CONTENTS
- 1. The Client Who Entered Into a Subcontract
- - The Complainant Company's Request
- - The Substance of the Complainant's Criminal Complaint
- 2. Explanation of the Concept of a Subcontract
- - Explanation of the Concept of Occupational Embezzlement
- 3. Defense of the Client Whose Subcontract Gave Rise to a Dispute
- 4. Case Outcome for the Client Who Concluded a Subcontract
1. The Client Who Entered Into a Subcontract
The client, who had entered into a subcontracting agreement, was the representative director of a company operating a construction business.
The complainant was a person who had entered into a subcontracting agreement with the client and had commissioned the client to perform interior construction work.
In the course of receiving and performing the complainant’s interior construction work, the client learned that the complainant’s company was engaged in various businesses.
Accordingly, the client and the complainant agreed to secure interior construction orders from the complainant company’s customers, with the client carrying out the construction, and to divide the net profits of the interior construction contracts with the complainant.
It was also agreed that the complainant would pay part of the interior construction order amount to the client’s company as an advance, and that the complainant would receive the remainder from the customers in installments and pay a certain proportion to the client’s company.
In order to begin performing the terms of the contract, the client and the complainant set up an interior model house, and it was agreed that the client would handle its operation.
The purpose for which the client and the complainant entered into the subcontracting agreement was to conclude interior construction contracts with the complainant company’s customers and thereby generate substantial profits.
The Complainant Company's Request
While performing the contract, the complainant requested the client to carry out additional construction on the model house, and agreed to pay the construction costs required for this.
In addition, to operate the model house, the client newly hired operating staff such as a call center.
However, the complainant did not pay the construction costs incurred, let alone the personnel costs for the staff.
The Substance of the Complainant's Criminal Complaint
When the client requested payment of the costs incurred, the complainant filed a complaint against the client for occupational embezzlement, citing the following content of the subcontracting agreement.
According to the complainant’s claim, because the client took the interior facilities that were in the model house after the construction was completed, occupational embezzlement was established against the client.
However, the client expressed a sense of grievance, stating that they had not been fully repaid the payment by the complainant and that the interior facilities they had taken were their own property.
2. Explanation of the Concept of a Subcontract
A 🔗subcontract, put simply, refers to a contract with a subcontracting business.
It refers to a contract between the contractor and a third party, concluded again so that the third party performs the work that the contractor is supposed to do.
Put simply, when a large company takes on a construction project, it refers to that large company not performing the entire project alone but entrusting part of it to a small or medium-sized enterprise.
Subcontracts are often concluded when a larger company entrusts work to a smaller company, and as with the client in this case, there is a considerable risk of being placed in an unfair situation by not receiving payment.
Explanation of the Concept of Occupational Embezzlement
The client in this case not only failed to receive payment under the subcontract but also came to face an unwarranted charge of occupational embezzlement.
The crime of 🔗occupational embezzlement refers to secretly disposing of or using, at one's own discretion, property entrusted to one in the course of business.
If the charge of occupational embezzlement had been recognized against the client, he could have been subject to imprisonment for up to 10 years or a fine of up to 30 million won.
Supreme Court Decision 2011Do1904, rendered May 26, 2011, holds as follows.
Where the keeper disposes of the property not for the benefit of oneself or a third party but for the benefit of the owner, the intent of unlawful acquisition as described above cannot be recognized in the absence of special circumstances.
However, where a person is entrusted with funds whose use is strictly limited by another and uses the funds for a purpose other than the limited use while executing them, the act of use itself constitutes the realization of the intent of unlawful acquisition, and the crime of embezzlement is established, even if it ultimately also serves the interests of the principal who entrusted the funds; but where the case does not fall under such circumstances, if the defendant offers an explanation as to the whereabouts or use of the money citing grounds that make it difficult to recognize the existence of the intent of unlawful acquisition, and there is also material consistent with that explanation, then in the absence of other special circumstances, it cannot be readily recognized that the entrusted money was embezzled with the intent of unlawful acquisition.
3. Defense of the Client Whose Subcontract Gave Rise to a Dispute
To prove that the charge of occupational embezzlement was not true, the attorney argued the contents of the contract and the fact of the complainant's non-payment of the price, and conducted the defense as follows.
Because the complainant has not paid the client the remaining agreed amount, the authority over all of the construction facilities under the contract still belongs to the client
The complainant, harboring malice when the client proceeded with a lawsuit claiming construction payment, filed the criminal complaint in this case
The attorney emphasized that the client was facing an unjust charge due to the complainant's malice, and conveyed that, to resolve the subcontract dispute, the client was already in the midst of conducting a civil lawsuit.
4. Case Outcome for the Client Who Concluded a Subcontract
The client, who had been anxious over a subcontracting contract dispute, obtained a non-referral decision on the charge of occupational embezzlement.
The client was in a difficult situation, having failed to receive proper payment after the subcontracting contract, and the situation had even reached the point of losing the will to live after being subjected to a charge of occupational embezzlement through the complainant's false accusation.
However, with the assistance of this firm's attorney, the client obtained a non-referral decision and expressed gratitude at being able to feel some relief.
When entering into a contract between businesses, such as a subcontracting contract, many legal disputes are encountered.
This firm provides one-stop legal services, from prior consulting before a subcontracting contract, to handling settlements during the performance of the contract, and responding to criminal and civil litigation when a dispute arises after the contract.
If you are in a situation requiring legal assistance related to a subcontracting contract, please proceed right away with a 🔗legal consultation appointment.
This content is based on actual case studies of Daeryun Law LLC with some adaptations, and the copyright belongs to our firm.
Unauthorized reproduction, duplication, or distribution and other copyright infringements may result in legal action under applicable laws.
