On the 16th, the Ministry of Justice approved a revision to the Civil Code’s contract-related provisions at the State Council meeting. This marks the first step in modernizing the Civil Code, which has remained largely unchanged since its enactment in 1958, to reflect evolving social and economic conditions.
The revised provisions allow for adjustments to the statutory interest rate, which had been fixed at 5% for civil cases and 6% for commercial cases for decades. The new system enables adjustments via presidential decree based on economic conditions such as interest rates and inflation, aiming to reduce excessive interest burdens and enhance fairness.
The revision also includes a provision allowing the cancellation of declarations of intent made under psychological manipulation, commonly referred to as ‘gaslighting.’ Previously, it was difficult to cancel such declarations under the existing Civil Code, but the new rules aim to protect individuals’ freedom of decision-making. Provisions related to debt default and compensation have also been systematized and simplified.
The Ministry of Justice views this revision as the starting point for a comprehensive overhaul of the Civil Code. A new Civil Code Revision Committee was launched in June 2023 with participation from academic and legal professionals, and contract law was selected as the first priority. Minister of Justice Sung-ho Jeong stated that the ministry will do its best to ensure parliamentary approval and continue advancing the modernization of the Civil Code.