The Civil Code, which has remained largely unchanged since its enactment in 1958, will undergo a comprehensive revision to reflect the changed social and economic environment. The Ministry of Justice announced on the 16th that it had approved an amendment to the contract law regulations as the first task for modernizing the Civil Code.
The amendment allows the statutory interest rate, which was fixed at 5% per annum for civil cases and 6% per annum for commercial cases, to be adjusted by presidential decree considering economic conditions such as interest rates and inflation. This improvement addresses the limitations of the fixed statutory interest rate, which has remained unchanged for decades despite significant fluctuations in market interest rates. It is expected to reduce excessive interest burdens and fairness disputes, and to adjust the rights and obligations between contracting parties more reasonably.
The amendment also includes a provision that allows for the cancellation of declarations of intent made under so-called ‘gaslighting’ conditions. This complements the existing Civil Code, which made it difficult to cancel declarations of intent made under psychological domination or undue interference, by allowing cancellations in cases of undue interference. This aims to practically protect individual decision-making freedom and clarify legal remedies for unfair situations that may arise during the contracting process.
The Ministry of Justice views this contract law amendment as the starting point for a comprehensive revision of the Civil Code. Despite two operations of the Civil Code Revision Committee since 1999, which led to some achievements such as the introduction of the adult guardianship system, a comprehensive revision of the Civil Code has not been achieved. Therefore, in June 2023, a new Civil Code Revision Committee consisting of academic and practical experts was launched to resume the revision work, with contract law being selected as the first task closely related to the lives of the people.