Korean contract law binds on offer and acceptance alone, with no consideration requirement and no general writing requirement. What surprises foreign counterparties sits elsewhere: an offer you cannot withdraw, a court that can cut your liquidated damages clause however carefully you drafted it and voids any agreement not to ask, and three fair-trade statutes that override the text you signed. This is orientation for the commercial decision, not legal advice on your document.
Contract terms are where a Korea plan meets its first hard constraint, so read this alongside the guide to doing business in Korea for foreign companies. Every statute below was read on law.go.kr in September 2026, cited by article and by the version in force.
How Are Contracts Formed Under Korean Contract Law?
By offer and acceptance. The Civil Act (민법, Act No. 21454, in force 17 March 2026) covers formation at Articles 527 to 535, and no article in that chapter conditions enforceability on consideration. A promise supported by nothing on the other side binds, and the nominal consideration recital in your English-law template does no work in Korea.
One rule inverts common-law instinct. Article 527 states that an offer cannot be revoked, so a quotation with an acceptance period is locked for that period whatever your sales team later decides. The rule bites only on a real offer, definite enough that acceptance alone closes the deal. A price list or an open quotation is an invitation to treat and locks nothing, so mark quotations non-binding and give them a validity date.
The Commercial Act (상법, in force 10 September 2026) adds a trap inside a running relationship. Article 53 requires a merchant who receives an offer in its line of business from a regular counterparty to send acceptance or refusal without delay, and treats failure to do so as acceptance. Silence binds. Article 4 makes anyone trading in its own name a merchant and Article 46, subparagraph 1 makes the sale of goods as a business a commercial act, so Article 53 reaches a foreign supplier whenever Korean law governs the contract, and not otherwise.
Do You Need a Korean Seal, or Is a Signature Enough?
A signature is enough for validity. The Civil Act imposes no general form requirement on commercial contracts, and the exception proves the scope: Article 428-2, added 3 February 2015, makes a guarantee effective only in writing bearing the guarantor’s name and seal or signature, and denies effect to one expressed electronically.
Seals do evidential and registry work. An individual resident in Korea registers one under Article 3 of the Seal Imprint Certification Act (인감증명법, in force 3 December 2017). A foreign company has neither a filed Korean seal nor a seal certificate, so the Korean side will ask its signatory for a notarised signature and proof of corporate authority instead. Korea has been in the Hague Apostille Convention since 14 July 2007, so one apostille replaces consular legalisation. Article 3 of the Digital Signature Act (전자서명법, in force 20 October 2022) bars denying an electronic signature effect for being electronic.
The seal earns its place as evidence. A document closed with a seal and a current certificate is hard to disown in a Korean court, which is why Korean companies want one. Which seal a counterparty actually applies, and how the certificate is checked, sit in the guide to negotiating with Korean companies.
Which Law Governs, and Which Court Actually Hears It?
Your choice of governing law is respected. Article 45 of the Act on Private International Law (국제사법, wholly amended 4 January 2022, in force 5 July 2022) gives effect to an express or implied choice, permits splitting it across parts of the contract, and permits changing it later. Article 45(4) is the limit: where every element connects to one country, choosing another country’s law does not displace that country’s mandatory rules. Absent a choice, Article 46 applies the law most closely connected, presumed to be the seat of the party owing the characteristic performance.
Forum is where foreign templates overreach. Article 8 allows a jurisdiction agreement, requires writing (including electronic exchanges), presumes exclusivity, and at Article 8(5) requires a Korean court to dismiss a suit brought in breach of an exclusive foreign forum clause. Dismissal turns on your own first move: Article 8(5) exempts jurisdiction arising under Article 9, which it does the moment your side argues the merits without contesting international jurisdiction first. Make that objection Korean counsel’s opening filing.
That works only if the resulting judgment is worth having. A foreign judgment is recognised in Korea only on the four conditions in Article 217 of the Civil Procedure Act (민사소송법, in force 12 July 2025), including proper service and reciprocity. Recognition still leaves you outside Korean assets: Article 26 of the Civil Execution Act (민사집행법, in force 1 February 2026) makes you win a separate execution judgment first, and Article 27(1) bars that court from reviewing the merits, so you litigate twice to collect once.
