Suggested citations
AGLC4 | 민법 2007 [Civil Law of the Democratic People's Republic of Korea (2007)] [tr Daye Gang].
Bluebook | Minbeob 2007 [Civil Law of the Democratic People's Republic of Korea (2007)] translated in Law and North Korea by Daye Gang, https://www.lawandnorthkorea.com/.
Adopted on September 5, Juche 79 (1990), as Decision No. 4 of the Standing Committee of the Supreme People's Assembly
Amended on September 23, Juche 82 (1993), as Decision No. 34 of the Standing Committee of the Supreme People's Assembly
Amended and supplemented on March 24, Juche 88 (1999), as Directive No. 540 of the Presidium of the Supreme People's Assembly
Amended and supplemented on March 20, Juche 96 (2007), as Directive No. 2161 of the Presidium of the Supreme People's Assembly
VOLUME I. GENERAL SYSTEM
CHAPTER I. BASICS OF CIVIL LAW
Article 1 (Objectives of Civil Law)
The Civil Law of the Democratic People’s Republic of Korea shall ensure a strong socialist economic system and material and technical foundations through the civil regulation of property relationships and shall serve to guarantee the independent and creative standard of life of the people.
Article 2 (Subjects of Regulation of Civil Law)
The Civil Law of the Democratic People’s Republic of Korea shall regulate property relationships formed by institutions, enterprises, organizations, and citizens who have the same status. The State is guaranteed an independent status as party in civil legal relationships to institutions, enterprises, organizations and citizens.
Article 3 (Principle of Socialist Property Regarding Means of Production)
Socialist ownership regarding means of production is the economic foundation of the Democratic People’s Republic of Korea. The State shall strengthen in property relationships the planned administration and operation of the national economy which is founded in socialist ownership to constantly consolidate the socialist economic system.
Article 4 (Principle of Planned Trade in Property)
Planned trade relationships in property consist of contracts founded in the national economic plan. The State shall conclude and realize trade relationships in property so that institutions, enterprises and organizations can carry out their planning orders without fail.
Article 5 (Principle of Adherence to Contractual Regulations)
The State shall embody the requirements of the Taean Work System, a form of socialist economic administration and abide strictly by contractual regulations when institutions, enterprises and organizations establish and realize property relationships.
Article 6 (Principle of Promoting the Well-Being of the People)
It is the fundamental character requirement of a socialist State to be accountable for and attend to the people’s standard of living. The State shall take a profound interest so that policies to promote the well-being of the people have a better effect on workers in institutions, enterprises and organizations establishing and realizing property relationships with citizens.
Article 7 (Principle of Guaranteeing Convenience to People in Property Relationships)
Property relationships involving citizens shall consist of contracts or other legal acts and cases. The State shall guarantee all convenience and conditions to allow workers to widely and routinely participate in property relationships.
Article 8 (Principle of Cooperation and Assistance between Parties to a Civil Relationship)
Collectivism is the foundation of socialist public activity. The State shall establish and realize property relationships from collectivist principle, under which institutions, enterprises, organizations and citizens cooperate and assist each other.
Article 9 (Principle of Respect for State and Social Interests)
The State shall prioritize State and social interests while thoroughly guaranteeing the interests of individual institutions, enterprises, organizations or citizens, in establishing and realizing property relationships.
Article 10 (Effect of Treaties Relating to Civil Affairs)
Should a treaty concluded between our country and another country have decided differently in relation to civil activities, it shall be followed.
CHAPTER II. PARTIES TO CIVIL LEGAL RELATIONSHIPS
Article 11 (Parties to Civil Legal Relationships)
Parties to civil legal relationships are institutions, enterprises and organizations that operate with independent expense budgets or are self-financing, and citizens.
Equity or contractual joint ventures established within the territory of the Democratic People’s Republic of Korea and other corporations of other countries recognized by the law are also parties to civil legal relationships.
Article 12 (Registration of Institutions, Enterprises and Organizations)
Organized institutions, enterprises and organizations must be registered with the authorities concerned to be recognized as established. Institutions, enterprises and organizations have competence for rights according to civil affairs, which allows them to have rights or bear duties of civil affairs, and the competence to act in civil affairs, which allows them to realize those rights and duties directly, from the time they are registered with the authorities concerned.
Article 13 (Competence for Rights According to Civil Affairs of Institutions, Enterprises and Organizations)
Institutions, enterprises and organizations are competent for rights according to civil affairs within the scope of their fundamental duties. Institutions, enterprises and organizations that have registered with the authorities concerned may not change their fundamental duties at will.
Article 14 (Competence to Act in Civil Affairs by Representatives and Legal Representatives)
The supervising officer of an institution, enterprise or organization is the representative of that institution, enterprise or organization. An institution, enterprise or organization shall engage in acts of civil legal affairs through its representative or a legal representative authorized by the representative.
Article 15 (Civil Liability of an Institution, Enterprise or Organization)
An institution, enterprise or organization shall take civil liability using the property it manages or owns.
Article 16 (Combining or Dividing Institutions, Enterprises or Organizations)
In cases where institutions, enterprises or organizations separate or combine, its civil rights and duties also separate or combine. In cases where an institution, enterprise or organization is abolished or decided to be dissolved, the claims and obligations it had shall be dealt with by the liquidator authorized for the duties concerned.
Article 17 (Lapse of Competence to Act and Competence for Rights According to Civil Affairs of an Institution, Enterprise or Organization)
The competence to act in civil affairs and the competence for rights according to civil affairs of an institution, enterprise or organization shall lapse when the abolition or dissolution of that institution, enterprise or organization is registered with the authorities concerned.
Article 18 (The State as a Party in Civil Legal Relationships)
The State is a direct party in certain civil legal relationships, including relationships involving the property of the State. In these cases, the State shall exercise its rights as a party and fulfil its duties through the institution assigned the authority concerned.
Article 19 (The Competence for Rights According to Civil Affairs of a Citizen)
The competence for rights according to civil affairs of a citizen comes about through birth and lapses upon death. All citizens have equal competence for rights according to civil affairs. No one can restrict the competence for rights according to civil affairs of a citizen unless provided for by law.
Article 20 (The Competence to Act in Civil Affairs of a Citizen)
The adult age of a citizen is 17 years. A citizen who has reached the age of 17 has the competence to act in civil affairs, which allows him or her to independently carry out acts of civil legal affairs. A person who has reached the age of 16 may independently carry out acts of civil legal affairs within the scope of his or her wages, and must receive the consent of his or her parents or guardian for acts which go beyond that scope. However, minors aged over 6 years may do acts of buying things such as school supplies or small daily necessities.
Article 21 (Persons who are Incompetent to Act in Civil Affairs, Acts of Civil Legal Affairs of a Person with a Disability in Physical Function)
A person who is incompetent to act in civil affairs or a person with a disability in physical function shall carry out acts of civil legal affairs through his or her parents or guardian. The deeming of an adult as a person who is incompetent to act in civil affairs shall be done through the judicial process.
Article 22 (Deeming of Missing Persons or Deceased)
A public notary office may, upon the application of an interested party, may deem as a missing person a citizen who has not been heard from during the passage of 3 years from the last time he or she was heard from. A citizen who has not been heard from for 2 years after deeming as a missing person, 5 years after last being heard from or not being heard from at all, or 1 year after a life-threatening accident may be deemed deceased following the same process as in the foregoing paragraph.
Article 23 (Cancellation of Deeming as Missing Person or Deceased)
A public notary office shall cancel the deeming concerned upon the application of the person himself or herself or an interested party in cases where a citizen deemed a missing person or deceased has appeared or sends news informing of his or her whereabouts.
In this case, changed property relationships may be cancelled but a newly established marital relationship may not be cancelled.
CHAPTER III. ACTS OF CIVIL LEGAL AFFAIRS
Article 24 (Form of Acts of Civil Legal Affairs)
Legal acts with the purpose of establishing, changing or terminating civil legal relationships may express intentions orally or by writing. However, in cases where the law requires it, it must be done in writing or by notarization.
Article 25 (Cancellation or Change of Acts of Civil Legal Affairs)
A person who has performed an act of civil legal affairs may only cancel or change acts he or she has done in cases where the law allows it or the other party consents.
Article 26 (Conditions for Validity of Acts of Civil Legal Affairs)
Acts of civil legal affairs only have legal effect if they conform to the law of the State and socialist standards of life. Acts that run counter to the law of the State and socialist standards of life, acts committed knowing that they harm the State and society, acts falsely committed, and acts committed by a citizen who is incompetent to act in civil affairs shall not have legal effect.
Article 27 (Effect of Invalid Legal Acts)
In cases where an act of civil legal affairs does not have legal effect, money or goods already exchanged by the parties shall be returned to the other party. However, the money or goods of a person who has committed an act knowing that it runs counter to the law of the State and socialist standards of life shall not be returned and shall be put into State coffers.
