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ADHESION CONTRACT ACT

Enacted by law No. 3922, December 31, 1986

Amended by law No. 4515, December 8, 1992

Amended by law No. 6459, May 20, 2001

CHAPTER 1
General Provisions

Article 1 Purpose

The purpose of this Act is to protect consumers and promote the harmonious improvement of people's lives by preventing enterprisesfrom preparing and using adhesion contracts containing unfair terms and conditions through the abuse of their negotiating position and by establishing a sound framework for business transactions through the regulation of adhesion contracts containing unfair terms and conditions.

Article 2 Definitions

For the purpose of this Act, -

(1) the term "adhesion contract" means the generalterms and conditions of a contract, regardless of their name, type, or scope, prepared in advance by one party in a certain form for the purpose of entering into a contract with a large number of persons;

(2) the term "Enterprise" means a person who is a party to a contract and offers an adhesion contract to another party as the content of the contract.

(3) the term "Customer" means a person whois a party to a contract and has received from an Enterprise an offer to incorporate an adhesion contract into the contract.

Article 3 Obligation to Specify and Explain Adhesion Contracts

(1) In entering into a contract, an Enterprise shall explain to its Customers the content of an adhesion contract in a way that would generally be expected for the type of contract in question and shall,upon the request of the Customer, deliver a copy of the adhesion contract to the Customer to help the Customer understand the Adhesion Contract; provided, however, that this shall not apply to an Adhesion Contract which is approved by an administrative agency under other laws and which is provided for in the Presidential Decree of this Act because of the need to effect a speedy transaction.

(2)An Enterprise shall explain the important particulars of an Adhesion Contract so that Customers can understand them; provided, however, that this shall not apply where such explanation is extremely difficult due to the nature of the contract.

(3) If an Enterprise enters into a contract in violation of the provisions of Paragraphs (1) and (2) above, it may not claim that the pertinent adhesioncontract forms a part of the contract.

Article 4 Precedence of Individual Agreement

If an Enterprise and a Customer agree on a matter that is addressed in an adhesion contract in a manner that is different from the Adhesion Contract, such agreement shall prevail over the adhesion contract.

Article 5 Construction of Adhesion Contracts

(1) An Adhesion contract shall be construedimpartially in accordance with the principle of trust and good faith and shall not be construed differently depending on the Customer.

(2) If the meaning of an adhesion contract is not clear, it shall be construed in favor of the Customer.

CHAPTER 2
Unfair Clauses In Adhesion Contracts

Article 6 General Principles

(1) Any clause in an adhesion contract which is not fair or iscontrary to the principle of trust and good faith shall be null and void.

(2) Any clause in an adhesion contract shall be presumed to be unfair if -

(a) it is unreasonably unfavorable to Customers;

(b) it is a clause which Customers would have difficulty anticipating in light of various circumstances such as the type of transaction, type of contract, and etc.; or

(c) itis so restrictive of essential rights under a contract that the purpose of the contract may not be achieved.

Article 7 Prohibition of Exemption Clause

Any clause of an adhesion contract concerning the liability of contracting parties shall be null and void if it -

(1) exempts an Enterprise from liability for intentional wrongdoing or gross negligence on the part of the Enterprise,...