{"id":702,"date":"2026-03-17T22:11:58","date_gmt":"2026-03-17T22:11:58","guid":{"rendered":"https:\/\/atlaw.kr\/en-blog\/?p=702"},"modified":"2026-05-03T08:33:20","modified_gmt":"2026-05-03T08:33:20","slug":"cisg-vs-korean-commercial-code-south-korea","status":"publish","type":"post","link":"https:\/\/atlaw.kr\/en-blog\/cisg-vs-korean-commercial-code-south-korea\/","title":{"rendered":"CISG vs. Korean Commercial Code in South Korea: 6 Key Differences"},"content":{"rendered":"<p><!-- ATLAS_HREFLANG_START --><link rel=\"alternate\" hreflang=\"ko\" href=\"https:\/\/atlaw.kr\/kr-blog\/cisg-%ed%95%9c%ea%b5%ad-%ec%83%81%eb%b2%95-%eb%b9%84%ea%b5%90\/\" \/><link rel=\"alternate\" hreflang=\"en\" href=\"https:\/\/atlaw.kr\/en-blog\/cisg-vs-korean-commercial-code-south-korea\/\" \/><link rel=\"alternate\" hreflang=\"x-default\" href=\"https:\/\/atlaw.kr\/kr-blog\/cisg-%ed%95%9c%ea%b5%ad-%ec%83%81%eb%b2%95-%eb%b9%84%ea%b5%90\/\" \/><!-- ATLAS_HREFLANG_END --><br \/>\n<!-- ===== Schema Markup ===== --><\/p>\n<p><script type=\"application\/ld+json\">{\"@context\": \"https:\/\/schema.org\", \"@type\": \"Article\", \"headline\": \"CISG vs. Korean Commercial Code in South Korea: 6 Key Differences Explained\", \"description\": \"A side-by-side comparison of the CISG and South Korea's Commercial Code across six issues \u2014 scope, trade usage, contract formation, preservation of goods, defect notification, and avoidance \u2014 with direct statutory citations.\", \"author\": {\"@type\": \"Person\", \"name\": \"Taejin Kim\", \"jobTitle\": \"Managing Partner\", \"worksFor\": {\"@type\": \"LegalService\", \"name\": \"Atlas Legal\", \"url\": \"https:\/\/atlaw.kr\", \"address\": {\"@type\": \"PostalAddress\", \"addressLocality\": \"Incheon\", \"addressRegion\": \"Songdo\"}}, \"@id\": \"https:\/\/atlaw.kr\/en\/taejin-kim-en\/#person\"}, \"publisher\": {\"@type\": \"Organization\", \"name\": \"Atlas Legal\", \"url\": \"https:\/\/atlaw.kr\", \"@id\": \"https:\/\/atlaw.kr\/#legalservice\"}, \"datePublished\": \"2026-03-17\", \"dateModified\": \"2026-03-17\", \"mainEntityOfPage\": {\"@type\": \"WebPage\"}, \"@id\": \"https:\/\/atlaw.kr\/en-blog\/cisg-vs-korean-commercial-code-south-korea#article\"}<\/script><\/p>\n<p><script type=\"application\/ld+json\">{\"@context\": \"https:\/\/schema.org\", \"@type\": \"FAQPage\", \"mainEntity\": [{\"@type\": \"Question\", \"name\": \"When does the CISG apply to contracts involving South Korea?\", \"acceptedAnswer\": {\"@type\": \"Answer\", \"text\": \"Under CISG Article 1(1), the Convention applies when the parties have their places of business in different states that are both Contracting States, or when conflict-of-laws rules lead to the application of a Contracting State's law. South Korea ratified the CISG in 2004, effective March 1, 2005. The South Korean Commercial Code's merchant-sale provisions (Articles 67\u201371), by contrast, apply to transactions between merchants as defined under Articles 4 and 5 of the Code. If no governing law clause is included in a contract between parties from two CISG Contracting States, the CISG applies automatically.\"}}, {\"@type\": \"Question\", \"name\": \"Which gives a longer defect notification period \u2014 the CISG or South Korea's Commercial Code?\", \"acceptedAnswer\": {\"@type\": \"Answer\", \"text\": \"The CISG is significantly more lenient. CISG Article 39(2) allows up to two years from the date of actual delivery as the outer limit for notifying defects. South Korea's Commercial Code Article 69(1), by contrast, requires the buyer to notify immediately upon discovery of patent defects, and within six months of delivery for latent defects. Importantly, the Supreme Court of South Korea held in 2013Da522 (June 24, 2015) that Article 69(1) applies only to warranty claims under the Civil Code, not to claims for damages based on incomplete performance (incomplete performance = \ubd88\uc644\uc804\uc774\ud589). A buyer who misses the six-month window may still pursue a damages claim by reframing the cause of action as incomplete performance under Civil Code Article 390.\"}}, {\"@type\": \"Question\", \"name\": \"Does silence amount to acceptance under the CISG or South Korea's Commercial Code?\", \"acceptedAnswer\": {\"@type\": \"Answer\", \"text\": \"Under CISG Article 18(1), silence or inaction does not by itself constitute acceptance. However, where a course of dealing between the parties exists, silence may exceptionally be treated as acceptance under CISG Article 9(1). South Korea's Commercial Code Article 53 takes a stricter approach: if a merchant who is in a standing business relationship with the offeror fails to dispatch a notice of acceptance or rejection without delay, the offer is deemed accepted. This automatic deemed-acceptance rule under the Commercial Code does not exist under the CISG.\"}}, {\"@type\": \"Question\", \"name\": \"Is automatic contract avoidance recognized under the CISG in South Korea?\", \"acceptedAnswer\": {\"@type\": \"Answer\", \"text\": \"No. CISG Article 26 provides that a declaration of avoidance is effective only if made by notice to the other party. There is no automatic avoidance under the CISG regardless of the gravity of the breach. South Korea's Commercial Code Article 68, by contrast, provides that in a fixed-time sale (\ud655\uc815\uae30\ub9e4\ub9e4) \u2014 a sale in which timely performance is essential to the contract's purpose \u2014 if the performing party misses the deadline and the other party does not immediately demand performance, the contract is deemed avoided automatically. This is one of the starkest practical differences between the two regimes.