Arbitration is the cleaner route into Korean assets, because Korea is a New York Convention party and Article 37 of the Arbitration Act (중재법, in force 1 October 2025) puts enforcement of an award on a court decision. Korea has been a party to the UN sale of goods convention since 1 March 2005 (UNCITRAL status table), so a cross-border sale runs under it by default. Your governing-law clause keeps it there: choosing Korean law or New York law selects the Convention, because it is part of the law of both. Exclude it by name or take it deliberately.
Which Language Version Controls?
Whichever one you say controls. Korean law leaves it to the parties, so an unstated hierarchy in a bilingual execution copy is a dispute waiting to be scheduled.
Procedure supplies the tiebreaker. Article 62 of the Court Organization Act (법원조직법, in force 12 March 2026) requires Korean in court, Article 277 of the Civil Procedure Act requires a translation to accompany any foreign-language document, and Article 37(3) of the Arbitration Act requires a Korean translation of an award before enforcement. An English-controlling clause still puts your document in front of a Korean judge as a translation prepared by one side. Commission the Korean version yourself, have whoever negotiated the English text review it, and name the controlling language in both.
How Do Korean Courts Treat Termination?
Less freely than the drafting suggests. Article 543 of the Civil Act makes termination a unilateral declaration to the other party and makes it irrevocable. For delayed performance, Article 544 requires you to demand performance within a reasonable period first and permits termination only after that period passes, the demand being excused where the debtor has already declared it will not perform. Article 545 removes the demand for time-critical performance and Article 546 for performance made impossible through the debtor’s fault. Article 550 makes termination of a continuing contract prospective only.
Continuing supply and distribution relationships attract more scrutiny again. On 23 April 2015 in case 2011Da19102 and 2011Da19119 the Supreme Court of Korea held that terminating a continuing contract requires circumstances in which the trust relationship underlying it has been destroyed so that maintaining it is difficult, and put the burden of proof on the party asserting that the relationship ended. Partial breach did not clear that bar on those facts. Whether ending a Korean distributor also triggers a compensation claim under Article 92-2 of the Commercial Act is worked through in the guide to Korea market entry modes.
What Happens to Your Liquidated Damages Clause?
A Korean court can cut it, and you cannot agree in advance that it will not. Article 398(1) of the Civil Act permits parties to fix damages for non-performance, Article 398(2) permits a court to reduce that amount to an appropriate level where it is unfairly excessive, and Article 398(4) presumes that any penalty payment agreed for breach is such a fixed damages amount. Your clause falls under the reduction power unless you displace the presumption.
The waiver route is closed. On 24 March 2016 in case 2014Da3115 the Supreme Court upheld a finding that an agreement barring a party from claiming reduction is void as contrary to Article 398(2), which it treated as a mandatory provision.
The alternative structure is a true penalty. On 21 July 2022 in case 2018Da248855 and 2018Da248862 the Supreme Court sitting en banc held that Article 398(2) cannot be applied by analogy to reduce a penalty, while confirming that an unfair penalty is controlled through full or partial nullity. The same judgment set out when a payment counts as a penalty: where the contract separately provides for compensation of actual loss, so reading the clause as fixed damages would produce double recovery. Price the ceiling into the commercial terms, because a number chosen to intimidate is a number a Korean court will revisit.
What Interest Runs on Late Payment?
Three rates, depending on the stage and the statute. Article 379 of the Civil Act sets the default at 5 percent a year where no other statute or agreement applies. Article 54 of the Commercial Act raises it to 6 percent for obligations arising from commercial acts, which covers ordinary B2B supply between merchants.
Litigation changes the arithmetic. Article 3(1) of the Act on Special Cases Concerning Expedition of Legal Proceedings (소송촉진 등에 관한 특례법, in force 2 June 2026) applies a decreed rate from the day after the complaint is served, set at 12 percent a year since 1 June 2019. Article 3(2) withholds that rate where the debtor’s dispute about the existence or scope of the obligation is reasonable, which is why Korean defendants contest liability itself.
Subcontracting carries its own clock. Article 13(1) of the Fair Transactions in Subcontracting Act requires payment within 60 days of receipt of the goods or completion of the service, and Article 13(8) charges interest on the excess period at a rate fixed by the Korea Fair Trade Commission, currently 15.5 percent a year under KFTC Notice No. 2018-21. Article 64 of the Commercial Act prescribes claims from commercial acts in five years unless a shorter period applies.
