No, really, what is it? It’s a commonly used word, sure: “You broke our contract” or “It’s in the contract” can be heard as often as other vaguely legalese phrases such as “My rights,” or “I’ll sue,” but what exactly is a contract? We ask because, if pressed, most people can’t really say. An agreement? A promise? The law?
A contract is a promise you must keep because the law will enforce it. You breach, you pay (or deliver). This seems simple until you consider that you don’t have to keep all promises because the law — the court — won’t enforce all promises. Consider:
“Your Honor, we had a deal that I was going to trade a shipful of guns for a truckful of narcotics.”
“Oh well then go ahead, a contract is a contract. Cheerio.”
Nope. But there are other, more subtle laws at play, such as securities regulations for investment transactions, labor law for employment contracts and immigration law for entering the country. What happens when an employer has a contract to pay a nonresident alien, who cannot work legally at all, a rate less than minimum wage? Korean courts have said that the employee must be compensated in accordance with the Labor Standards Act. But it might not be too wise to file a suit because, if immigration were to get wind of it, they could fine both parties for violating immigration law and maybe deport the worker.
There are also basic principles of contract law, such as when a promise is meant to be kept, that vary by jurisdiction. Unilateral promises to bestow a gift are not enforceable in the US (usually) but enforceable in England and Korea. Legal humor blog Lowering the Bar featured a story about a “contract” that, despite being signed in blood, was not enforceable because it was essentially a gift promise. (That case involved two Americans of Korean descent, oddly enough.) A person may also be unable to form a contract (or certain types of contracts) due to lack of mental capacity or being a minor.
In perhaps a more relevant example, a Canadian paraglider was allowed to sue a Korean instructor despite a waiver of liability because he could not read the waiver as it was written in Korean. But unlike California, for example, where business contracts must be in a language readable by the other party, there isn’t any provision in Korean civil law mandating for this. So you might not be able to cancel your phone and lease on a whim; even if other courts followed the same reasoning, the readability issue might be limited to waivers, where an understanding of the risks disclosed is a key feature, rather than all contracts. Furthermore, the usual presumption is that a person has read and understood what they have signed. (Otherwise courts would be involved in endless inquiries about knowledge and understanding.)
It is commonly said that contracts are simply viewed as guidelines in Korea. And while that may be true in a cultural sense, where long-term relationships are viewed as more important than short-term promises or the “bottom line” of a single deal, it’s not true as a matter of law. A breach is a breach and an obligation is an obligation, unless there is a legal justification for failing to meet the obligation.
Yuna Lee is a Korean attorney with the firm Seowoo Minyul in Seoul. Darren Bean is a California-licensed attorney residing in Seoul.