Direct-payment duty capped by unpaid construction prices

1. 01Question

   Where an employer pays a lower subcontractor directly under Article 35(2)(iii) of the Framework Act on the Construction Industry, is its direct-payment duty confined, unless there are special circumstances, to the range of its duty to pay construction prices to the subcontractor, after deducting the supplier's charges already covered by progress payments it has paid?

2. 02Holding

   Yes, in principle. Article 35(7) of the Framework Act on the Construction Industry and Article 29(4) of its Enforcement Rule apply Article 9(3) of the Enforcement Decree of the Act on Fair Transactions in Subcontracting to such a direct payment, so unless there are special circumstances the employer bears the direct-payment duty only within the range of its duty to pay construction prices to the subcontractor. That range is capped by the employer's duty to the original contractor and consists of the subcontract price less the part of the supplier's charges already covered by progress payments the employer has already paid, and the range of the duty under Article 35(2)(iii) is the same. On these facts the defendant was obliged to pay only KRW 16,668,300 and default interest on it.

   Summary of the holding, verbatim

   하도급거래 공정화에 관한 법률 제14조 제1항에 따른 발주자의 수급사업자에 대한 직접지급의무의 범위는 특별한 사정이 없는 한 발주자의 원사업자에 대한 대금지급의무를 한도로 하여 해당 수급사업자의 하도급대금에서 발주자가 원사업자에게 이미 지급한 기성공사대금 내역 중 해당 수급사업자의 하도급공사 부분의 금액을 공제한 금액이라고 보아야 하는데, 이는 건설산업기본법 제35조 제2항 제3호에 따른 발주자의 하수급인에 대한 직접지급의무의 범위의 경우도 마찬가지이다.

   Unofficial English translation

   Unless there are special circumstances, the scope of the project owner's obligation to make direct payment to the subcontractor under Article 14 (1) of the Fair Transactions in Subcontracting Act must be regarded as an amount capped by the project owner's obligation to pay the price to the prime contractor, calculated by subtracting, from the subcontract price of the relevant subcontractor, the amount corresponding to the portion of the subcontract works performed by the relevant subcontractor out of the progress payments for the works that the project owner has already paid to the prime contractor, and the same is true also of the scope of the project owner's obligation to make direct payment to the subcontractor under Article 35 (2) 3 of the Framework Act on the Construction Industry.

3. 03Disposition

   Partly reversed and remanded Stated in the decision

   원심판결 중 피고 패소 부분을 파기하고, 이 부분 사건을 수원고등법원에 환송한다.

   Unofficial English translation

   The judgment of the court below in the part where the defendant lost is reversed, and this part of the case is remanded to the Suwon High Court.

4. 04Form of the test

   Elements stated Stated in the decision

   특별한 사정이 없는 한 발주자는 수급인에 대한 대금지급의무의 범위에서 직접지급의무를 부담한다

   Unofficial English translation

   Unless there are special circumstances, the project owner bears the obligation to make direct payment within the scope of the obligation to pay the price to the contractor

5. 05Factors

   • 특별한 사정이 없는 한 발주자는 수급인에 대한 대금지급의무의 범위에서 직접지급의무를 부담한다
   • 발주자의 원사업자에 대한 대금지급의무를 한도로 하여
   • 발주자가 원사업자에게 이미 지급한 기성공사대금 내역 중 해당 수급사업자의 하도급공사 부분의 금액을 공제한 금액이라고 보아야 하는데
   • 이는 건설산업기본법 제35조 제2항 제3호에 따른 발주자의 하수급인에 대한 직접지급의무의 범위의 경우도 마찬가지이다

   Unofficial English translation

   • Unless there are special circumstances, the project owner bears the obligation to make direct payment within the scope of the obligation to pay the price to the contractor

   • capped by the project owner's obligation to pay the price to the prime contractor

   • must be regarded as an amount calculated by subtracting, from the subcontract price of the relevant subcontractor, the amount corresponding to the portion of the subcontract works performed by the relevant subcontractor out of the progress payments for the works that the project owner has already paid to the prime contractor

   • the same is true also of the scope of the project owner's obligation to make direct payment to the subcontractor under Article 35 (2) 3 of the Framework Act on the Construction Industry

6. 06Relation to precedent

   Follows earlier decisions Stated in the decision

   대법원 2011. 4. 28. 선고 2011다2029 판결(공2011상, 1052)

   Unofficial English translation

   Supreme Court Decision 2011Da2029 decided April 28, 2011 (Gong 2011 Sang, 1052)

   Decisions referred to

   [1] 대법원 2018. 6. 15. 선고 2016다229478 판결(공2018하, 1255) / [2] 대법원 2011. 4. 28. 선고 2011다2029 판결(공2011상, 1052)

7. 07Burden of proof

   Not addressed Not in the decision

8. 08Open question and revisit condition

   What circumstances count as the special circumstances that would take a case outside the rule confining the direct-payment duty to the range of the paying party's duty to pay construction prices to its subcontractor?

   The remand judgment of the Suwon High Court, which must decide both the direct-payment claim and the alternative assignment claim against the deductibility of the progress payments, will show how the ceiling works in practice. Any amendment to Article 35(2)(iii) or 35(7) of the Framework Act on the Construction Industry, to Article 14(1) of the Act on Fair Transactions in Subcontracting or to Article 9(3) of its Enforcement Decree, or a later decision defining the special circumstances, would call for this entry to be read again.

Read 2026-10-24 · Cross-read 2026-10-24. All quotes matched against the official text. The Chinese-character placeholders the court used for anonymised parties are given in their Korean readings, and parenthetical Chinese-character glosses are omitted.

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