Article 28 (Forms of Cancellable Acts of Civil Legal Affairs)
Acts of civil legal affairs done by deception, acts of civil legal affairs made in error about the essential content, acts of civil legal affairs done through coercion and against one’s will, and acts of civil legal affairs done by a person who has reached the age of 16 without the consent of his or her parents or guardian may be cancelled.
Cancellation must occur within 2 months.
Cancelled acts of civil legal affairs shall not have legal effect.
Article 29 (Effect of Cancellation of Acts of Civil Legal Affairs)
In cases where an act of civil legal affairs has been cancelled, money or goods already exchanged by the parties shall be returned to the other party. However, the money or goods of a person who has deceived or coerced the other party into committing an act of civil legal affairs shall not be returned and shall be put into State coffers.
Article 30 (Effect of Acts of Civil Legal Affairs)
The effect of acts of civil legal affairs can be associated with the occurrence of certain conditions. In these cases, a party shall not do any acts which bring forward or interfere with the occurrence of those conditions.
Article 31 (Legal Representation for Acts of Civil Legal Affairs)
An institution, enterprise, organization or citizen may commit acts of civil legal affairs through a legal representative except for cases where the law provides, or where they must carry them out themselves.
Article 32 (Types of Legal Representation)
Of legal representation, there are attorneys who act according to the law and authorized agents who act according to authorization. A legal representative must be a citizen who is the competent to act in civil affairs.
Article 33 (Legal Effect of Legally Represented Acts)
A legal representative commits acts of civil legal affairs in the in the name of the person who authorized the legal representation, and the legal effect of that act returns to the person who authorized the legal representation. The person who authorized the legal representation is accountable to third parties with which the legal representative committed legal acts for the consequences of all the acts which happen within the scope of the authority of legal representation. A legal representative shall be accountable for the consequences of representative acts beyond the scope of the authority of legal representation.
Article 34 (Form of Authorization of Legal Representative)
Authorization of a legal representative is done orally or in writing. A citizen who orally authorizes a legal representative must inform the other party about that fact and the scope of the authority of legal representation. An institution, enterprise or organization may only authorize a legal representative in writing, and the power of attorney or credentials which authorize the legal representative must clearly state the scope of the authority of legal representation.
Article 35 (Duties of a Legal Representative)
A legal representative must responsibly commit representative acts within the scope of the authority of legal representation. A legal representative is accountable to the person who authorized the legal representation for damage created by insincerely carrying out representative acts within the scope of the authority of legal representation.
Article 36 (Lapse of Authority of Legal Representation)
An authority of legal representation lapses in cases where the person who authorized the legal representative or the legal representative passes away, or in cases where the legal representative becomes incompetent to act in civil affairs. The authority of legal representation granted by authorization also lapses in cases where the person who authorized the legal representative has cancelled the authorization of the legal representative or where the legal representative has refused the authorization. In cases where an oral authorization of a legal representative is cancelled, the other party must be informed of that fact.
VOLUME II. THE OWNERSHIP SYSTEM
CHAPTER I. GENERAL REGULATIONS
Article 37 (Forms of Ownership)
Ownership of property in the Democratic People’s Republic of Korea is divided into State ownership, ownership by social, cooperative organizations, and private ownership according to the form of that ownership.
Article 38 (Foundation of Occurrence of Ownership)
Ownership occurs on the foundation of acts and cases other than the law or contract. Ownership occurs at the time fixed by the law if founded on the law, or if founded on contract then at the time the contract is concluded and its subject is taken over, unless otherwise agreed.
Article 39 (Authority of Owner)
A person who has ownership may possess, use, or dispose of his or her own property within the scope of the law. Only the person who has the ownership concerned may dispose of property.
Article 40 (Claiming the Return of Property in Illegal Possession)
A person who has ownership may claim the return of his or her property in cases where another person is in illegal possession of it.
Article 41 (Claim for Exclusion of Acts Interfering with the Realization of Ownership)
A person with ownership may require that a person cease an act where that act interferes with the realization of his or her ownership.
Article 42 (Joint Ownership)
Ownership may be held by several people jointly. The possession, use or disposal of joint property shall follow the agreement of the people who have ownership jointly.
Article 43 (Division of Jointly Owned Property)
People who have ownership jointly may split his or her portion from jointly owned property to hold. In cases where it is difficult to split the property into goods, he or she may receive a price according to his or her portion. In cases where the portions of people who have ownership jointly are not clear, their portions are seen as the same.
CHAPTER II. STATE OWNERSHIP
Article 44 (Character and Source of State Ownership)
State ownership is ownership by the whole people. State ownership consists of nationalized property, property provided by State investment, products of State enterprises, property purchased by State institutions and enterprises, property transferred to State institutions and enterprises following a decision of the State, property offered to the State by social, cooperative organizations or citizens, and other property arranged to be put in the State coffers.
There is no restriction to the subject of State ownership.
Article 45 (Subject of State Ownership)
Only the State may own the following property:
1. All of the State’s natural resources capable of generating wealth including underground resources, forest resources, and marine resources;
2. Railway, aviation transport, communications institutions and important factories, enterprises, ports, banks;
3. Each class of school and important cultural and public health facilities.
Article 46 (Entity in Charge of State Ownership)
The entity in charge of State ownership is the State which represents the whole people. The State may possess, use or dispose of property under its ownership without restriction for the development of wealth and power for the State and the improvement of well-being of the people.
Article 47 (Realization of State Ownership)
State ownership is realized directly by the State or through individual State institutions and enterprises. State institutions and enterprises have managerial control over the property owned by the State that they manage, and may possess in its name, use, or dispose of that property under the guidance of the State.
Article 48 (Transfer of State Ownership and Managerial Control)
In cases where the property of a State institution or enterprise is supplied or sold to a social, cooperative organization or a citizen, State ownership is transferred to that social, cooperative organization or citizen. However, in cases where the property of a State institution or enterprise is supplied or sold to another State institution or enterprise, only the managerial control is transferred.
Article 49 (Right to Use Fixed Assets which are Property of the State)
The State continues to keep its ownership over modern farm machinery including tractors, rice planting machines and harvesters that the State has assigned to cooperative farms, cultural facilities provided to cooperative farms using State expenses, and fixed assets such as threshing floors, livestock pens and warehouses, and the right to use is transferred to the cooperative farm concerned. Cooperative farms may use fixed assets provided by the support of the State as if their own property according to their objectives.
Article 50 (Right to Use Homes which are Property Owned by the State)
The State shall build homes and transfer their right to use to labourers, clerks and cooperative farmers, and shall protect that right to use with law.
In cases where a dispute is lodged between the parties to a divorce related to the right to use a home which is property of the State, the people’s political institution shall determine a new person with the right to use the home on the basis of the certified copy of the judgment of the court concerned.
Article 51 (Claiming the Return of Property Owned by the State)
State institutions and enterprises may claim the return of their property in cases where a person without authorization has transferred it to social, cooperative organizations or a citizen.
Article 52 (Ownership of Ownerless Goods)
Ownerless goods shall be property of the State.
Included in ownerless goods are goods where there is no person with ownership or goods where the person with ownership is unidentifiable.
CHAPTER III. OWNERSHIP OF SOCIAL, COOPERATIVE ORGANIZATIONS
Article 53 (Character and Source of Property of Social, Cooperative Organizations)
Property of social, cooperative organizations is the collective property of the workers in the social, cooperative organization. Property of social, cooperative organizations consists of property brought in by the members of the social, cooperative organization, property provided by the social, cooperative organization’s own investment, products of the social, cooperative organization, property the social, cooperative organization has bought, and property of which the State has transferred the right of use to the social, cooperative organization.
Article 54 (Subject of Ownership by Social, Cooperative Organizations)
Social, cooperative organizations may own subjects required for business activities such as land, farm machinery, ships, small and medium factories, and enterprises.
Article 55 (Entity in Charge of Ownership by Social, Cooperative Organizations and its Authority)
The entity in charge of ownership by social, cooperative organizations is the individual social, cooperative organization. Social, cooperative organizations may possess, use or dispose of property it owns according to the will of its members under democratic principle.
However, the disposal of land shall be as stipulated by law.
Article 56 (Transfer of Ownership by Social, Cooperative Organizations)
In cases where a product produced by a social, cooperative organization is supplied or sold to a State institution, enterprise, or another social, cooperative organization or citizen, the ownership of that product shall be transferred to the other party.
Article 57 (Claiming the Return of Property Owned by Social, Cooperative Organizations)
Social, cooperative organizations may claim the return of their property in cases where a person without authorization has transferred it to another social, cooperative organization or a citizen.
CHAPTER IV. PRIVATE OWNERSHIP
Article 58 (Character and Source of Private Ownership)
Private ownership is individual ownership by the workers for the purposes of consumption. Private ownership consists of socialist distribution according to labour, supplementary benefits from the State and society, products coming out of individual side economic activities including kitchen garden economies, property purchased by a citizen or inherited or received as a gift, or property that has been created on other legal bases.
