• Title/Summary/Keyword: contract risk

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A Study on the FIDIC's Conditions of Contract for EPC/Turnkey Projects (FIDIC의 EPC/Turnkey 프로젝트용 표준약관(標準約款)에 관한 연구(硏究))

  • Choi, Myung-Kook
    • THE INTERNATIONAL COMMERCE & LAW REVIEW
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    • v.18
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    • pp.189-218
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    • 2002
  • The EPC/Turnkey Contract goes to the extreme in allocating risks to the contractor and depending on the types of project, this may be regarded as unacceptable. It has also gone to the extreme in the extent to which the contractor is responsible for the specification and design of the Works. The employer is not responsible for correctness of any information provided by him nor for correctness of any specification or other matter included in the Employer's Requirements, except the definition of the intended purpose and criteria for testing and performance. With such conditions it is surprising that the employer is entitled to interfere in the contractors performance to an extent that is close to what is norm for a construction contract with employer design and with normal risk allocation. The combination of risk allocation and inappropriate administrative provisions makes the EPC/Turnkey Contract a document that will meet severe resistance from contractors. It is also likely that employers will see the risks and difficulties from their own perspective. It is a fiction that the EPC/Turnkey Contract will give the employer a contact with a certainty of final price and completion date. It is not a fiction that the EPC/Turnkey Contract carries many seeds for disputes between the parties. The Orange Book has become an accepted document even if it clearly contains some weaknesses. Some of these have been corrected in the Plant Contract. In my opinion FIDIC should let users become more familiar with the Plant Contract as a follow up to the Orange Book.

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A Study on the Rule of Warranty in the English Law of Marine Insurance (영국 해상보험법상 담보(warranty)에 관한 연구)

  • Shin, Gun-Hoon
    • THE INTERNATIONAL COMMERCE & LAW REVIEW
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    • v.42
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    • pp.275-305
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    • 2009
  • Marine insurance contracts, which intended to provide indemnity against marine risks upon the payment of price, known as a premium, originated in Northern Italy in the late 12th and early 13th centuries. The law and practice were later introduced into England through the Continent. It is, therefore, quite exact that English and European marine insurance law have common roots. Nevertheless, significant divergences between English and European insurance systems occurred since the late 17th century, mainly due to different approaches adopted by English courts. The rule of warranty in English marine insurance was developed and clarified in the second part of the 18th century by Lord Mansfield, who laid the foundations of the modern English law of marine insurance, and developed different approaches, especially in the field of warranty in marine insurance law. Since the age of Lord Mansfield, English marine insurance law has a unique rule on warranty. This article is, therefore, designed to analyse the overall rule of the rule of warranty in English marine insurance law. The result of analysis are as following. First, warranties are incorporated to serve a very significant function in the law of insurance, that is, confining or determining the scope of the cover agreed by the insurer. From the insurer's point of view, such the function of warranties is crucial, because his liability, agreed on the contract of insurance, largely depend on in, and the warranties, incorporated in the contract play an essential role in assessing the risk. If the warranty is breached, the risk initially agreed is altered and that serves the reason why the insurer is allowed to discharge automatically further liability from the date of breach. Secondly, the term 'warranty' is used to describe a term of the contract in general and insurance contract law, but the breach of which affords different remedies between general contract law and insurance contract law. Thirdly, a express warranty may be in any form of words from which the intention to warrant is to be inferred. An express warranty must be included in, or written upon, the policy, or must be contained in some document incorporated by reference into the policy. It does not matter how this is done. Fourthly, a warranty is a condition precedent to the insurer's liability on the contract, and, therefore, once broken, the insurer automatically ceases to be liable. If the breach pre-dates the attachment of risk, the insurer will never put on risk, whereas if the breach occurs after inception of risk, the insurer remains liable for any losses within the scope of the policy, but has no liability for any subsequent losses. Finally, the requirements on the warranty must be determined in according to the rule of strict construction. As results, it is irrelevant: the reason that a certain warranty is introduced into the contract, whether the warranty is material to the insurer's decision to accept the contract, whether or not the warranty is irrelevant to the risk or a loss, the extent of compliance, that is, whether the requirements on the warranty is complied exactly or substantially, the unreasonableness or hardship of the rule of strict construction, and whether a breach of warranty has been remedied, and the warranty complied with, before loss.

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The Rules of Law on Passing of Risk in Contracts for the International Sale of Goods (국제물품매매계약에서 위험이전에 관한 법리)

  • Hong, Sung Kyu
    • THE INTERNATIONAL COMMERCE & LAW REVIEW
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    • v.64
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    • pp.3-37
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    • 2014
  • The purpose of this paper is to examine thoroughly on passing of risk in contracts for the international sale of goods. Articles 66~70 of the CISG contain provisions on passing of risk. Article 66 states the main effect of passing risk to the buyer. Article 67~69 determine the decisive point in time which the risk passes from the seller to the buyer and article 70 attempts to explain the relation between passing of risk and fundamental breach of contract by the seller. As in the case corresponding Incoterms rules, the main issue to be resolved is which party should bear the economic consequences in the event that the goods are accidentally lost, damages or destroyed. Many cases also apply CISG articles 66~70 to contracts in which parties not agree on the use of trade terms such as CIF, CFR, FOB and FCA in Incoterms[R] 2010 Rule that provide for when the risk passes. In order to minimize disputes that may arise under contract, when drawing up a contracts for the international sale of goods, the specifics of agreement should be clearly stipulated. Consequently, the parties of contracts for the international sale of goods should take adequate measures, and it is required to prepare the contracts clearly as the specific terms to prevent and resolve contractual disputes on passing of risk.

