State contracts

State contracts (국가계약) refer to the contracts to which the State is a party, and which are regulated by the Act on Contracts to which the State is a Party (abbreviated to the "State Contract Law", 국가를 당사자로 하는 계약에 관한 법률).

In Korea, the government, regardless of department, agency, local autonomous entity, should observe the principles stated in the above Act. Even though the Act effectively establish standard forms and practices in making contracts both in public and private sectors, it is true that it does some harms to flexible contracting practices as shown in boilerplate clauses.

Key words
State contract, public procurement, boilerplate, general provisions

Principles
When a government department or agency is a party to a contract, the afore-mentioned State Contract Law is applied first hand apart from the current Civil and Commercial Acts.

When contracting with Korean contractors and suppliers, the State Contract Law and its subordinate regulations shall apply. In the international transactions, such principles based on the State Contract Law shall be preferred as follows:

They are, among others, the Scope of the Contract, Definitions and Interpretations, Performance of Contract, Repayment Guarantee, Specifications of Product, Prior Notice of Part Numbers, Manufacturer's Drawings and Instructions, Installation, Integration and Training Services, Painting and Protective Coating, Inspection and Acceptance, Product Packaging, Marking of Transit Packaging, Notification of Readiness for Delivery, Partial Performance, Liquidated Damages for Delayed Delivery, Warranty, Confidentiality, Appropriateness of Contract Price, Intellectual Property Rights, Costs, Assignment and Novation, Non-Waiver, Effectiveness of Contract, Headings, Language, Implementation of Offset Program, Assurance of Follow-On Support, and Resale.

Further, the followings are contents which should be either added or amended to the current provisions:
 * The United Nations Convention on Contract of the International Sales of Good (“CISG”), to which Korea is a contracting state, has become the governing law of GTC. Accordingly legal uncertainty and lack of foreseeability of performance will be eliminated.
 * INCOTERMS and payment methods using a letter of credit are also largely used in international trade.
 * In connection with the jurisdiction, sovereign immunity and alternative dispute resolution including arbitration are continuously covered by the general terms and conditions.
 * As a participant in a diverse range of international transactions, there is a need to cope with various requirements of the other contracting party. Force majeure under the change-in-circumstance theory grants affected party the right of immunity or termination of the contract.

Legal Foreseeability
The Public Procurement Service of Korea (PPS) usually invites contractors and suppliers, small and large, and civic groups for a briefing. PPS has regular sessions to explain the Accounting Rules of the Ministry of Strategy and Finance and the Enforcement Decree of the Act on the Contracts to which the State is a Party. Another purpose of such sessions is to receive feedback from participants and reflect it in an intended revision to PPS policies.

On the other hand, there exists the Act on Litigation to Which the State is a Party (국가를 당사자로 하는 소송에 관한 법률).