Which Korean Statutes Override What You Wrote?
Three, and each reaches contracts written in English by foreign parties. Article 105 of the Civil Act confirms that parties may vary any provision unconnected to public order, which makes the exceptions the whole story.
The Act on the Regulation of Terms and Conditions (약관규제법, in force 7 August 2024) applies to terms one party prepares in advance for use with multiple counterparties, per Article 2, subparagraph 1, and the “customer” in subparagraph 3 includes business counterparties. Article 3(4) bars you from relying on terms you failed to disclose and explain, Article 6 voids terms that lose fairness in breach of good faith, and Article 14 voids unfair jurisdiction clauses and unfair reversals of the burden of proof. Article 4 is the way out: a term the parties actually negotiated beats the standard form, so redline what you care about and keep the drafts that prove it. The international carve-out at Article 15 is narrow: Article 3 of its Enforcement Decree limits it to internationally used transport, finance and insurance terms and to trade insurance, so standard supply terms for industrial goods stay in scope.
The Fair Transactions in Subcontracting Act (하도급법, in force 11 August 2026) turns on what you commission, not on nationality. Article 2(1) needs a commissioning of manufacture, repair, construction or services, so having a Korean SME build to your specification pulls you in and buying its catalogue product stays outside. Article 2(3) then reserves the protection for the Korean SME that takes the commission, so the Act only ever runs against you. Article 3 requires a written order issued before work begins, signed or sealed by both parties, and Article 35(2) exposes a violating principal to up to three times the loss caused, or five times for misuse of a subcontractor’s technical data.
The Fair Agency Transactions Act (대리점법, in force 21 January 2025) governs continuing resale and consignment relationships under Article 2, subparagraph 1, and Article 3(1) then removes most of them: the Act stands down where the supplier is itself an SME, where the dealer is not an SME, or where the supplier is not found to hold a superior bargaining position. Check which side of Article 3 your distributor sits on before pricing the termination clause. Article 5(1) requires the supplier to issue a written agreement immediately on execution, listing return conditions, business transfer, and the grounds and procedure for termination. Article 34(2) exposes a supplier to up to three times the loss for forced purchasing, coerced economic benefits, or retaliation. The Korea Fair Trade Commission enforces both, so an administrative file is the likely first sign that something is wrong.
Frequently Asked Questions
Is a contract valid in Korea without a company seal? Yes. The Civil Act imposes no general form requirement on commercial contracts, so a signed agreement binds. The seal serves evidence and registry functions, and Article 3 of the Digital Signature Act protects electronic execution from being denied effect. A foreign signatory has no Korean seal to apply, so expect a request for a notarised signature and an apostille instead.
Can a foreign company choose English law for a Korean contract? Yes, under Article 45 of the Act on Private International Law, subject to Article 45(4) where every element connects to Korea. Enforcement is harder: a foreign judgment needs recognition under Article 217 of the Civil Procedure Act and then a separate execution judgment under Article 26 of the Civil Execution Act. Arbitration skips that second suit.
Will a Korean court enforce my liquidated damages clause in full? Not necessarily. Article 398(2) of the Civil Act lets a court reduce an unfairly excessive amount, and in case 2014Da3115 in 2016 the Supreme Court treated that article as mandatory, voiding an advance agreement not to seek reduction. A genuine penalty escapes reduction after the 2022 en banc decision in 2018Da248855, but courts then police it through full or partial nullity.
Which Korean statutes override contract terms in B2B deals? Mainly three, all enforced by the Korea Fair Trade Commission. The Act on the Regulation of Terms and Conditions voids unfair standard-form terms, carving out only international transport, finance and insurance. The Fair Transactions in Subcontracting Act applies where you commission a Korean SME to build. The Fair Agency Transactions Act reaches continuing resale, subject to its Article 3(1) exclusions.
Getting the Korean Version Read Before You Sign
Most of the exposure above is created at drafting and priced at termination, which makes the Korean text the document that matters. Inquivix supports international companies entering Korea with the local commercial groundwork that sits around a deal, and Korean counsel should review the executed text. To talk through how a Korea agreement is being structured before it reaches signature, write to Joon K Lee at joon@joonklee.com.
