In improvement projects, associations and construction contractors enter into construction contracts. These contracts generally include provisions related to implementation, and construction contracts, in part, exhibit the characteristics of implement...
In improvement projects, associations and construction contractors enter into construction contracts. These contracts generally include provisions related to implementation, and construction contracts, in part, exhibit the characteristics of implementation contracts.
A contractor who enters into a contract with the association must first be selected as a preferred bidder through a resolution of the general meeting. When the contractor selected as the preferred bidder signs a contract with the association, the contractor finally acquires the status of a contractor. The current Urban Improvement Act has several regulations restricting the timing and method of selection of contractors. These restrictive regulations are mandatory provisions for public interest, so construction contracts concluded in violation of these provisions are not recognized as valid.
The association, as one of the parties to the construction contract, is a public administrative entity that has transferred the public duties of the state. The association exercises administrative disposal authority for the purpose of achieving the public interest of maintaining the overall functionality of the city. Furthermore, when viewed in terms of the "public nature of the contracted property" and the "social impact of the contract effect," it is evident that the construction contracts entered into by the association aim to produce legal effects in public law.
Constructors demolishes aging housing, creates high-quality residential spaces, and improve the residential environment where old buildings are concentrated. As a result, urban functionality is enhanced through construction contracts, and the rational usability of land increases. The housing resulting from improvement projects significantly satisfies the housing demand in our society and ultimately contributes to improving the living environment of low-income households after undergoing a ‘filtering process’.
Considering these facts, the construction contracts between associations and construction contractors in improvement projects satisfy the characteristics of a concept in ‘public contract’. Construction contracts should be understood as contracts under public law, not contracts under civil law. Their specific nature as public law contracts should be adequately considered when addressing legal issues arising from such contracts.
Unlike private construction projects, improvement projects are public development projects that are carried out on the premise of publicity. In addition, construction contracts concluded during the project are contracts under public law. Therefore, the continuation of the contract must be strongly protected under public law, and even if conflicts arise during the implementation of the contract, the cancellation of the contract should not be considered prematurely. Therefore, the Supreme Court's attitude that the civil law's provision of arbitrary termination is applicable to maintenance projects does not take into account the public aspects of the improvement project at all.
Furthermore, even if the assosciation attempts to cancel it in accordance with the terms of the contract, the court must apply strict criteria for judgment on the reason. Within a reasonable range, requests for an increase in construction costs for reasons such as inflation should be flexibly accepted as part of the contents of the construction contract.