\"}}, {\"@type\": \"Question\", \"name\": \"How does the self-help sale right differ between the CISG and South Korea's Commercial Code?\", \"acceptedAnswer\": {\"@type\": \"Answer\", \"text\": \"CISG Article 88(1) permits a party who is obliged to preserve the goods to sell them 'in an appropriate manner' if the other party unreasonably delays taking possession, retaking the goods, or paying the price or preservation costs, provided reasonable prior notice is given. There is no restriction on the method of sale. South Korea's Commercial Code Article 67(1) limits the seller to deposit (\uacf5\ud0c1) or auction (\uacbd\ub9e4) only. For emergency sales of perishable goods, the CISG imposes a duty to take reasonable steps to sell without requiring court authorization, whereas Commercial Code Article 70(1) requires court permission before an emergency auction.\"}}, {\"@type\": \"Question\", \"name\": \"Can parties exclude the CISG in a contract governed by South Korean law?\", \"acceptedAnswer\": {\"@type\": \"Answer\", \"text\": \"Yes. CISG Article 6 expressly allows the parties to exclude the application of the Convention or derogate from or vary the effect of any of its provisions. To exclude the CISG, a governing law clause such as 'This Agreement shall be governed by the laws of the Republic of South Korea, excluding the United Nations Convention on Contracts for the International Sale of Goods' should be included. Without such an exclusion, the CISG applies automatically when both parties are based in Contracting States.\"}}, {\"@type\": \"Question\", \"name\": \"How is trade usage treated differently under the CISG versus South Korea's Commercial Code?\", \"acceptedAnswer\": {\"@type\": \"Answer\", \"text\": \"Under CISG Article 9(2), usages that are widely known and regularly observed in international trade in the type of contract involved are implicitly incorporated into the contract, even without express agreement. This means trade terms such as Incoterms can be incorporated automatically. South Korea's Commercial Code Article 1 grants legal-source status only to commercial custom law (\uc0c1\uad00\uc2b5\ubc95) \u2014 usages that have achieved the status of binding legal norms through general recognition \u2014 not to mere trade usages. The scope of implied incorporation is therefore narrower under the Commercial Code.\"}}], \"@id\": \"https:\/\/atlaw.kr\/en-blog\/cisg-vs-korean-commercial-code-south-korea#faq\"}<\/script><\/p>\n<p><script type=\"application\/ld+json\">\n{\n    \"@context\": \"https:\/\/schema.org\",\n    \"@type\": \"LocalBusiness\",\n    \"name\": \"Atlas Legal\",\n    \"image\": \"https:\/\/atlaw.kr\/logo.png\",\n    \"url\": \"https:\/\/atlaw.kr\",\n    \"telephone\": \"+82-32-864-8300\",\n    \"address\": {\n        \"@type\": \"PostalAddress\",\n        \"streetAddress\": \"323 Incheon Tower-daero, Centroad B-2901, Songdo-dong\",\n        \"addressLocality\": \"Incheon\",\n        \"addressRegion\": \"Yeonsu-gu\",\n        \"addressCountry\": \"KR\"\n    },\n    \"priceRange\": \"$$\",\n    \"openingHoursSpecification\": {\n        \"@type\": \"OpeningHoursSpecification\",\n        \"dayOfWeek\": [\"Monday\",\"Tuesday\",\"Wednesday\",\"Thursday\",\"Friday\"],\n        \"opens\": \"09:00\",\n     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!important; }\n    .kb-row-container, .kb-column-container { margin: 0; padding: 0; }\n<\/style>\n<p><!-- ===== Body Content ===== --><\/p>\n<div class=\"content-container\">\n<p>    <!-- Table of Contents --><\/p>\n<div class=\"toc\" style=\"padding: 15px; border-radius: 0; margin-bottom: 20px; background-color: #f5f5f5;\">\n<h2 style=\"font-size: 20px; margin-top: 0; margin-bottom: 10px;\">Table of Contents<\/h2>\n<ul style=\"list-style-type: none; padding-left: 0; margin: 0;\">\n<li><a href=\"#section1\">1. Scope of Application: Place of Business vs. Merchant Status<\/a><\/li>\n<li><a href=\"#section2\">2. Incorporation of Trade Usage: Usage vs. Commercial Custom Law<\/a><\/li>\n<li><a href=\"#section3\">3. Contract Formation: Offer, Acceptance, and Duty to Respond<\/a><\/li>\n<li><a href=\"#section4\">4. Preservation of Goods: General Duty vs. Specific Statutory Provisions<\/a><\/li>\n<li><a href=\"#section5\">5. Buyer&#8217;s Duty to Inspect and Notify Defects<\/a><\/li>\n<li><a href=\"#section6\">6. Avoidance of Contract: Notice Required vs. Automatic Avoidance<\/a><\/li>\n<li><a href=\"#section7\">7. FAQ<\/a><\/li>\n<\/ul><\/div>\n<p>    <!-- Story Hook --><\/p>\n<div class=\"story-hook\" style=\"padding: 15px 20px; margin-bottom: 15px; border-radius: 0; background-color: #f5f5f5;\">\n<p><strong>Hypothetical scenario:<\/strong> Company A, a South Korean textile manufacturer, entered into a seasonal fabric supply contract with Company B, an Italian fashion house. The contract specified delivery by September 30. Company A missed the deadline by a few days. Company B \u2014 without sending any notice of avoidance \u2014 signed a replacement contract with another supplier in early October, then notified Company A that &#8220;the contract is over.&#8221; Company A responded that it had never received a valid notice of avoidance and demanded payment. Under South Korea&#8217;s Commercial Code Article 68, the contract would be deemed automatically avoided in a fixed-time sale if the other party fails to immediately demand performance after the deadline passes. Under CISG Article 26, however, avoidance is effective only if communicated by notice. Whether the contract survived or not \u2014 and whether Company A can collect payment \u2014 turns entirely on which law applies.<\/p>\n<\/p><\/div>\n<p>    <!