Article 59 (Subjects of Private Ownership)
A citizen may own basic materials required for a home and family life such as different kinds of household goods, cultural goods, other daily necessities and cars.
Article 60 (Entity in Charge of Private Ownership and its Authority)
The entity in charge of private ownership is the individual citizen. A citizen may possess, use or dispose of property he or she owns according to socialist standards of life and for the purposes of his or her consumption.
Article 61 (Joint Ownership of Family Property)
Citizens who are members of a family shall have ownership jointly over the property of the family.
Article 62 (Claiming the Return of Privately Owned Property)
A citizen may claim the return of his or her property against a citizen who takes property knowing that it is being handed over by a person without authorization. Regarding lost goods, he or she may claim their return even in cases where the person did not know that fact when taking it.
Article 63 (Right of Inheritance)
The State guarantees the right of inheritance regarding privately owned property. The privately owned property of a citizen is inherited as stipulated by law. A citizen may also hand over his or her own property to a member of the family or another citizen, or an institution, enterprise, or organization, according to a will.
VOLUME III. SYSTEM OF CREDITS AND DEBTS
CHAPTER I. GENERAL REGULATIONS
Article 64 (Status of Creditors and Debtors)
A creditor has the right to require certain acts regarding property to be carried out, and a debtor has the duty to carry out certain acts regarding property.
Article 65 (Rights and Responsibilities between a Creditor and Debtor)
In the credit-debt relationship, a creditor and debtor may have rights together with corresponding duties, and may also have only rights or duties.
Article 66 (Foundation of Occurrence of Credit-Debt Relationship)
Credit-debt relationships are established on the basis of State administrative documents including the national economic plan or contracts, or other acts and cases.
Article 67 (Assistance in Paying off Debt)
A creditor must give appropriate assistance to a debtor in paying off debt. A creditor who has violated this duty and has interfered with paying off debt shall be restricted in giving credit or shall be accountable accordingly.
Article 68 (Prevention of Loss Resulting from Debt Default)
A creditor must adopt relevant measures to prevent an increase in damage by a debtor defaulting on debt. In cases where a creditor who has violated this duty and the damage increases, the creditor’s right to demand compensation is restricted to that extent.
Article 69 (Price in Credit-Debt Relationships)
In credit-debt relationships, the price shall be determined and calculated by the price provided or evaluated by the State, or the price agreed upon by the parties. Money or goods exchanged for more in violation of State price regulations are returned to the other party and money or goods intentionally exchanged for more in violation of State price regulations shall not be returned and shall be put into State coffers.
Article 70 (Credit and Debt between Several Parties)
In cases where there are several creditors or debtors in a credit-debt relationship, each may have a several portion of the credit or debt or may have it jointly.
Article 71 (Rights and Responsibilities of a Several Creditor or Debtor)
A several creditor has the right to require only the payment of his or her portion and a several debtor has the duty to pay off only his or her portion of the debt.
Article 72 (Several Debt Duties without Clear Portions)
In cases where it is not clear that the portions of the claim the several creditors have or the portions of the duty the several debtor have are each different, their portions are seen as the same.
Article 73 (Duties of a Joint Creditor or Debtor)
Joint creditors each have the right to require the payment of the total credit and joint debtors each have the duty to pay off the whole of the debt.
Article 74 (Relationship between Joint Creditors and Debtors)
A joint debtor who has paid off the whole of the debt has the right to require compensation for the portion each should bear separately from the other joint debtors, and a joint creditor who is paid the whole of the debt has the duty to allocate the portion concerned to the other joint creditors.
Article 75 (Restrictions on the Exercise of Right of Claim by a Joint Creditor)
A joint creditor must not intrude upon the interests of another joint creditor in exercising his or her right of claim. In cases where one joint creditor has abandoned his or her right of claim, it does not impact the other joint creditors.
Article 76 (Waiver of Joint Debt)
In cases where a creditor waives the debt of one joint debtor, the portion of other joint debtors decreases by the portion he or she was to bear.
Article 77 (Transfer of Credit and Debt)
A creditor or debtor may hand over his or her credit or debt to a third party. A creditor who intends to hand over the credit to a third party must inform the debtor about it, and a debtor who intends to hand over the debt to a third party must obtain the creditor’s consent in advance.
Article 78 (Debt Created by Fault of a Third Party)
A party who pays off a debt to a creditor created by the fault of a third party has the right to require compensation from the third party accordingly.
Article 79 (Party to the Payment of the Debt)
A debtor must pay off the debt himself or herself. A debt that a debtor does not need to pay off himself or herself may be authorized so that third party pays it off. In this case, the debtor is accountable to the creditor regarding the third party’s payment of the debt.
Article 80 (Observance of the Debt Payment Date)
A debtor must pay off the debt within the period determined. A party who has delayed the payment of debt or has delayed the receipt of the payment of debt is accountable for it.
Article 81 (Means of Payment of Debt)
Unless provided for by law or contract, debt must be paid in one payment and in cases where the debt is paid in portions, the creditor may refuse to accept that payment.
Article 82 (Quality of Goods in Payment of Debt)
In a credit-debt relationship where fungible goods are handed over as consideration, the debtor must hand over the goods of the best quality. In cases where the payment consists of handing over goods without cost, he or she may hand over goods of approximately average quality.
Article 83 (Credits and Debts in Cases where the Specific Goods have Disappeared or Become Unusable)
In a credit-debt relationship where the subject is non-fungible goods, the credit-debt relationship concerned disappears in cases where the goods disappear or become unusable. However, regarding damage that has been created, the party at fault is accountable for compensation. In a credit-debt relationship where it is agreed that fungible goods will be handed over, and the goods have disappeared are damaged, the debtor must hand over different goods of the same kind.
Article 84 (Transition of Fungible Goods to Non-Fungible Goods)
From the time the subject of the credit or debt is determined to be non-fungible among fungible goods, that subject good becomes a non-fungible good.
Article 85 (Transfer of Subsidiary Property)
In credit-debt relationships where property is handed over, the property handed over must be handed over together with its subsidiary property.
Article 86 (Place of Payment of Debt)
Debt must be paid in a place determined by law or by contract. If not provided for by law or by contract, debt to be paid in money shall be paid at the creditor’s address or trading bank, debt to be paid in real estate at the location of the real estate, and other debt at the location or address of the debtor.
Article 87 (Ownership of Compensated Damaged Goods)
In cases where goods the subject of a debt have been severely damaged, the person who compensates its whole price has the ownership of the goods concerned.
Article 88 (Right of Choice in Creditor-Debtor Relationships)
It may be determined that a party in a creditor-debtor relationship may choose one act among several to carry out. If the person with the right to choose the act is not provided for by the law or by contract, the right of choice is with the debtor.
Article 89 (Delay in Exercise of Right of Choice)
If the person with the right to choose does not choose the act until the debt payment date arrives, the right of choice is transferred to the other party.
Article 90 (Entering into a Contract)
A contract consists of the offer of one party and the agreement of the other party. The party who has made the offer may not unilaterally cancel the offer concerned from the time the other party receives that offer.
Article 91 (Conditions for Agreement of Contract)
Contracting parties must agree on fundamental conditions such as the subject of the contract, the contracting period, and price. A contract with content that delivers a citizen unearned income may not be established.
Article 92 (Ways of Entering into a Contract)
A contract may be concluded for consideration or without cost. A contract in which an institution, enterprise or organization participates must be concluded for consideration.
Article 93 (Form of Contract)
A contract between institutions, enterprises or organizations shall be concluded in writing. In cases where they are concluded orally, that fact must be proven. A contract between an institution, enterprise or organization and a citizen, or between a citizen and a citizen, may be concluded orally unless provided for by law. In cases where a dispute has arisen about the entry into and content of a contract, a contract concluded in writing shall be deemed preferential in court proceedings or arbitration.
Article 94 (Trade and Contract of Real Estate)
Contracts making trade in real estate as the content shall be concluded in writing and notarized to have legal effect.
Article 95 (Simultaneous Fulfilment of Contracts)
It shall be the principle that contracts where two parties together bear duties shall be fulfilled simultaneously. In cases where one party has not fulfilled his or her duty the other party may postpone the fulfilment of his or her duties.
A creditor may hold the subject of the credit in the case where a debtor does not fulfil his or her duties in the period determined.
Article 96 (Cancellation of Contract)
In cases where one party does not fulfil the contract in the period determined, the other party may cancel the contract and may be compensated for damage incurred as a result thereof.
Article 97 (Inspection of Subject of Contract)
A person who has received the subject of a contract must inspect it in time and inform the other party of any defects that appear. The party at fault for the defects in the subject of the contract must fix the defect or exchange the subject for another or decrease its price.
Article 98 (Responsibility for Hidden Defaults in the Subject of the Contract)
A person who has received the subject of a contract may inform the other party of hidden defects and hold them accountable. Accountability for hidden defects must be borne within the period determined.
