheongchul Law Firm is composed solely of attorneys from the major law firms in Korea such as Kim & Chang, Bae, Kim & Lee, and Yulchon, along with in-house counsel from leading corporations. A single attorney does not handle a case alone; instead, specialized attorneys in the relevant fields form teams to provide comprehensive solutions that go beyond just addressing specific issues, ultimately focusing on achieving what the client desires. If you need assistance in achieving your goals, please do not hesitate to contact Cheongchul.