-- Direct Answer --><\/p>\n<div class=\"direct-answer\" style=\"padding: 15px; border-radius: 0; margin-bottom: 20px; font-weight: 500; background-color: #f5f5f5;\">\n        <strong>Key takeaway:<\/strong> Since both South Korea and Italy are CISG Contracting States and the contract contained no governing law clause, CISG Article 1(1)(a) applies automatically. Under CISG Article 26, Company B&#8217;s failure to send a notice of avoidance means the contract was never validly avoided. Company A&#8217;s right to claim payment survives under the CISG \u2014 an outcome that would be reversed under the South Korean Commercial Code.\n    <\/div>\n<p>    <!-- Story Development --><\/p>\n<div class=\"story-detail\" style=\"padding: 20px; border-radius: 0; margin: 20px 0; background-color: #f5f5f5;\">\n<h3>Why the CISG\u2013Commercial Code Gap Matters for International Business in South Korea<\/h3>\n<p class=\"disclaimer\">\u203b The scenario above is a hypothetical illustration for educational purposes only.<\/p>\n<p>South Korea ratified the CISG on February 17, 2004, with the Convention entering into force domestically on March 1, 2005. Major South Korean trading partners \u2014 including the United States, China, Germany, and France \u2014 are all Contracting States, meaning the CISG governs a significant portion of South Korea&#8217;s international trade by default. The critical practical problem is that the CISG and South Korea&#8217;s Commercial Code reach materially different conclusions on several key issues. The sections below compare both instruments directly, citing the operative statutory text.<\/p>\n<\/p><\/div>\n<p>    <!-- Section 1 --><br \/>\n    <\/p>\n<h2 id=\"section1\">1. How does the scope of application differ in South Korea? \u2014 Place of Business vs. Merchant Status<\/h2>\n<p>The CISG uses the <strong>place of business<\/strong> as its trigger, while South Korea&#8217;s Commercial Code uses <strong>merchant status<\/strong>. This foundational difference shapes every comparison that follows.<\/p>\n<table>\n<tr>\n<th>Issue<\/th>\n<th>CISG<\/th>\n<th>South Korean Commercial Code<\/th>\n<\/tr>\n<tr>\n<td>Trigger criterion<\/td>\n<td>Place of business in a Contracting State<\/td>\n<td>Merchant status (statutory or deemed merchant)<\/td>\n<\/tr>\n<tr>\n<td>Key provisions<\/td>\n<td>Art. 1(1), Art. 10<\/td>\n<td>Arts. 3, 4, 5, 67\u201371<\/td>\n<\/tr>\n<tr>\n<td>Nationality relevant?<\/td>\n<td>No (Art. 1(3))<\/td>\n<td>Not directly (merchant status governs)<\/td>\n<\/tr>\n<tr>\n<td>Opt-out available?<\/td>\n<td>Yes, by agreement (Art. 6)<\/td>\n<td>Mix of mandatory and default rules<\/td>\n<\/tr>\n<\/table>\n<h3>CISG Scope of Application (Article 1(1))<\/h3>\n<p>CISG Article 1(1) provides: &#8220;This Convention applies to contracts of sale of goods between parties whose places of business are in different States: (a) when the States are Contracting States; or (b) when the rules of private international law lead to the application of the law of a Contracting State.&#8221;<\/p>\n<p>CISG Article 1(3) further provides: &#8220;Neither the nationality of the parties nor the civil or commercial character of the parties or of the contract is to be taken into consideration in determining the application of this Convention.&#8221; In other words, the CISG does not distinguish between consumers and merchants \u2014 it asks only whether the parties have their <strong>places of business in different Contracting States<\/strong>.<\/p>\n<p>Where a party has more than one place of business, CISG Article 10(a) designates as the relevant place &#8220;that which has the closest relationship to the contract and its performance, having regard to the circumstances known to or contemplated by the parties at any time before or at the conclusion of the contract.&#8221; CISG Article 6 allows the parties to &#8220;exclude the application of this Convention or &#8230; derogate from or vary the effect of any of its provisions,&#8221; giving wide latitude for party autonomy.<\/p>\n<h3>Scope of South Korea&#8217;s Commercial Code (Articles 3\u20135, 67\u201371)<\/h3>\n<p>Commercial Code Article 3 provides: &#8220;Where the act of one party is a commercial act, this Act applies to all parties.&#8221; Article 4 defines a merchant as &#8220;a person who engages in commercial acts in his\/her own name.&#8221; Article 5(1) deems a person who operates a business in a commercial manner using a shop or similar establishment to be a merchant even without performing a commercial act; Article 5(2) treats a company as a merchant in all cases. The merchant-sale provisions in Articles 67 through 71 apply on the premise of a &#8220;sale between merchants.&#8221;<\/p>\n<p>In summary, the CISG asks <strong>where the parties&#8217; places of business are located<\/strong>, while South Korea&#8217;s Commercial Code asks <strong>whether the parties qualify as merchants<\/strong>. Any Korean company that enters into a cross-border sale with a counterpart based in a CISG Contracting State without specifying the governing law will find the CISG applied automatically.<\/p>\n<p>    <!-- Section 2 --><br \/>\n    <\/p>\n<h2 id=\"section2\">2. How is trade usage treated differently in South Korea? \u2014 Usage vs. Commercial Custom Law<\/h2>\n<p>The CISG allows <strong>trade usage (usage)<\/strong> \u2014 even usage that has not attained the status of binding law \u2014 to be implicitly incorporated into a contract. South Korea&#8217;s Commercial Code grants legal-source status only to <strong>commercial custom law (\uc0c1\uad00\uc2b5\ubc95)<\/strong>, i.e., usage that has crystallized into a legally binding norm through general acceptance.