Article 99 (Responsibility for the Disappearance or Damage of the Subject of a Contract)
A person who is in possession of the subject of a contract must be accountable for its disappearance or damage. However, the party to the contract is not accountable if he or she is not at fault or the subject of the contract has disappeared or is damaged because of due to an unavoidable reason such as a natural disaster.
Article 100 (Contracts for a Third Party)
Contracts may be concluded for a third party. In this case, the legal effect of a contract occurs for the parties who concluded the contract as well as for the third party.
CHAPTER II. CONTRACTS BASED ON PLANS
Article 101 (The Purposes of Contracts Based on Plans)
Contracts based on plans shall be concluded on the basis of the national economic plan to implement the national economic plan and strictly enforce self-financing in economic administration. Institutions, enterprises and organizations must conclude contracts according to designated processes and methods.
Article 102 (Establishment of Contracts Based on Plans)
Contracting parties shall determine contract content so that the national economic plan can be implemented in the strictest and most rational way. In cases where institutions, enterprises and organizations recognise that the plan clearly has a deficiency, they must inform the planning institution about it in time.
Article 103 (Time of Establishment of Contract)
Contracts shall be concluded at the time agreement is reached on all the particulars provided for by law. Differences in opinion in concluding a contract shall be resolved by arbitration process.
Article 104 (Changes in Contracts Based on Plans)
Contracts shall be changed upon the supplementation or adjustment of national economic plans. Changes to contracts shall be realized when one party receives from the other party notification on the supplementation or adjustment of the contract, or both parties to the contract receive it from an authorized State institution.
Article 105 (Entry into a Contract for the Supply of Resources)
Acts where an institution, enterprise or organization exchange resources based on the State’s plan for the supply of resources shall be done according to a contract for the supply of resources. Contracts for the supply of resources must be concluded and fulfilled in conformity with the requirements of the Taean Work System and State requirements for using a commercial form for the exchange of resources.
Article 106 (Parties to a Contract for the Supply of Resources)
Parties to a contract for the supply of resources shall be the institutions, enterprises and organizations that exchange resources according to the State’s detailed plan for the supply of resources. According to the contract for the supply of resources, the supplier bears the duty to hand over the resources predicted in the plan to the consumer, and the consumer bears the duty to take them over and pay the price accordingly.
Article 107 (Conditions for Agreement in a Contract for the Supply of Resources)
Parties to a contract for the supply of resources must agree on conditions such as the name of the resources to be suppled, specifications, quality, period of supply, amount, price, method of exchange, method of packaging, and the trading bank.
Article 108 (Method of Supply of Resources)
The supplier must ship resources in time through a transportation institution or hand them over to the consumer from their warehouses. The supplier shall be accountable for organizing the transportation through the transportation institution and the transportation fee shall be borne by the consumer.
Article 109 (Inspection of Resources Supplied)
Inspection of resources supplied shall be done by the consumer. If there is an accident to the resources, the consumer may call for the attendance of the supplier and receive an accident report from them. A party who refuses or delays confirmation of the accident without a lawful reason shall be accountable on the basis of the accident report drafted by the consumer.
Article 110 (Treatment of Hidden Defects in Resources Supplied)
A consumer who has discovered a hidden defect in resources supplied must inform the supplier and receive from them an accident report. In cases of emergency or where there is a dispute about the cause and content of the accident, the accident report may be drafted with the participation of the supervisory institution concerned.
In respect of hidden defects, a consumer may hold the supplier accountable within 3 months of taking over the resources, and in the case of machine equipment until the test run is finished.
Article 111 (Adjustment of Supply of Contracted Resources)
In cases where the consumer has dissipated the resources supplied and lost the ability to pay, a supplier may adjust the supply of the resources contracted.
Article 112 (Settlement of the Price of the Resources)
The consumer must pay the price in time after taking over the resources.
In cases where the kind, specifications, quality or price of the resources does not accord with the conditions of the contract, the consumer may return the resources to the supplier without paying the price. However, resources which may spoil or require urgent measures cannot be returned and only the price may be lowered.
Article 113 (Entry into a Contract for the Supply of Products)
Acts where an institution, enterprise or organization exchange products based on the State’s plan for the supply of products shall be done according to a contract for the supply of products. Contracts for the supply of products must be concluded and fulfilled in conformity with production and consumption according to manufacture-on-demand, and with State requirements for satisfying the material and cultural demands of the people.
Article 114 (Duties of Parties to a Contract for the Supply of Products)
According to the contract for the supply of products, the supplier bears the duty to hand over the people’s consumer goods predicted in the plan to the consumer, and the consumer bears the duty to take them over and pay the price accordingly.
Article 115 (Parties to a Contract for the Supply of Products)
Parties to a contract for the supply of products shall be the enterprises, wholesale enterprises and retail enterprises that exchange products according to the State’s plan for the allocation of products. A trading company which is responsible for the product sales of an enterprise and cooperative farms may also be parties to a contract.
Article 116 (Agreement in a Contract for the Supply of Products)
Parties to a contract for the supply of products must agree on the conditions provided for in Article 107 of this law.
Article 117 (Method of Supply of Products)
The supplier must ship resources in time through a transportation institution or transport them to the warehouses of the consumer. In this case, they must send the product statement together with the products to the consumer.
Article 118 (Inspection of Products Supplied)
Inspection of products supplied shall be done by the consumer. Treatment of defects which appear in that process shall be done following the provision under Article 109 paragraph 2 of this law.
Article 119 (Treatment of Hidden Defects in Products Supplied)
Treatment of hidden defects in products supplied shall be done following the provision under Article 110 paragraph 1 of this law. For hidden defects in products for which a warranty has not been determined, accountability may be claimed within 3 months of the time the product is taken over.
Article 120 (Entry into a Contract for the Purchase of Agricultural Produce)
Acts where a purchasing institution buys up agricultural produce on the basis of the State purchasing plan shall be done according to a contract for the purchase of agricultural produce. Contracts for the purchase of agricultural produce must be concluded and fulfilled in conformity with the planned mobilization of grains and raw materials and State requirements for raising the production will of farm workers.
Article 121 (Duties of Parties to a Contract for the Purchase of Agricultural Produce)
According to the contract for the purchase of agricultural produce, the supplier bears the duty to produce the agreed agricultural produce and hand it over to the purchasing institution and the purchasing institution bears the duty to take them over and pay the price accordingly.
Article 122 (Conditions for Agreement in a Contract for the Purchase of Agricultural Produce)
Parties to a contract for the purchase of agricultural produce must agree on conditions such as the purchase period of the purchased products, amount, quality, specifications, storage and method of transportation.
Article 123 (Quality and Specifications of Purchased Products)
The quality and specifications of purchased products shall be determined by the State purchasing plan. In cases where the State purchasing plan does not indicate, the parties shall decide by agreement.
Article 124 (Container and Packaging Materials of Purchased Products)
The packaging materials and containers of purchased products shall be guaranteed by the purchasing institution. Packaging materials and containers arranged by the producer shall be guaranteed by the producer. In this case, the price shall be borne by the purchasing institution.
Article 125 (Purchasing Period)
Parties to a contract shall keep to the purchasing period. In cases where the purchasing institution has not been able to purchase agricultural produce within the contracted period, it must compensate the producer for the damage incurred.
Article 126 (Inspection of Agricultural Produce to be Purchased)
A purchasing institution must strictly inspect the quality of agricultural produce and measure its volume to purchase it. Agricultural produce may not be purchased by the method of placing it in a warehouse and calculating its capacity.
Article 127 (Storage of Agricultural Produce Purchased)
The responsibility for taking away or storing agricultural produce purchased from the warehouses of the producer or in the field shall be borne by the purchasing institution. However, grains purchased which are not packaged and purchased products which have a large volume may be stored with the producer under the responsibility of the purchasing institution.
Article 128 (Entry into Contracts for Basic Construction)
Acts where an institution, enterprise or organization commissions basic construction based on the State’s basic construction plan shall be done according to a contract for basic construction. Contracts for basic construction must be concluded and fulfilled in conformity with State requirements to centralize construction, lower the cost of construction and raise the quality of construction.
Article 129 (Duties of Parties to a Contract for Basic Construction)
According to the contract for basic construction, the builder bears the duty to complete the subject of the construction and hand it over to the commissioner of the construction, and the commissioner of the construction bears the duty to guarantee the construction conditions as determined and take over the completed construction in time.
Article 130 (Conditions for Agreement in a Contract for Basic Construction)
The parties to a contract for basic construction must agree on conditions such as the subject of the construction and its size, the dates of the commencement and completion of the subject of the construction, and the particulars the parties must abide by. A contract for basic construction shall be concluded by subject of the construction and by taking the program year as the standard.
