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Four subcontracting guidelines

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  1. Introducing and complying with 'Guidelines for Desirable Contract' between large and medium enterprises is designed to ensure fair trade from signing of a contract to its fulfillment.
    1. Determine the appropriate deadline acceptable in normal practice through adequate discussions and reach a compromise through consultations with a partner company in case parties settle for a deadline that is earlier than usual and citing the urgency of an order.
    2. Determine and adjust a contract price through reasonable unit cost calculation and adjustment that reflects a rise in raw materials price, exchange rate fluctuations, or a rise in prices (by introducing contract price adjustment standards and procedures).
    3. Prohibition of unreasonable price reductions.
  2. Compliance with 'Partner Company Selection (Registration) and Management Guidelines' for fair and objective selection and operation (change in registration) of partner companies.
    1. Guarantee of fairness and transparency in partner company selection (registration) and cancellation standards (by disclosing standards and procedures).
    2. Notification of partner company selection (registration) evaluation results.
    3. Providing partner companies with equal opportunities to participate in bidding.
  3. Introduction and enforcement of 'Guidelines for Installing and Operating Subcontracting Internal Review Committee' designed to set up a system for preventing and monitoring unfair business practices.
    1. Organization of Subcontracting Internal Review Committee.
    2. Prior review of determination of major prices such as raw materials pricing and conditions.
    3. Reviewing the adequacy of the standards and procedures for partner company selection, registration and cancellation.
    4. Operation of unfair trade practices reporting center.
  4. Introduction and enforcement of 'Guidelines on Desirable Document Issuance and Preservation' designed to establish document issuance and preservation in subcontracting.
    1. Issuance of seven documents of Subcontract Agreement (including additional contract amendments), Confirmation of Subcontract Agreement, Proof for Reception of Objects, etc., Inspection Result Notification, Price Reduction Statement, Request for Technical Data, and Notification of Contract Amendment Details.
    2. Preservation for 3 years, in accordance with Article 23, Section 1 of Subcontracting Act, of the seven documents in addition to the seven documents specified in Paragraph 1 including a document that records application details and negotiation details as well as the adjusted amount and reason for adjustment in case the subcontractor has applied for subcontract price adjustment due to price fluctuation of raw materials, etc., and a document that has recorded details of the raw materials, etc., date of deduction, amount and reason of deduction in case the project owner has provided the subcontractor with raw materials, etc. necessary for manufacturing, etc. of the object, etc. and deducted the cost from the price of the subcontract.