<\/p>\n<table>\n<tr>\n<th>Issue<\/th>\n<th>CISG<\/th>\n<th>South Korean Commercial Code<\/th>\n<\/tr>\n<tr>\n<td>Scope of incorporation<\/td>\n<td>Agreed usages + internationally known usages (Art. 9(1)(2))<\/td>\n<td>Only commercial custom law \u2014 usage with legal-norm status (Art. 1)<\/td>\n<\/tr>\n<tr>\n<td>Key provisions<\/td>\n<td>Arts. 9(1), 9(2)<\/td>\n<td>Art. 1<\/td>\n<\/tr>\n<tr>\n<td>Implicit incorporation?<\/td>\n<td>Yes (Art. 9(2))<\/td>\n<td>Generally no; narrow exception (Art. 29(2))<\/td>\n<\/tr>\n<\/table>\n<h3>CISG Treatment of Trade Usage (Article 9)<\/h3>\n<p>CISG Article 9(1) provides: &#8220;The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves.&#8221; CISG Article 9(2) adds: &#8220;The parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned.&#8221; A usage that is merely regional or local, and not regularly observed in international trade of the type in question, does not qualify under Article 9(2).<\/p>\n<h3>South Korea&#8217;s Commercial Code Treatment (Article 1)<\/h3>\n<p>Commercial Code Article 1 provides: &#8220;Commercial matters shall be governed by this Act; where there is no provision herein, commercial custom law shall apply; and where there is no commercial custom law, the Civil Code shall apply.&#8221; Commercial custom law (\uc0c1\uad00\uc2b5\ubc95) requires not only a recognized commercial practice but also general acceptance as a legally binding norm (opinio juris) \u2014 a higher threshold than mere trade usage. Commercial Code Article 29(2), which permits accounting practices to be governed by &#8220;generally fair and appropriate accounting practices,&#8221; illustrates one narrow area where trade usage without full legal-norm status may apply.<\/p>\n<p>The practical consequence is significant: under the CISG, Incoterms and similar internationally recognized trade terms can be implicitly incorporated without express agreement, whereas under the Commercial Code alone, such implicit incorporation is generally unavailable.<\/p>\n<p>    <!-- Section 3 --><br \/>\n    <\/p>\n<h2 id=\"section3\">3. When is a contract formed in South Korea? \u2014 Offer, Acceptance, and Duty to Respond<\/h2>\n<p>Three sub-issues arise here. First, the <strong>immediate-acceptance requirement for oral offers<\/strong> produces the same result under both instruments. Second, the <strong>moment of contract formation for offers between absent parties<\/strong> historically differed, but the gap has been eliminated by the deletion of the relevant Commercial Code provision in 2010. Third, the <strong>effect of silence<\/strong> remains a meaningful difference.<\/p>\n<table>\n<tr>\n<th>Issue<\/th>\n<th>CISG<\/th>\n<th>South Korean Commercial Code<\/th>\n<\/tr>\n<tr>\n<td>Oral offer between present parties<\/td>\n<td>Must be accepted immediately absent special circumstances (Art. 18(2), 3rd sentence)<\/td>\n<td>Lapses if not accepted immediately (Art. 51)<\/td>\n<\/tr>\n<tr>\n<td>Contract formation between absent parties<\/td>\n<td>Receipt theory \u2014 acceptance effective on arrival (Arts. 18(2), 23)<\/td>\n<td>Receipt theory \u2014 former dispatch theory provision (old Art. 52) deleted May 14, 2010<\/td>\n<\/tr>\n<tr>\n<td>Effect of silence<\/td>\n<td>Silence not acceptance in principle (Art. 18(1), 2nd sentence); exception where course of dealing exists (Art. 9(1))<\/td>\n<td>Deemed acceptance if merchant in standing relationship fails to dispatch notice without delay (Art. 53)<\/td>\n<\/tr>\n<tr>\n<td>Revocation of offer<\/td>\n<td>Revocable before offeree dispatches acceptance (Art. 16(1)); irrevocable offer exceptions (Art. 16(2))<\/td>\n<td>No specific provision; Civil Code principles apply<\/td>\n<\/tr>\n<\/table>\n<h3>(1) Immediate Acceptance of Oral Offers<\/h3>\n<p>CISG Article 18(2), third sentence, provides: &#8220;An oral offer must be accepted immediately unless the circumstances indicate otherwise.&#8221; Commercial Code Article 51 provides: &#8220;An offer to conclude a contract between parties present in the same place shall lose its effect if not immediately accepted by the other party.&#8221; Both instruments reach the same conclusion on this point.<\/p>\n<h3>(2) Contract Formation Between Absent Parties \u2014 The Deleted Commercial Code Provision<\/h3>\n<p>CISG Article 18(2) provides that an acceptance &#8220;becomes effective at the moment the indication of assent reaches the offeror,&#8221; and CISG Article 23 provides that &#8220;a contract is concluded at the moment when an acceptance of an offer becomes effective in accordance with the provisions of this Convention.&#8221; The CISG consistently applies the <strong>receipt theory<\/strong>.<\/p>\n<p>South Korea&#8217;s Commercial Code formerly contained Article 52, which provided a dispatch-theory rule for offers between absent parties without a fixed acceptance period. That provision was <strong>deleted on May 14, 2010 (Act No. 10303)<\/strong>. The Civil Code&#8217;s receipt theory (Civil Code Article 111) now applies, eliminating any practical difference with the CISG on this point for contracts concluded after that date.<\/p>\n<h3>(3) The Effect of Silence \u2014 The Duty to Respond<\/h3>\n<p>CISG Article 18(1), second sentence, states: &#8220;Silence or inactivity does not in itself amount to acceptance.&#8221; However, CISG Article 9(1) preserves the possibility that silence may constitute acceptance where the parties have established a relevant course of dealing.<\/p>\n<p>Commercial Code Article 53, by contrast, provides: &#8220;When a merchant receives an offer to conclude a contract belonging to his line of business from a party with whom he\/she maintains a standing business relationship, he\/she shall dispatch a notice of acceptance or rejection without delay. Failure to do so shall be deemed acceptance.