Article 131 (Guarantee of Construction Conditions)
The commissioner of the construction must guarantee the construction site and design so that there is no interference in the construction. The work of moving the construction and facilities inside the construction site may be done by the builder on the commission of the commissioner of the construction.
Article 132 (Dates of Commencement and Completion of the Subject of the Construction and Adherence to Working Dates)
The builder must abide by the dates of commencement and completion of the subject of the construction and working dates, and must guarantee the quality of the construction according to the design and technical documents.
Article 133 (Confirmation of Construction Performance)
The commissioner of the construction must confirm the construction performance of the builder in time so that there is no interference in the construction.
Article 134 (Transfer of Construction)
The builder and the commissioner of the construction may only hand over and take over construction that has been qualified at the pre-delivery inspection. Pre-delivery inspection shall be done after the contracted construction is finished and end-to-end testing has been conducted according to operating capacity.
Article 135 (Guarantee of Construction)
The builder bears a duty to fix defects that appear within 1 year of handing over the construction to the commissioner of the construction. In this case, the party at fault shall bear the costs.
Article 136 (Entry into Contracts for Transportation of Freight)
Acts of transporting cargo interconnected with the State transportation plan through a transportation institution shall be done according to a contract for transportation of freight. Contracts for transportation of freight must be concluded and fulfilled in conformity with State requirements for rationally organizing transportation so that cargo transportation plans may be carried out massively.
Article 137 (Duties of Parties to a Contract for Transportation of Freight)
According to the contract for transportation of freight, the consignor bears the duty to hand over freight to the transportation institution and pay the freight charge, and the transportation institution bears the duty to transport that freight and hand it over to the consignee.
Article 138 (Conditions for Agreement in a Contract for Transportation of Freight)
Parties to a contract for transportation of freight must agree on conditions such as the label of the freight, amount of transportation, origin and destination, methods of loading and unloading the freight, and the names of the consignor and consignee.
Article 139 (Guarantee of Freight and Transportation Method)
The consignor must hand over the contracted freight according to the specifications determined in time to the transportation institution, and the transportation institution must allocate a transportation method that conforms with the nature of that freight.
Article 140 (Work to Load and Unload Freight)
Unless otherwise agreed, the work of loading and unloading freight shall be done by the owner of the freight. The party that manages the work of loading and unloading freight must keep to the period determined for the work.
Article 141 (Storage and Management of Freight)
The transportation institution must store and manage the freight well until it hands over the freight to the consignee. The transportation institution must not use the freight it transports at will or hand it over to another person.
Article 142 (Adherence to Transportation Period)
The transportation institution must go through the most rational transportation route to ship the freight to its destination within the period determined. In cases where this duty has been violated, the owner of the freight may refuse to pay the additional freight charge and may receive compensation for delay for the freight that has arrived late.
Article 143 (Notification about Freight that has Arrived)
A transportation institution must inform the consignee in time when the freight arrives. The consignee must pick up the freight that has arrived within the period determined. If this duty is violated, he or she must pay a storage charge or the relevant fee. The storage fee or fines for freight transported through intermodal transport shall be calculated following the proportion applied by the transportation institution that hands over the freight.
Article 144 (Inspection of Freight that has Arrived)
The consignee may inspect the freight and, if there is an accident, may receive an accident report from the transportation institution and may claim the relevant damage compensation. A transportation institution which refuses to draft an accident report without a lawful reason shall be accountable for that accident.
Article 145 (Transportation of Freight that is not Interconnected with the National Economic Plan)
Institutions, enterprises, organizations and citizens transporting freight that is not interconnected with the national economic plan through the transportation institution shall follow the order of contracts for transportation of freight.
CHAPTER III. CONTRACTS NOT BASED ON PLANS
Article 146 (Purposes of Contracts not Based on Plans)
Contracts not based on plans shall be concluded so that State policies for all the people have a better effect on the citizens and to guarantee the normal business activities of institutions, enterprises and organizations.
Article 147 (Subjects for which a Contract may not be Entered into)
Products that can only be owned with the approval of the State or rare metals or other goods controlled by the State cannot become the subject of a contract.
Article 148 (Entry into a Contract of Sale and Purchase)
Acts of sale and purchase between a retail enterprise or purchasing institution and a citizen or between citizens shall be done according to a contract of sale and purchase. Contracts of sale and purchase must be concluded and fulfilled to be able to smoothly guarantee the consumer demands of the people.
Article 149 (Duties of Parties to a Contract of Sale and Purchase)
According to the contract of sale and purchase, the vendor bears the duty to hand over the ownership of the purchaser of the goods, and the purchaser bears the duty to take over the goods and pay the price. Only a person with the right of disposal over a good may sell them. A contract of sale and purchase concluded knowing that a person without the right of disposal is selling the goods does not have legal effect.
Article 150 (Parties to a Retail Contract)
The vendor in a contract of sale and purchase about a product produced and supplied by an enterprise becomes a retail enterprise. A retail enterprise must make product order sheets conforming to the demands of the residents and must procure and sell products in time.
Article 151 (Defects which Appear during the Guarantee Period)
A person who has purchased a product with a determined warranty may hold accountable the person who sold that product for defects which appear within that period.
Article 152 (Parties and Subjects to a Contract of Purchase)
The parties which purchase agricultural and stock breeding products, native produce, raw materials and resources, and ordinary goods excluding agricultural products, rare metals and goods controlled by the State in the State plan, shall be purchasing institutions. Purchasing institutions must publish the grading standard and price of types of basic purchase items and must buy up purchased products as stipulated.
Article 153 (Adherence to Period of a Contract of Purchase)
A purchasing institution shall buy up contracted goods within the period determined. In cases where this duty has been violated, the vendor may sell the goods concerned to another purchasing institution and may be compensated for damage incurred.
Article 154 (Transportation of Purchased Products)
The work of transporting purchased products to the place of sale shall be done by the vendor and the work of transporting them from the place of sale to another place shall be done by the purchasing institution. In cases where the transporting work of purchased products has been contracted differently from the foregoing paragraph, the person who is responsible for transporting may receive from the other party the freight charge concerned.
Article 155 (Contract for Sale and Purchase at a Market)
Products a citizen has produced through agricultural sideline activities may only be bought and sold at a farmers’ market at a price agreed between the producer and the consumer. They may not resell purchased goods more expensively.
Article 156 (Entry into a Contract for Work Activities)
Acts where a citizen is entrusted to make or repair, manufacture or do other work shall be done according to a contract for work activities. A contract for work activities shall be concluded and fulfilled to enable good community service for workers.
Article 157 (Duties of Parties to a Contract for Work Activities)
According to the contract for work activities, the working person bears the duty to do the work ordered and hand over the results to the person ordering the work, and the person ordering the work bears the duty to take over the results of the work and pay the service charge concerned.
Article 158 (Period for Entry into a Contract for Work Activities)
A contract for work activities is concluded at the time the parties agree orally and exchange the work.
Article 159 (Duties of the Person Ordering the Work)
The person ordering the work must inform of the requirements and must also give the technical materials at the time of handing over the work. In cases where this duty is violated, the working person may prolong the period for the work to that extent or may postpone the order of the work.
Article 160 (Guarantee of Resources and Components Required for the Work)
The working person must himself or herself bear the costs of resources or components not separately provided for in the contract. In cases where it is decided that the person ordering the work bears the costs of resources or components, the working person must inspect it and must inform the other party in time if there are defects.
Article 161 (Treatment of the Subject of the Work)
The working person shall carefully handle the subject of the work given by the person ordering the work and use resources and components correctly according to the requirements of consumption levels and technical regulations. Leftover resources and components must be returned together with the results of the work to the person ordering the work.
Article 162 (Prohibition on Changing the Structure of the Subject of the Work)
A working person shall not change the structure of the subject of the work at will or remove a part from the subject of the work given by the person ordering the work or exchange resources and components.
Article 163 (Adherence to Period for the Work)
A working person must abide by the period for the work. In cases where it is clear that the working person will not be able to finish the work before the period determined, the person ordering the work may cancel the contract and be compensated for damage incurred.
Article 164 (Guarantee of Quality of the Work)
A working person must guarantee the quality of the results of the work. In cases where a warranty is determined, a working person shall be accountable for defects which appear in that period as long as it is not another person’s fault.
Article 165 (Duty to Take over the Results of the Work)
A person who has ordered work must take over the results of the work in time. In cases where this duty has been violated, the working person may receive a determined storage charge.
Article 166 (Entry into a Contract for Storage)
The act of entrusting and storing goods shall be done according to a contract for storage. A contract for storage shall be concluded and fulfilled to guarantee the business convenience of institutions, enterprises and organizations and the living convenience of the people.
Article 167 (Duties of Parties to a Contract for Storage)
According to the contract for storage, a person who stores goods bears the duty to store those goods and then return it to the person who requests the storage, and the person who requests the storage of goods bears the duty to retrieve the goods and pay the storage charge concerned.