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Deriving Key Risk Sub-Clauses for EPC/Turnkey Contract Conditions for Overseas Construction Projects - Based on FIDIC Conditions of Contract for EPC/Turnkey Projects, second edition 2017 - (해외건설공사 EPC/Turnkey 계약조건 핵심 리스크 세부조항 도출 - FIDIC Silver Book 2017년 개정판 기준으로 -)

  • Hong, Seong Yeoll;Jei, Jae Yong;Seo, Sung Chul;Park, Hyung Keun
    • Korean Journal of Construction Engineering and Management
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    • v.23 no.6
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    • pp.101-110
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    • 2022
  • Recently, the global construction market is expected to grow at an annual average of 4.8% by 2025 and the risk of overseas construction is also expected to increase accordingly. In particular, domestic construction companies intensively participated in the EPC(Engineering, Procurement, Construction)/Turnkey project, but as a result of failing to respond to contractual risks, they have suffered losses of trillions of won in overseas business since 2013. Nevertheless, there have been not many studies on the derivation of EPC/Turnkey's contractual key risk sub-clauses. Therefore, in this study, the key risk sub-clauses were studied for the conditions of the 2017 Silver Book contract issued by the International Consulting Engineering Federation(FIDIC). To this end, 30 experts with more than 10 years of experience in international construction contracts were formed as a panel to conduct a Delphi survey on 170 sub-clauses of 21 clauses of FIDIC Silver Book to derive 62 main risk sub-clauses. In addition, the RPN(Risk Priority Number) was finally calculated using the FMEA(Failure Mode and Effect Analysis) technique, and 25 key risk sub-clauses within the Critical Risk range were derived. Through the results of this study, the practical point of view is able to refer to the contract provisions to be carefully reviewed at the bidding and contract signing stage in overseas construction projects. From an academic point of view, it provides direction and basic knowledge of how to study the contract fields used in overseas construction EPC/Turnkey projects.

Comparison of Success Rates of Supply Chain Contract using Simulation (시뮬레이션을 이용한 공급사슬 계약 성사율 비교)

  • Gao, Yang;Seo, Dong-Won
    • Journal of the Korea Society for Simulation
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    • v.31 no.1
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    • pp.19-27
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    • 2022
  • This study compares and analyzes wholesale(or price-only) contract, revenue-sharing contract, quantity-flexibility contract, and channel-rebate contract in a decentralized supply chain consisting of one supplier and one retailer. By setting the parameters of each coordination contract based on the previous results, we conduct simulations using @RISK for several combinations of these parameters. Under the supply chain coordination, we evaluate the probability of successfully signing a contract and the participant in favor of each contract. As a result, the quantity-flexibility contracts is most advantageous for the retailer and the channel-rebate contracts is most advantageous for the supplier. It revealed that revenue-sharing contracts can be used more flexibly because they can be selected in the widest range to redistribute profits between supplier and retailer.

A Checklist for Assessment of Risks Involved in IT Service Project Contract (IT 서비스 프로젝트 계약서 위험 요인 평가 체크리스트)

  • Jeong, Eun Joo;Jeong, Seung Ryul
    • Journal of Internet Computing and Services
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    • v.15 no.4
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    • pp.57-65
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    • 2014
  • Risk factors are the reason behind cost overruns and delays in long-term large-scale IT service projects. Major risks originate from the integration of complex IT system components, including software, hardware, and solutions; the competitive bidding process; the turnkey and firm-fixed price nature of contracts; and the project execution environment. We have identified several risk factors such as delay in acceptance, low quality of deliverables, delay in payment, adding and changing requirements and scope, unclear definition of roles and responsibilities of the buyer and supplier, and unclear procedures of change and quality management during the project execution phase. One needs to manage risks proactively before signing the contract. In order to weed out or lower the risk factors well in advance, we need to identify and remove risk factors contained in contract clauses and attached contract documents. We propose a checklist for assessing IT service project contracts. To validate the checklist's utility, we applied it to an IT service project in the finance industry. The results show that the checklist is effective in identifying and removing risk factors pertaining to IT service projects.

