Tax & Regulation February 2, 2026 · 38 min read

Korean Contract Law: Legal Guide for Canadian Companies

Key Takeaway

Korean contract law operates under a civil law framework fundamentally distinct from Canada's common law tradition. Canadian businesses must account for the absence of a consideration requirement, a pervasive statutory good faith obligation, enforceable penalty clauses, and the Civil Code's role as a gap-filler — all of which materially affect how contracts should be drafted, negotiated, and enforced in the Korean market.

Implications

Canadian companies entering Korean commercial agreements should: (1) not assume common law concepts such as consideration or implied good faith limitations apply; (2) recognize that shorter Korean-style contracts are not incomplete — the Civil Code fills gaps by default; (3) treat penalty clauses as binding and enforceable, requiring careful drafting; (4) ensure offer-and-acceptance mechanics align with Articles 527 and 534 of the Korean Civil Code to avoid unintended counter-offers or lapsed offers; and (5) engage Korean legal counsel familiar with both the Civil Code (민법) and Commercial Code (상법) before executing any binding agreements.

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