Article 168 (Period for Entry into a Contract for Storage)
A contract for storage is concluded at the time the parties orally agree between themselves and the goods are handed over to the person who stores the goods or the person who stores the goods takes over the goods and gives the other party the marker concerned. A contract for storage may be concluded with a determined period or without a determined period.
Article 169 (Duties of a Person who Requests the Storage)
A person who requests storage of goods must inform the person who stores the goods about precautions in storing the goods. The person who requests storage of the goods is accountable for damage caused to the goods being stored in violation of this duty and damage caused to the person who stores the goods.
Article 170 (Duties of a Person who Stores Goods)
A person who stores goods must store goods according to the contract. Goods which require management by their nature must responsibly manage and store them. The person who stores the goods may be compensated by the person who requests storage of goods for the cost of managing the goods being stored.
Article 171 (Storage of Goods Related with the Performance of Work)
An institution which takes and stores goods related with the performance of its work such as an inn, theatre, or meeting hall is accountable for goods disappearing or being damaged. However, it shall not be accountable for goods stored separately by a person who requests storage of goods.
Article 172 (Duty to Retrieve Goods Stored)
A person who requests storage of goods must retrieve goods stored in time. In cases where a person who requests storage does not retrieve the stored goods until after the storage period, a person who stores the goods may receive a higher determined storage charge.
Article 173 (Duty to Return the Stored Goods in their Original Condition)
A person who stores goods must return stored goods in their original condition to the person who requests storage of goods. In cases where goods which are sealed or packaged are entrusted, they will be returned in the same condition, and in cases where the goods are received after confirming the contents they must be returned after confirming the contents again.
Article 174 (Duty to Correctly Return Stored Goods)
A person who stores goods must correctly return the stored goods to the very person who requested to store the stored goods. In cases where the goods are received and a marker is given, the duty of storage disappears if the goods are returned to a person who presents the given marker.
Article 175 (Storage and Management of Property without a Legal Duty)
A citizen may store and manage the property of another citizen or of a State social, cooperative organization even without a legal duty. In this case, the person who stores and manages the property shall inform the owner of the property of the given fact and must store and manage the property as if it were his or her own property and may be compensated for the expense required to store and manage it.
Article 176 (Treatment of Property Stored and Managed without a Legal Duty)
In a case where a person who stores and manages the property of another without a legal duty unavoidably disposes of that property, he or she must return to the owner of the property the amount of the price received.
Article 177 (Entry into a Borrowing Contract)
Citizens’ acts of borrowing things such as books, daily necessities, cultural and entertainment equipment, or sporting equipment shall be done according to a borrowing contract. A borrowing contract must be concluded and fulfilled to smoothly guarantee the various material and cultural demands of the people.
Article 178 (Duties of Parties to a Borrowing Contract)
A person who lends goods under a borrowing contract bears the duty to hand it over so the borrower can use it for a certain period, and the borrower bears the duty to pay the usage fee and return the goods concerned to the lender after using them.
Article 179 (Form of a Borrowing Contract)
A contract where a citizen borrows material like books, patented goods, audio recordings and video recordings from the institutions concerned may be concluded for consideration or without cost.
Article 180 (Duty to Lend Goods in a Usable State)
A lender must hand over goods in a state where they can be used in accordance with their nature and in cases where they lend defective goods must inform the borrower of that fact. Damage given to the borrower in violation of this duty must be compensated.
Article 181 (Duty to Use Borrowed Goods According to Contract Conditions and Use)
A borrower shall use borrowed goods according to contract conditions and use, and shall not change their structure at will. In cases where a borrower tries to change the structure of borrowed goods, he or she must receive the consent of the lender.
Article 182 (Repair of Borrowed Goods)
Major repairs of borrowed goods shall be done by the lender, mid-level repairs shall be done by the person determined in the contract, and small repairs shall be done by the borrower. In cases where a person who has taken on mid-level repairs and small repairs has not repaired in time and the borrowed goods are severely damaged, the other party may cancel the contract.
Article 183 (Sub-lending Borrowed Goods)
A borrower in a borrowing contract may sub-lend borrowed goods to a third party with the consent of the lender. In this case, the borrower is accountable to the lender for the fulfilment of the contractual duties.
Article 184 (Borrowing Contracts which Establish a Security Deposit)
In a borrowing contract concluded with the establishment of a security deposit, the lender may refuse to return the security deposit until the borrowed goods are returned.
Article 185 (Entry into Commissioning Contract)
Acts where an institution, enterprise or organization commissions sales, purchases or other property trades to another institution or to a citizen shall be done according to commissioning contract. Commissioning contracts must be concluded and fulfilled so that every economic reserve and potential can be mobilized and used for little effort and funds.
Article 186 (Duties of Parties to a Commissioning Contract)
According to the commissioning contract, the fiduciary bears the duty to carry out acts of property trade commissioned by the beneficiary at the beneficiary’s expense. The beneficiary has the duty to take over the results and pay the given remuneration. A commissioning contract must be concluded in writing.
Article 187 (Guarantee of Conditions Required to Carry Out Commissioned Acts)
A beneficiary must first hand over to the other party necessary money or goods to do the commissioned act.
Article 188 (Duties of a Fiduciary)
A fiduciary must do the commissioned act in conformity with the conditions of the contract. In cases where a fiduciary is going to do an act that goes beyond the scope of the conditions of the contract, he or she must receive the consent of the beneficiary.
Article 189 (Right of Claim of a Third Party in Relation to a Fiduciary)
A third party who has a right of claim against a fiduciary irrelevant to the commissioning contract may not realize his or her right of claim from money or goods that were received for the act commissioned or are agreed to be handed over to the beneficiary.
Article 190 (Treatment of Profitable Results of Acts)
A fiduciary must hand over to the beneficiary even the results of the acts that were done more profitably than as required by the beneficiary.
Article 191 (Remuneration for Results of Commissioned Acts and Payment of Expenses)
A beneficiary must take over the results of the act from the fiduciary in time and must pay the given remuneration and the expenses he or she has incurred.
Article 192 (Imposing Contractual Norms in Property Trades between Institutions, Enterprises and Organizations)
The contract for sale and purchase, contract for work activities, contract for storage, borrowing contract, and commissioning contract provided for in this law are also applicable and imposed to property trade relationships between institutions, enterprises and organizations.
Article 193 (Entry into Contracts for Passenger Transportation)
Travel where citizens use transportation methods including trains, cars, ships and aeroplanes shall be done according to contracts for passenger transportation. Contracts for passenger transportation must be concluded and fulfilled so as to guarantee the safety and comfort of the people while travelling.
Article 194 (Duties of Parties to a Contract for Passenger Transportation)
According to the contract for passenger transportation, a guest bears the duty to pay the given price to the transportation institution, and the transportation institution bears the duty to transport them to their travel destination. Contracts for passenger transportation are concluded at the time the transportation institution approves the use of the given transportation method according to the ticket.
Article 195 (Guarantee of Conditions of Travel)
Transportation institutions must guarantee well to the guests which use the transportation method the conditions and facilities required for travel, including medical services and onboard meals.
Article 196 (Duty to Transport Guests to their Destinations)
In cases where a transportation institution has not been able to transport a guest to his or her travel destination, it must guarantee the guest the use of another transportation method.
Article 197 (Refund of Ticket Price and Prolongation of Ticket Validity)
If a guest tries to return the ticket price within the determined period or in cases where he or she is not able to be transported, a transportation institution must return the whole or part of the given ticket price to the guest or prolong the validity of the ticket.
Article 198 (Rights of Travellers)
Guests who are travelling may take pre-school children without a ticket and may board the transportation method concerned with luggage within the scope determined.
Article 199 (Adherence to Order of Travel)
Guests must preserve transportation methods, facilities and equipment in the course of travel and keep the order of travel as instituted. In cases where this duty has been violated, the transportation institution may require compensation for damage from the guest concerned or may require that he or she disembark from the transportation method.
Article 200 (Entry into a Savings Contract)
Acts where a citizen saves money in a savings institution shall be done through a savings contract. A savings contract must be concluded and fulfilled so as to effectively use idle money for economic construction and to promote the improvement of the people’s standards of life.
Article 201 (Duties to the Parties of a Savings Contract)
According to the savings contract, when a citizen who saves entrusts money to a savings institution, the savings institution bears the duty to save it and hand it over according to the request of the citizen who saved it. A savings contract is concluded when the savings institution receives the money and hands over a savings certificate to the citizen who saved the money.
Article 202 (Rights of a Citizen who Saves)
In a savings contract, a citizen who saves may determine at will the type and amount of savings. A savings institution must, at the request of the citizen who saves, change savings already received into another type of savings or must transfer it to another savings institution.
Article 203 (Duty to Receive Money for Saving or Hand over Money Saved)
A savings institution must, at the request of a citizen at any time, receive money to save or hand over money saved. In cases where the savings institution has not correctly confirmed the other party and wrongly handed over money, it shall be accountable for it.
