Daebo Magnetic, a manufacturer of equipment for secondary batteries, has been penalized by the Fair Trade Commission for failing to issue written contracts as required by law.
On July 20, the Fair Trade Commission announced that it has decided to impose a fine of 32 million won on Daebo Magnetic for not providing formal written contracts to its subcontractors when outsourcing manufacturing.
Daebo Magnetic produces de-metalization equipment that uses magnetic fields to remove metal contaminants from raw materials. The company supplies major secondary battery manufacturers, including Samsung SDI, LG Energy Solution, and EcoPro BM.
According to the commission's investigation, from November 2021 to July 2022, Daebo Magnetic outsourced the manufacturing of de-metalization equipment bodies, frames, and screens to two subcontractors but failed to issue formal contracts containing required legal details and signatures before work commenced on 51 occasions.
Specifically, in 50 transactions, the company only sent emails with partial information such as drawings, product names, order quantities, and delivery dates. In the remaining case, the contract lacked signatures and essential legal details, including inspection methods and payment terms.
This constitutes a violation of Article 3 of the Subcontracting Law, which mandates that the primary contractor must issue a written contract detailing payment terms and methods, signed by both parties, before work begins.
As a result, the Fair Trade Commission has issued a corrective order to prevent similar violations in the future and imposed a fine of 32 million won on Daebo Magnetic.
A commission official stated, "This action aims to clarify transaction conditions and prevent disputes by penalizing violations of the fundamental obligation to issue written contracts in subcontracting transactions. We plan to strictly enforce the law against actions that undermine the order of subcontracting transactions in the future."
* This article has been translated by AI.
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