The Effect of Construction Safety Supervision System on Risk Control and Reduction (건설안전감리제도가 위험제어 및 절감에 미치는 영향)

  • Lim, Jin-Sang;Kang, Kyung-Sik
    • Journal of the Korea Safety Management & Science
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    • v.20 no.3
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    • pp.1-9
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    • 2018
  • This study is intended to look into the effect of construction safety supervision system on risk control and reduction. To achieve this, a survey was carried out to 114 companies in construction, ordering, contract and management. The overall findings were as follows. The effect of construction safety supervision system on risk control and reduction showed that factors of supervision system, supervision cost and supervision method had a positive effect on risk control and reduction. And their perception of the introduction of safety supervision system in construction sites according to process showed that there was a difference between them according to the field of ordering, contract and supervision. There was the biggest difference between owner and contractor in double supervision system, but no difference between them in the perception of risk reduction. These results show that all ordering, contract and supervision are positively needed for the introduction of construction safety supervision. This means that there is a difference between owner and contractor in the perception of process according to system operation. All companies agree to system improvement by the settlement of safety supervision system for the prevention of safety accidents and safe construction, but the systematic complement of safety supervision is the burden of contractor. And there is a big difference between owner and contractor in the perception of responsibility and concern for cost burden.

The Significance of Contract Law for Efficient Mergers and Acquisitions (M&A) Procedure

  • Eungoo KANG
    • East Asian Journal of Business Economics (EAJBE)
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    • v.11 no.4
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    • pp.41-50
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    • 2023
  • Purpose - This study aims to examine the role of contract law in mergers and acquisitions (M&A) and to examine whether or not contract law is necessary in M&A. The study also discusses how contract law can be utilized in M&A, as well as some of the problems that arise from the use of contracts in this area. Research design, data, and methodology - To minimize bias and errors, this study used only peer-reviewed articles and book excluding internet news articles, conference papers, and dissertations. For a well-organized screen and selection process, the author conducted the extraction procedure thoroughly to eliminate some duplicated resources. Result: This study indicates that complex deals carry a high risk but also have the potential to yield substantial revenue for stakeholders. Thus, contract law is essential to the success of M&A because it helps to define the (1) terms of the transaction, (2) reduces risk, (3) offers legal safeguards, and ensures that the (4) agreement is enforced. Conclusion - This study concludes that an understanding of contract law is essential to the profitable merging of two businesses. The application of contract law provides a mechanism for enforcing the agreement, which can increase the likelihood that the stipulations of the M&A will be satisfied.

Passing of Risk of Loss of the Goods under CISG (국제물품매매협약상 위험이전)

  • HEO, Hai-Kwan;OH, Tae-Hyung
    • THE INTERNATIONAL COMMERCE & LAW REVIEW
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    • v.75
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    • pp.1-28
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    • 2017
  • Article 67 of CISG which provides for the passing of risk of loss of the goods applies to the contract of sale involving carriage of the goods. The risk here is in nature the price risk. Under Article 67(1), if the seller is bound to hand the goods over to a carrier at a particular place, the risk passes to the buyer when the goods are handed over to the carrier at that place; if the seller is not bound to hand them over at a particular place, the risk passes to the buyer when the goods are handed over to the carrier. In these cases, the risk passes even though the seller duly retains documents controlling the disposition of the goods. Article 69 of CISG applies to the contract of sale that does not involve carriage of the goods. Under Article 69(1) which covers the situation that the buyer is bound to take over the goods at the place of business of the seller, the risk passes when the buyer takes over the goods, however if the buyer does not take over the goods in due time, the risk passes at the time when the goods are placed at the buyer's disposal and he commits a breach of contract by failing to take delivery. Under Article 69(2) which covers the situation that the buyer is bound to take over the goods at a place (including his own place of business) other than the place of business of the seller, the risk passes when delivery is due and the buyer is aware of the fact that the goods are placed at his disposal at that place. Under these provisions of CISG, this study suggests what should be the definition of the contract of sale involving carriage of the goods. This study goes further to looks into what should be the concepts of the handing over of the goods by the seller to the carrier, the taking over of the goods by the buyer and the placing the goods at the buyer's disposal by the seller. This study may, we hope, provide a guidance for clearer understanding of the exact time of passing of risk under CISG.

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The Selection and Effects of Contract Language in International Contract (국제계약에 있어서 계약언어의 선택과 효과)

  • Song Yang-Ho
    • Journal of Arbitration Studies
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    • v.15 no.1
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    • pp.207-228
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    • 2005
  • When closing an international contract, both contract parties endeavor to convey their intentions from the stage of negotiation to the moment of signing the contract. Of the many problems presently related to contract language, the first one to consider is which contract party will run the risk of the language deficiencies occurring as a result of the misunderstanding and misinterpretation between different languages. The second problem to consider is whether the interpretation and translation of the contract language is needed and, if so, which party is going to bear the expenses and assume responsibility of the misinterpretation in the translation of, the contract language. The third problem is related to the obligation of explaining to both contract parties the contents and details of the international contract written in different languages. The fourth issue is which language of both contract parties becomes the standard contract language in the procedure of arbitration. The fifth, but not the last problem, is how to solve the language defects in interpreting and translating the contract languages. These five problems can be easily solved by the approval of the contract parties in scrutinizing and selecting the contract languages. However, this research mainly focuses on which effects of the contract language and as how to define and select the contract language.

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