Article 204 (Confidentiality of Saving)
A savings institution must keep savings confidential and must not make public the contents of the savings.
Article 205 (Entry into Insurance Contract)
Acts where a citizen buys insurance for life, health or property shall be done according to an insurance contract. Insurance contracts shall be concluded and fulfilled so as to protect people from damage caused by accidental disaster and to mobilize and use idle money.
Article 206 (Duties of Parties to an Insurance Contract)
According to the insurance contract, a citizen who buys insurance bears the duty to pay the insurance premium to the insuring institution, and the insuring institution bears the duty to hand over insurance money or insurance compensation to the citizen concerned if an insurance accident occurs. An insurance contract shall be concluded when the insuring institution hands over the insurance policy to the citizen who is buying insurance.
Article 207 (Intentional Insurance Accidents)
In cases where a citizen who has bought insurance or a third party who has an interest in receiving the insurance money or insurance compensation has intentionally caused an insurance accident, insurance money or insurance compensation shall not be paid.
Article 208 (Claim of Compensation against a Third Party at Fault)
An insuring institution which has handed over insurance compensation for an accident caused by the fault of a third party may require compensation for it from the third party. In cases where a third party has caused an insurance accident, the citizen who has bought insurance must secure the results of the accident. If this duty is violated, he or she may receive less insurance compensation or not at all.
Article 209 (Payment of Bodily Insurance Premiums)
Citizens who have concluded bodily insurance contracts such as life insurance, children’s insurance, and disaster insurance must regularly pay the insurance premium within the period determined. If a person who has bought bodily insurance does not pay the insurance premium within the period determined, the legal effect of the insurance disappears, and if the insurance premium is paid the legal effect of the insurance reappears from that time.
Article 210 (Payment of Bodily Insurance Money)
An insuring institution must pay the insurance money concerned if a citizen who has bought bodily insurance has died or is no longer able to work. In life insurance and children’s insurance, if the insurance period has ended and the citizen who has bought the insurance pays all of the insurance premium, the matured endowment shall be paid.
Article 211 (Payment of Property Insurance Premiums)
A citizen who has bought property insurance must pay insurance premiums within the period determined. In cases where the period of the contract has passed without an insurance accident, the insurance premiums paid shall be the income of the insuring institution.
Article 212 (Notification of Property Insurance Accident)
In cases where an insurance accident has happened, a citizen who has bought property insurance must soon inform the insuring institution and must take measures to lessen the loss. If this duty is violated, he or she may receive less insurance compensation or not at all.
Article 213 (Entry into Authorizing Contracts)
Acts of authorizing property trade and other legally significant acts to another shall be done by an authorizing contract unless another legal basis is available.
Article 214 (Duties of Parties to Authorizing Contracts)
According to the authorizing contract, an agent bears the duty to carry out authorized acts in the name and at the expense of the principal, and the principal bears the duty to take over the results of the acts the agent has done within the scope of authorization.
Article 215 (Acts that Cannot be Authorized)
Acts which require the direct expression of intention of the person himself or herself such as adoptive relationships or wills may not be authorized.
Article 216 (Adherence to the Scope of Authorization)
Agents must act within the scope of authorization. In cases where it is unavoidable to smoothly carry out the authorized act, he or she may do acts that go beyond that scope.
Article 217 (Liability for Damage Incurred in the Process of Authorized Acts)
An agent is accountable to the principal for damage incurred through his or her fault in the process of doing the authorized act. However, the principal shall be accountable for damage incurred without the fault of any party.
Article 218 (Notification of Implementation Progress)
An agent must inform the principal of the implementation progress of the authorized acts at his or her request.
Article 219 (Compensation of Expenses Spent on Authorized Acts)
A principal must receive the results of the agent’s acts in time in accordance with the conditions of the contract and must compensate the expenses he or she has spent. A principal is accountable for compensating the agent for damage incurred in the process of doing the authorized acts due to his or her fault.
Article 220 (Cancellation of Authorizing Contract)
The parties to an authorizing contract may cancel the authorizing contract at any time. The party which cancels the contract is accountable to compensate the damage incurred by the other party as a result.
Article 221 (Entry into a Borrowing Contract)
Acts where citizens borrow and lend money or goods between them shall be done according to a borrowing contract. Borrowing contracts shall be concluded without cost. Borrowing contracts exchanging interests or goods in the form of interest may not be concluded.
Article 222 (Duties of Parties in a Borrowing Contract)
According to a borrowing contract, in the case where the lending citizen hands over money or goods to a borrowing citizen, the borrowing citizen bears the duty to repay to the lending citizen money of the same amount or goods of the same kind and amount. A borrowing contract is concluded at the time the lending citizen hands over the money or the goods to the other party.
Article 223 (Contracting Period of a Borrowing Contract)
In cases where a period has been determined and the borrowing contract concluded, the lending citizen can require the repayment of the lent money or goods when the period ends and the borrowing citizen may repay it even before the period ends.
Article 224 (Subject of Performance of a Borrowing Contract)
A citizen must repay borrowed money or goods within the period determined. In cases where he or she does not have the same goods, he or she may repay with other goods upon agreement with the other party.
Article 225 (Entry into Bank Lending Contract)
Acts where a banking institution lends money to an institution, enterprise or organization shall be done according to a bank lending contract. Bank lending contracts must be concluded and fulfilled so as to strengthen financial discipline and conserve monetary funds and promote its turnover.
Article 226 (Duties of Parties to a Bank Lending Contract)
According to the bank lending contract, a banking institution bears the duty to hand over monetary funds to the institution, enterprise or organization receiving the loan, and the recipient of the loan bears the duty to use those funds and to pay the principal and interest to the banking institution. A bank lending contract is concluded at the time the banking institution approves the application of the recipient of the loan and has handed over the loan.
Article 227 (Secured Source of Repayment of Loans)
Bank lending contracts shall be concluded on the condition that the source of repayment of the loan is taken as security. A person applying for a loan must give as security to the banking institution his or her capacity to repay the loan in documents.
Article 228 (Duty to Use Loan to for Designated Purpose)
The recipient of a loan must not misappropriate or dissipate the loan and must use it for its designated purpose. In cases where this duty has been breached, the banking institution may recover the loan before the end of the period or may discontinue the next loan.
Article 229 (Repayment of Loan)
The recipient of a loan must pay to the banking institution the principal and interest within the period determined. In cases where this duty has been breached, he or she must pay a higher percentage of interest from the day the period ends.
Article 230 (Entry into a Joint Venture Contract)
Acts where institutions, enterprises or organizations build things together such as homes or facilities with State funds and share the right to use shall be done according to a joint venture contract. Joint venture contracts must be concluded and fulfilled to mobilize reserves and potential to guarantee the demand for construction.
Article 231 (Duties of Parties to Joint Venture Contracts)
Parties to a joint venture contract bear the duty to participate in joint work and shall share right of use of the results of the work according to the degree of participation in the work. Joint venture contracts must be concluded in writing and be notarized.
Article 232 (Conditions for Agreement of Joint Venture Contracts)
Parties to a joint venture contract must agree on conditions such as the subject of the work, period, calculation method of work performance, principle for sharing the results of the work, and authority of the representative of the joint venture.
Article 233 (Election of Representative of Joint Venture)
The parties to the contract shall elect a representative of the joint venture to smoothly fulfil the contract. The representative of the joint venture shall be accountable for the joint venture as the representative of the parties to the contract.
Article 234 (Division of the Results of the Joint Venture)
When the work has finished, the representative of the joint venture must lodge with an institution concerned about the division and use of the results of the work by the parties to the contract according to their work performance.
CHAPTER IV. ACTS OF UNJUST ENRICHMENT
Article 235 (Duty to Repay Unjust Enrichment)
A person who has been unjustly enriched without legal basis by another person’s loss must return the enrichment concerned to the person who has incurred damage due to that unjust enrichment.
Article 236 (Period to Repay Unjust Enrichment)
A person who has been unjustly enriched must return property created from the enrichment to the person who has incurred damage from the time he or she finds out that the enrichment was unjust.
Article 237 (Principle of Repayment of Unjust Enrichment)
It shall be the principle that unjust enrichment and property created from it shall be returned in kind, and in cases where it cannot be returned in kind its price must be paid.
Article 238 (Storage and Management of Unjust Enrichment Property)
A person who returns property created from unjust enrichment may be compensated for the expense of storing and managing it and returning it.
Article 239 (Treatment of Unjust Enrichment where the Returnee Cannot be Identified)
In cases where the returnee of unjust enrichment cannot be identified, the person who was unjustly enriched must submit that enrichment to the institution concerned.
VOLUME IV. CIVIL LIABILITY AND THE CIVIL LITIGATION SYSTEM
CHAPTER I. CIVIL LIABILITY
Article 240 (Conditions for Civil Liability)
Institutions, enterprises, organizations and citizens shall bear civil liability in cases where they have violated the civil rights of another or have violated their civil duties. However, an institution, enterprise or organization under the same ownership shall not bear civil liability for the faults of other institutions, enterprises and organizations under the same ownership.