&#8221; This automatic deemed-acceptance rule \u2014 which does not require any positive act \u2014 applies without equivalent under the CISG. Any merchant in South Korea operating under the Commercial Code who receives an offer from a standing trading partner must dispatch a response or risk being bound.<\/p>\n<p>    <!-- Section 4 --><br \/>\n    <\/p>\n<h2 id=\"section4\">4. How do preservation obligations differ in South Korea? \u2014 General Duty vs. Specific Statutory Provisions<\/h2>\n<p>The CISG establishes a <strong>general preservation duty<\/strong> applicable to both seller and buyer in a unified framework. South Korea&#8217;s Commercial Code addresses preservation obligations through <strong>separate, specific provisions<\/strong> covering the receiving merchant&#8217;s duty to preserve tendered goods, the seller&#8217;s right to deposit or auction, and the buyer&#8217;s duty to preserve or sell defective goods.<\/p>\n<table>\n<tr>\n<th>Issue<\/th>\n<th>CISG<\/th>\n<th>South Korean Commercial Code<\/th>\n<\/tr>\n<tr>\n<td>Seller&#8217;s preservation duty<\/td>\n<td>Reasonable measures (Art. 85); third-party warehouse permitted (Art. 87)<\/td>\n<td>Deposit or auction only (Art. 67)<\/td>\n<\/tr>\n<tr>\n<td>Buyer&#8217;s preservation duty<\/td>\n<td>Reasonable measures (Art. 86)<\/td>\n<td>Preserve\/deposit; court-authorized auction (Art. 70)<\/td>\n<\/tr>\n<tr>\n<td>Self-help sale \u2014 discretionary<\/td>\n<td>Any appropriate method upon unreasonable delay (Art. 88(1))<\/td>\n<td>Auction only after advance notice and reasonable period (Art. 67(1))<\/td>\n<\/tr>\n<tr>\n<td>Self-help sale \u2014 compulsory (perishables)<\/td>\n<td>Duty to take reasonable steps; court authorization not required (Art. 88(2))<\/td>\n<td>Court authorization required for emergency auction (Art. 70(1))<\/td>\n<\/tr>\n<tr>\n<td>Pre-contract goods custody<\/td>\n<td>Not addressed (contract-existence prerequisite)<\/td>\n<td>Merchant must preserve goods tendered with rejected offer (Art. 60)<\/td>\n<\/tr>\n<\/table>\n<h3>CISG General Preservation Duty (Articles 85\u201388)<\/h3>\n<p>CISG Article 85 provides: &#8220;If the buyer is in delay in taking delivery of the goods or, where payment of the price and delivery of the goods are to be made concurrently, if he fails to pay the price, and the seller is either in possession of the goods or otherwise able to control their disposition, the seller must take such steps as are reasonable in the circumstances to preserve them.&#8221; CISG Article 86(1) imposes a parallel duty on the buyer who wishes to reject goods already received: the buyer &#8220;must take such steps to preserve them as are reasonable in the circumstances.&#8221;<\/p>\n<p>On self-help sales, CISG Article 88(1) provides that a party obliged to preserve goods &#8220;may sell them by any appropriate means&#8221; if the other party unreasonably delays, provided reasonable prior notice of the intended sale is given. CISG Article 88(2) imposes a duty \u2014 not merely a right \u2014 to take reasonable steps to sell goods that are subject to rapid deterioration or whose preservation involves unreasonable expense, without requiring court authorization.<\/p>\n<h3>South Korea&#8217;s Commercial Code Specific Provisions (Articles 60, 67, 70)<\/h3>\n<p>Commercial Code Article 60 provides: &#8220;When a merchant receives an offer in the line of its business and receives samples or other goods in connection therewith, it shall preserve such goods at the offeror&#8217;s expense even if it rejects the offer.&#8221; This provision \u2014 which has no CISG equivalent \u2014 imposes a preservation duty at the pre-contractual stage.<\/p>\n<p>For the seller&#8217;s self-help sale right, Commercial Code Article 67(1) provides: &#8220;In a sale between merchants, where the buyer refuses to take delivery or is unable to do so, the seller may deposit the goods or, after giving notice of a reasonable period, sell them by auction.&#8221; For the buyer&#8217;s emergency sale, Article 70(1) provides that where &#8220;there is a risk of loss or damage to the goods, the buyer may, with court authorization, sell them by auction.&#8221;<\/p>\n<p>Two critical differences stand out. First, the CISG&#8217;s self-help sale right permits sale by &#8220;any appropriate means&#8221; while the Commercial Code restricts the seller to deposit or auction. Second, the CISG does not require court authorization for emergency sales of perishable goods, whereas Commercial Code Article 70(1) makes court authorization a mandatory condition.<\/p>\n<p>    <!-- Section 5 --><br \/>\n    <\/p>\n<h2 id=\"section5\">5. How do defect inspection and notification duties differ in South Korea?<\/h2>\n<p>This is the area where the CISG and South Korea&#8217;s Commercial Code diverge most sharply in practice. The differences in the strictness of the inspection obligation, the outer time limit for notification, and the consequences of non-notification are all significant.