A Study on Unfair Special Provisions in Government Procurement Contracts

The principle of good faith is also applied to government procurement contracts. However in government procurement contracts the government is in a superior position than the contracting party in terms of information and authority regarding government procurement, and unlike private parties the government is not an entity that pursues only its own interests but has a responsibility to serve the interests of the entire nation, including the contracting party. Therefore the government must not abuse its authority by taking advantage of its superior position against the contracting party and has a duty to treat and consider the contracting party fairly and equally. The “Act on Contracts to Which the State is a Party” which are the laws that govern government procurement contracts, declare that the principle of good faith applies to government procurement contracts, and they prohibit special provisions that unfairly restrict the contracting party’s interests under the law and specify that such unfair special provisions are null and void. In order to be considered an unfair special provision, it must be a special provision that restricts the interests of the contracting party that could reasonably be expected as stipulated in the law or various contract terms at the time of entering into the contract, and such restrictions must be unfair. Whether it is unfair or not should be judged by comparing the interests of the contracting party that are restricted and the interests the government gains from it. If there is no significant imbalance between the interests of the contracting party that are restricted and the interests of the government that are gained from it, it cannot be considered unfair.