Article 241 (Civil Liability through Fault)
Civil liability shall be borne by the person at fault unless provided for by law. If a person who has violated a contract or a law is not able to prove that he or she is not at fault, it shall be considered that the fault lies with him or her.
Article 242 (Form of Civil Liability)
Civil liability shall be imposed in the form of the return of property, restitution, compensation for damage the payment of fines such as cancellation charges and arrears charges, or restrictions or loss on the right of claim. In these cases, different forms of civil liability may be imposed in combination.
Article 243 (Liability for Unlawful Acts by a Person who is Incompetent to Act)
In cases where a person who is not competent to act in civil affairs has violated another person’s civil rights, civil liability shall be imposed on his or her parents or guardian. In cases where the act of violation occurred in a period when the person was out of the control of the parents or guardian, civil liability shall be imposed on the person who bore the duty to control him.
Article 244 (Liability for Unlawful Acts by a Person who is Partially Competent to Act)
In cases where a person who is partially competent to act and has reached the age of 16 years old has incurred damage by violating the civil rights of another, his or her parents or guardian shall bear civil liability for the parts that go beyond the scope of his or her ability to pay.
Article 245 (Liability for Unlawful Acts by a Member of an Institution, Enterprise or Organization)
In cases where a member of an institution, enterprise or organization has caused harm to the property or body of another in carrying out his or her work, that institution, enterprise or organization shall bear civil liability.
Article 246 (Return of Property in Illegal Possession)
An institution, enterprise, organization and citizen which is illegally possessing property including the building of another must return it to the owner. In cases where the property cannot be returned in kind, they must pay the price accordingly.
Article 247 (Liability for Illegally Violating Property)
An institution, enterprise, organization and citizen that has caused harm to the property of another must restore that property to its original condition. In cases where restitution of property is impossible, he or she must give different goods of the same kind or pay that price.
Article 248 (Compensation for Damage for Violation to the Person)
An institution, enterprise, organization and citizen that has caused harm to the health and life of a person must compensate the damage concerned. A person who has severely damaged the dignity and honour of a person and left irreparable damage on his or her body and character must compensate the victim regardless of legal limitations.
Article 249 (Compensation for Damage Caused to Another by an Animal under Management)
In cases where an animal under management causes harm to the property or body of another, the owner or manager of the animal must compensate that harm. However, in cases where there is fault of the victim, the liability for compensation is lessened or waived.
Article 250 (Compensation for Damage for Violation of Land and Environmental protection Regulations)
An institution, enterprise, organization and citizen that has caused damage to the property of another by violating the law of the State on protecting land and resources and preserving and afforesting the natural environment and preventing environmental pollution must compensate the damage accordingly.
Article 251 (Joint Liability for Acts of Collective Violation)
In cases where several people have collectively caused harm to the property or body of another, they shall bear joint civil liability.
Article 252 (Liability for Breach of Contract)
A person who has violated a contract based on a plan shall pay a cancellation charge or arrears charge, and shall be responsible for compensating the damage created unless provided for by law. A person who has violated a contract which is not based on a plan shall be accountable to compensate that damage.
Article 253 (Liability for Contracts Violated by Parties on Both Sides)
In cases where all the contracting parties have violated a concluded contract, each shall bear the civil liability concerned.
Article 254 (Compensation for Damage upon Change or Cancellation of Contract)
The change or cancellation of a contract does not impact the right of a party who has requested compensation for damage.
Article 255 (Liability for Damage Caused by a Subject that Can Cause Grave Danger to the Surrounding Environment)
In cases where an institution, enterprise or organization has caused harm to the property or body of another in the process of handling or working on a subject that can cause grave danger to the surrounding environment shall bear civil liability even if it is not at fault. However, in cases where the victim has been grossly negligent, it shall not be accountable.
Article 256 (Waiver of Liability for Self-Defence or Act of Necessity)
In cases where a citizen has unavoidably caused harm to the property or body of another within the scope of what is necessary for self-defence or to protect the interests of the State and of society from natural disaster or illegal violation, he or she shall not bear civil liability.
Article 257 (Compensation for Damage Occurring due to Act of Necessity)
In cases where damage has been unavoidably caused to the property of another for the interests of the State and of society, the owner of the property saved as a result must compensate the damage of the person who has been harmed.
Article 258 (Relationship between Civil Liability and Administrative or Criminal Liability)
Civil liability does not exclude administrative or criminal liability for unlawful acts.
CHAPTER II. CIVIL STATUTE OF LIMITATIONS
Article 259 (Imposing Civil Statute of Limitations)
The lodgement of court proceedings or arbitration to be guaranteed the realization of civil rights must be done within the civil limitation period. In cases where this is violated, he or she cannot be guaranteed the realization of rights by judicial or arbitral process. The civil statute of limitations is not imposed for a claim to return property owned by the State.
Article 260 (Civil Limitation Period where a Citizen is a Party)
The civil limitation period between an institution, enterprise or organization and a citizen or between citizens shall be 1 year.
Article 261 (Civil Limitation Period between Institutions, Enterprises and Organizations)
The civil limitation period between institutions, enterprises and organizations are as follows:
1. 3 months for demands for payment for a product and claims for refund of a deposit, claims for damage compensation and cancellation charges for violation of specifications, completeness and samples of products supplied, decomposition or spoiling, shortfall in quantity and other violation of conditions of the contract, claims for payment of arrears charges, and claims arising related to transportation and communications work;
2. 6 months for claims besides those in the foregoing number;
3. 2 years for claims related to foreign civil transactions unless provided for by the treaty (Article 261 of the 1990 former law: 3. Period in the agreement concerned for claims for compensation related to accidents of imported goods taken over directly from a foreign country and claims related to international liaison and transportation and international communications).
Article 262 (Civil Limitation Period of Credit by Budgeting Institutions and Enterprises)
For the claims of budgeting institutions and enterprises, it shall be considered that the civil limitation period has passed if the budget year in which the right of claim arose passes, even if the civil limitation period has not passed.
Article 263 (Treatment of Property where the Civil Limitation Period has Passed)
Property for which the civil limitation period has passed shall be ownerless property. Institutions, enterprises and organizations must submit property for which the civil limitation period has passed to the institution concerned according to the process stipulated by the law and in time.
Article 264 (Voluntary Performance of Civil Duties after the End of the Civil Limitation Period)
A person who has voluntarily performed his or her civil duties after the end of the civil limitation period may not request a return even if he or she was not aware of the fact that the civil limitation period had passed.
Act 265 (Suspension of Civil Limitation Period)
In cases where the right of claim cannot be exercised due to reasons beyond anyone’s control such as a natural disaster within the last 3 months of the civil limitation period, the calculation of the limitation period is suspended and the calculation of the period continues when that reason disappears. In cases where the remaining limitation period is less than 3 months, it shall be extended to 3 months.
Article 266 (Cessation of Civil Limitation Period)
The calculation of civil limitation period ceases in cases such as the following:
1. In cases where a creditor has lodged court proceedings or an arbitration;
2. In cases where the debtor has confirmed a debt from a demand of payment through a banking institution;
3. In cases where a debtor approves the debt in a general contract dispute case not based on a plan between citizens or between institutions, enterprises, organizations and citizens, or between institutions, enterprises and organizations.
If the limitation period ceases, the limitation period is calculated anew from that time.
Article 267 (Extension of Civil Limitation Period)
A judicial organ or arbitral organ may extend the limitation period in cases where it is recognised that a person with a right of claim had unavoidable reasons for not lodging court proceedings or an arbitration within the civil limitation period.
Article 268 (Mandatory Imposition of Civil Limitation Period)
A judicial organ or arbitral organ must impose the legal limitation even if a party does not claim the benefit of the civil statute of limitations.
Article 269 (Commencement of Civil Limitation Period)
A civil limitation period commences at the following times:
1. For debts where the payment date is determined, on that date;
2. For debts where the payment date is not determined, when the debt was created;
3. For claims for damage compensation occurring through violation and damage to specifications, completeness and samples, decomposition or spoiling, shortfall in quantity and other violation of conditions of the contract for products supplied between institutions, enterprises and organizations, when the accident report was drafted or was meant to be drafted;
Article 270 (Commencement Date of Civil Limitation Period)
Civil limitation periods are determined by day, month or year, and that calculation starts from the day after the reason for calculating a limitation period arises.
Article 271 (End Date of Civil Limitation Period)
A civil limitation period ends when the same day as the date when the reason for calculating a limitation arose, and in cases where there is no same day, it ends when the last day of that month passes. In cases where the last day of the limitation period is a Sunday or holiday or a State-mandated day of rest, the first following work day shall be the last day of the limitation period.
Last updated 4 June 2021