<\/p>\n<table>\n<tr>\n<th>Issue<\/th>\n<th>CISG<\/th>\n<th>South Korean Commercial Code<\/th>\n<\/tr>\n<tr>\n<td>Inspection timing<\/td>\n<td>Within as short a period as practicable (Art. 38(1)); may be deferred to destination if goods are in transit (Art. 38(2))<\/td>\n<td>Without delay (Art. 69(1)); latent defects within 6 months<\/td>\n<\/tr>\n<tr>\n<td>Notification timing<\/td>\n<td>Within a reasonable time after discovery or discoverability (Art. 39(1))<\/td>\n<td>Immediately upon discovery (Art. 69(1))<\/td>\n<\/tr>\n<tr>\n<td>Outer time limit<\/td>\n<td>2 years from date of actual delivery (Art. 39(2))<\/td>\n<td>6 months from delivery for latent defects (Art. 69(1))<\/td>\n<\/tr>\n<tr>\n<td>Consequence of non-notification<\/td>\n<td>Loss of right to rely on non-conformity (Art. 39); price reduction and some damages still available if reasonable excuse exists (Art. 44)<\/td>\n<td>Loss of right to rescind, reduce price, or claim damages (Art. 69(1))<\/td>\n<\/tr>\n<tr>\n<td>Seller&#8217;s bad faith<\/td>\n<td>Seller cannot invoke Arts. 38\u201339 (Art. 40)<\/td>\n<td>Art. 69(1) inapplicable (Art. 69(2))<\/td>\n<\/tr>\n<\/table>\n<h3>CISG Inspection and Notification Obligations (Articles 38\u201340, 44)<\/h3>\n<p>CISG Article 38(1) provides: &#8220;The buyer must examine the goods, or cause them to be examined, within as short a period as is practicable in the circumstances.&#8221; Where the contract involves carriage, Article 38(2) permits deferral &#8220;until after the goods have arrived at their destination.&#8221; Article 38(3) permits further deferral where goods are redirected or retransshipped in transit, provided the seller knew or ought to have known of that possibility at the time of contracting.<\/p>\n<p>CISG Article 39(1) provides: &#8220;The buyer loses the right to rely on a lack of conformity of the goods if he does not give notice to the seller specifying the nature of the lack of conformity within a reasonable time after he has discovered it or ought to have discovered it.&#8221; Article 39(2) adds: &#8220;In any event, the buyer loses the right to rely on a lack of conformity of the goods if he does not give the seller notice thereof at the latest within a period of two years from the date on which the goods were actually handed over to the buyer.&#8221; CISG Article 40 bars the seller from invoking Articles 38 and 39 &#8220;if the lack of conformity relates to facts of which he knew or could not have been unaware and which he did not disclose to the buyer.&#8221; CISG Article 44 preserves the buyer&#8217;s right to reduce the price under Article 50 and to claim damages other than loss of profit, even after the notification period, if the buyer has a reasonable excuse for failure to notify.<\/p>\n<h3>South Korea&#8217;s Commercial Code (Article 69) and the Warranty\/Incomplete-Performance Distinction<\/h3>\n<p>Commercial Code Article 69(1) provides: &#8220;In a sale between merchants, the buyer shall inspect the subject matter without delay upon receipt, and if a defect or shortage in quantity is discovered, shall dispatch notice to the seller immediately; failure to do so shall preclude any claim for rescission, reduction of price, or damages arising therefrom. The same applies where a latent defect in the subject matter of the sale is discovered by the buyer within six months.&#8221; Article 69(2) provides: &#8220;The preceding paragraph shall not apply where the seller acted in bad faith.&#8221;<\/p>\n<p>The most significant difference is the <strong>six-month outer limit for latent defects<\/strong> under Article 69(1) compared to the CISG&#8217;s two-year limit. The notification standard is also stricter: Article 69(1) requires immediate dispatch, whereas the CISG requires notification within a reasonable time. The consequence of non-notification under the Commercial Code is also broader \u2014 it bars rescission, price reduction, and all damages \u2014 while the CISG&#8217;s Article 44 exception preserves partial relief where a reasonable excuse exists.<\/p>\n<p>A critical qualification applies under South Korean law: the Supreme Court of South Korea held in its judgment of June 24, 2015 (Case No. 2013Da522) that <strong>Commercial Code Article 69(1) applies only to warranty claims under Civil Code Article 580, not to damages claims based on incomplete performance (\ubd88\uc644\uc804\uc774\ud589) under Civil Code Article 390<\/strong>. In that case, the buyer notified defects well after the six-month period; the warranty claim was rejected, but the seller&#8217;s liability for incomplete performance \u2014 consisting of the cost to remediate contaminated soil \u2014 was upheld. A buyer who has missed the six-month notification window may therefore still recover by reframing the claim as one for incomplete performance, although the burden of proving the seller&#8217;s fault then falls on the buyer. No such bifurcation exists under the CISG, which applies a unified remedial framework under Articles 45 et seq.<\/p>\n<p>    <!-- Section 6 --><br \/>\n    <\/p>\n<h2 id=\"section6\">6. How does contract avoidance work differently in South Korea? \u2014 Notice Required vs. Automatic Avoidance<\/h2>\n<p>The most fundamental divergence between the CISG and South Korea&#8217;s Commercial Code on avoidance is whether a <strong>notice of avoidance is required<\/strong>. This difference is most acute in fixed-time sales, where the Commercial Code permits automatic deemed avoidance.<\/p>\n<table>\n<tr>\n<th>Issue<\/th>\n<th>CISG<\/th>\n<th>South Korean Commercial Code<\/th>\n<\/tr>\n<tr>\n<td>Grounds for avoidance<\/td>\n<td>Fundamental breach (Arts. 25, 49(1)(a)); failure to deliver within Nachfrist period (Arts. 47, 49(1)(b))<\/td>\n<td>Expiry of performance deadline in fixed-time sale (Art. 68)<\/td>\n<\/tr>\n<tr>\n<td>Notice requirement<\/td>\n<td>Mandatory \u2014 avoidance effective only upon notice (Art. 26)<\/td>\n<td>Automatic deemed avoidance if immediate performance not demanded (Art. 68)<\/td>\n<\/tr>\n<tr>\n<td>Automatic avoidance<\/td>\n<td>Not recognized<\/td>\n<td>Recognized in fixed-time sales<\/td>\n<\/tr>\n<tr>\n<td>Time to exercise avoidance right<\/td>\n<td>Reasonable time after delivery (Art. 49(2))<\/td>\n<td>Immediately after deadline passes (Art. 68)<\/td>\n<\/tr>\n<tr>\n<td>Effect of avoidance<\/td>\n<td>Parties released from obligations; restitution; damages (Art. 81)<\/td>\n<td>Restitution (Civil Code Art. 548 by analogy); damages<\/td>\n<\/tr>\n<\/table>\n<h3>CISG Avoidance (Articles 25, 26, 49, 81)<\/h3>\n<p>Under the CISG, the buyer may avoid the contract only where there is a <strong>fundamental breach<\/strong>. CISG Article 25 defines fundamental breach as a contravention &#8220;which results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract,&#8221; unless the breaching party could not foresee such a result. CISG Article 49(1)(b) also permits avoidance where the seller fails to deliver within an additional period of reasonable length fixed by the buyer under Article 47(1).<\/p>\n<p>The critical provision is CISG Article 26: &#8220;A declaration of avoidance of the contract is effective only if made by notice to the other party.&#8221; There is no automatic avoidance under the CISG under any circumstances. CISG Article 81(1) provides: &#8220;Avoidance of the contract releases both parties from their obligations under it, subject to any damages which may be due.&#8221;<\/p>\n<h3>South Korea&#8217;s Commercial Code \u2014 Automatic Avoidance in Fixed-Time Sales (Article 68)<\/h3>\n<p>Commercial Code Article 68 provides: &#8220;In a sale between merchants, where the nature of the sale or the declaration of intention of the parties indicates that the purpose of the contract cannot be achieved if performance is not made at a fixed time or within a fixed period, and one party fails to perform at the time for performance, the other party shall be deemed to have avoided the contract unless it immediately demands performance.&#8221;<\/p>\n<p>This provision differs from the CISG in two fundamental respects. First, the mere expiry of the performance deadline triggers automatic deemed avoidance without any notice of avoidance \u2014 the contract disappears by operation of law. Second, it is the party that wishes to keep the contract alive who must act, by immediately demanding performance. In practice, any Korean company in a fixed-time sale governed by the Commercial Code must issue an immediate demand for performance the moment a deadline passes if it wants to preserve the contract. Under the CISG, the same company could wait for an explicit avoidance notice before treating itself as released from its obligations.<\/p>\n<p>    <!-- FAQ --><br \/>\n    <\/p>\n<h2 id=\"section7\">7. FAQ<\/h2>\n<div class=\"faq-section\" style=\"padding: 20px; border-radius: 0; margin: 30px 0; background-color: #f5f5f5;\">\n<div class=\"faq-item\">\n<div class=\"faq-question\">Q1. When does the CISG apply to contracts involving South Korea?<\/div>\n<div class=\"faq-answer\">A. Under CISG Article 1(1), the Convention applies when the parties have their places of business in different states that are both Contracting States, or when conflict-of-laws rules lead to the application of a Contracting State&#8217;s law. South Korea ratified the CISG in 2004, effective March 1, 2005. The Commercial Code&#8217;s merchant-sale provisions (Articles 67\u201371) apply to transactions between merchants under Articles 4 and 5. If no governing law clause is included in a contract between parties from two CISG Contracting States, the CISG applies automatically. To exclude the CISG, the parties must include an express opt-out clause under CISG Article 6.<\/div>\n<\/p><\/div>\n<div class=\"faq-item\">\n<div class=\"faq-question\">Q2. Which gives a longer defect notification period \u2014 the CISG or South Korea&#8217;s Commercial Code?<\/div>\n<div class=\"faq-answer\">A. The CISG is significantly more lenient. CISG Article 39(2) allows up to two years from the date of actual delivery. South Korea&#8217;s Commercial Code Article 69(1) requires notification within six months of delivery for latent defects. An important exception exists under South Korean law: the Supreme Court held in 2013Da522 (June 24, 2015) that Article 69(1) applies only to warranty claims, not to claims for damages based on incomplete performance under Civil Code Article 390. A buyer who has missed the six-month window may still pursue a damages claim by reframing it as incomplete performance, though the burden of proving fault then shifts to the buyer. The CISG applies a single unified remedial framework without this distinction.<\/div>\n<\/p><\/div>\n<div class=\"faq-item\">\n<div class=\"faq-question\">Q3. Is automatic contract avoidance recognized under the CISG in South Korea?<\/div>\n<div class=\"faq-answer\">A. No. CISG Article 26 requires a notice of avoidance in all cases \u2014 there is no automatic avoidance under the CISG regardless of the severity of the breach. South Korea&#8217;s Commercial Code Article 68, by contrast, provides that in a fixed-time sale, failure to immediately demand performance after the deadline passes results in the contract being automatically deemed avoided. This is one of the starkest practical differences between the two regimes.<\/div>\n<\/p><\/div>\n<div class=\"faq-item\">\n<div class=\"faq-question\">Q4. Does silence constitute acceptance under the CISG or South Korea&#8217;s Commercial Code?<\/div>\n<div class=\"faq-answer\">A. Under CISG Article 18(1), silence does not in itself amount to acceptance. An exception exists where a course of dealing makes silence an established mode of acceptance under CISG Article 9(1). South Korea&#8217;s Commercial Code Article 53 goes much further: if a merchant in a standing business relationship fails to dispatch a notice of acceptance or rejection without delay upon receiving an offer in the line of its business, the offer is automatically deemed accepted. Any merchant operating under the Commercial Code must actively respond to offers from regular trading partners.<\/div>\n<\/p><\/div>\n<div class=\"faq-item\">\n<div class=\"faq-question\">Q5. How does the self-help sale right differ between the CISG and South Korea&#8217;s Commercial Code?<\/div>\n<div class=\"faq-answer\">A. CISG Article 88(1) permits sale &#8220;by any appropriate means&#8221; upon reasonable prior notice when the other party unreasonably delays. South Korea&#8217;s Commercial Code Article 67(1) restricts the seller to deposit or auction only. For perishable or costly-to-preserve goods, the CISG imposes a duty to sell without court authorization, whereas Commercial Code Article 70(1) requires court authorization before an emergency auction. In practice, the CISG allows much faster and more flexible disposal of goods, which is particularly important in time-sensitive cross-border transactions.<\/div>\n<\/p><\/div>\n<div class=\"faq-item\">\n<div class=\"faq-question\">Q6. How is trade usage treated differently under the CISG versus South Korea&#8217;s Commercial Code?<\/div>\n<div class=\"faq-answer\">A. CISG Article 9(2) implicitly incorporates usages that are widely known and regularly observed in international trade of the type involved, even without express agreement. South Korea&#8217;s Commercial Code Article 1 grants legal-source status only to commercial custom law \u2014 trade usages that have achieved binding legal-norm status through general acceptance. Internationally recognized trade terms such as Incoterms can be implicitly incorporated under the CISG, but not automatically under the Commercial Code alone.<\/div>\n<\/p><\/div>\n<div class=\"faq-item\">\n<div class=\"faq-question\">Q7. Can parties exclude the CISG in a contract governed by South Korean law?<\/div>\n<div class=\"faq-answer\">A. Yes. CISG Article 6 expressly permits the parties to exclude the application of the Convention. A clause such as &#8220;This Agreement shall be governed by the laws of the Republic of South Korea, excluding the United Nations Convention on Contracts for the International Sale of Goods&#8221; is sufficient. Without such an exclusion, the CISG applies automatically when both parties are based in CISG Contracting States. Korean companies engaging in international trade are advised to make a deliberate, informed choice on this point before signing.<\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>    <!-- GEO \/ Experience Statement --><\/p>\n<p>Cross-border transactions involving South Korean companies routinely present the CISG\u2013Commercial Code choice-of-law question. In practice, contracts without a governing law clause are among the most common sources of international commercial disputes handled by our firm. The differences identified in this article \u2014 particularly the two-year versus six-month notification period, the notice requirement for avoidance under CISG Article 26, and the automatic avoidance rule under Commercial Code Article 68 \u2014 have determined the outcome of real disputes. Identifying and resolving the governing-law question at the contract drafting stage is the single most cost-effective step parties to international sales transactions involving South Korea can take.<\/p>\n<p class=\"disclaimer\" style=\"margin: 20px 0;\">\u203b This article is provided for general informational purposes only and does not constitute legal advice. The applicable law and legal conclusions may vary depending on the specific facts and circumstances of each case. Please consult a qualified attorney before taking any action.<\/p>\n<p>    <!-- Author Box --><\/p>\n<div class=\"author-box\" style=\"background-color: #f8f9fa; padding: 20px; border-radius: 0; margin-top: 30px; border-left: 2px solid #722f37;\">\n<h3>About the Author<\/h3>\n<div class=\"author-name\">Taejin Kim | Managing Partner<\/div>\n<div class=\"author-info\">Corporate Advisory, Corporate Disputes &amp; Corporate Criminal Defense<\/div>\n<div class=\"author-info\">Former Prosecutor | 33rd Bar Admission Class<\/div>\n<div class=\"author-info\">LL.B. &amp; LL.M. in Criminal Law, Korea University; LL.M., University of California, Davis<\/div>\n<div class=\"author-info\">Atlas Legal | Incheon Songdo, South Korea<\/div>\n<p>        <a href=\"https:\/\/atlaw.kr\" target=\"_blank\" rel=\"noopener noreferrer\">Visit Atlas Legal<\/a>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Table of Contents 1. Scope of Application: Place of Business vs. Merchant Status 2. Incorporation of Trade Usage: Usage vs. Commercial Custom Law 3. Contract Formation: Offer, Acceptance, and Duty to Respond 4. Preservation of Goods: General Duty vs. Specific Statutory Provisions 5. Buyer&#8217;s Duty to Inspect and Notify Defects 6. Avoidance of Contract: Notice&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_kadence_starter_templates_imported_post":false,"_kad_post_transparent":"default","_kad_post_title":"default","_kad_post_layout":"default","_kad_post_sidebar_id":"","_kad_post_content_style":"default","_kad_post_vertical_padding":"default","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"_kad_post_classname":"","footnotes":""},"categories":[15,220],"tags":[555,557,556,558,232],"class_list":["post-702","post","type-post","status-publish","format-standard","hentry","category-corporate","category-intl-transactions","tag-cisg","tag-governing-law","tag-international-sale-of-goods","tag-korean-commercial-code","tag-south-korea-commercial-law"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - 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