Case Studies
Joint technology development contracts, be sure to check these!
Law firm Veat provided online promotion services company (hereinafter "customer") to review the joint technology development agreement with another corporation and provided guidance on legal risks so that the business could be successfully carried out. What are the key elements of a Joint Technology Development Agreement? A Joint Development Agreement is an agreement that must be concluded when two or more companies jointly develop technology in order to specify the various matters regarding the rights and obligations relationship related to the technology development. If the content of such a joint technology agreement is unclear or important provisions are omitted, the roles, rights, and obligations of each party may become ambiguous, increasing the likelihood of future legal disputes between the parties. Therefore, a thorough review by a legal professional is necessary. In this contract review process, Law firm Veat focused on checking and supplementing the following items. 1. Clarification of the objectives and scope of work for joint technology development If the development goals expected by the contracting parties differ, there is a high probability of conflict during the project. Also, the scope of work for each contracting party must be clarified so that if a problem arises later, it can be determined which party is at fault and appropriate action (such as damage compensation or contract termination) can be taken. Accordingly, Law firm Veat defined the objectives and scope of work for joint technology development in the contract so that the parties could proceed with development in the same direction. 2. Clarification of the development period Joint development projects generally take a long time, so the development period and schedule must be clearly stated in the contract. The development period can be specified by a specific date or by achieving a specific condition. Also, if it is likely that the development period will be changed due to the nature of the development, regulations should be established at the time of contract conclusion regarding the method for adjusting the development period so as to prevent disputes related to the development period from arising later. In order to determine the details of the provisions related to the development period when concluding a joint development agreement, a clear understanding of the development project is necessary. Law firm Veat has extensive know-how based on numerous cases in this regard, and has defined development period provisions suitable for the customer’s development project. 3. Preparation of Non-Disclosure Agreement (NDA) Clause In the process of joint technology development, there is a high probability that the core technology of each company will be shared, so a Non-Disclosure Agreement (NDA) clause must be thoroughly prepared so that each party can collaborate without worrying about technology leakage. When establishing such a confidentiality clause, it is important to determine the scope of the confidentiality obligation and the duration of the obligation in years. These matters should be determined based on the nature of the joint technology development covered by the contract. For example, if the technology information learned through the joint technology development should not be disclosed even after several years and is a company’s core secret, it would be necessary to set a long duration for the confidentiality obligation. 4. Preparation of Clause Related to Ownership of Results Ultimately, the reason for joint technology development is generally to produce certain results, such as intellectual property. Therefore, it is the most important part of a joint technology development agreement to clearly define the ownership and usage rights of the results generated as a result of such joint technology development. If this is not clearly stated in the contract, there is a possibility of disputes over the ownership of technology and patents even after the development is completed. In particular, it is necessary to stipulate in detail the method of attribution of the jointly developed technology, the right to file a patent application, and whether or not to grant a license, so as to prevent unnecessary disputes related to the attribution and license usage of the results from arising later. 5. Adding Other Clauses Necessary for Joint Technology Development In addition, considering various risks that may arise in the process of joint technology development, clauses such as contract termination conditions, liability for damages, and dispute resolution procedures have been added. This allows each party to respond stably in unforeseen circumstances. Veat’s Differentiated Legal Advice to Help Companies Collaborate Smoothly Through this joint technology development agreement review, Law firm Veat has established a fair and clear contractual system so that cooperation can proceed smoothly between the customer and another corporation. In particular, legal professionals specializing in the IT and technology fields thoroughly reviewed the contract to prevent various legal problems that the customer intending to develop technology may face in advance. Companies planning joint technology development should always have a legal professional review the contract before signing it. Law firm Veat provides customized legal advice based on a precise understanding of the characteristics of technology development projects and business models, and a deep understanding of related laws such as the Intellectual Property Basic Law, helping customers establish stable cooperation structures and focus on company management. If you need legal advice regarding joint technology development agreements and intellectual property rights, we recommend that you seek help from Law firm Veat at any time. You can find the details of this business case on the Law firm Veat blog below. - Be sure to check this when concluding a Joint Technology Development Agreement! Thank you. Law firm Veat
[Startup Lawyer] Legal requirements and limitations of stock option exercise for fixed-term employees Legal Review
Law firm Veat received a request from an IT startup (hereinafter referred to as “client”) to review whether a contract employee could exercise stock purchase options. The client had previously granted stock purchase options to a contract employee, and the employee wished to exercise them after a certain period. However, considering the requirements of the Commercial Code and the Act on Promotion of Venture Businesses, the client deemed that a legal review was necessary to determine whether a contract employee could actually exercise stock purchase options and requested advice from Law firm Veat. Stock purchase options are actively utilized by startups as a means of attracting and motivating talented individuals. However, the exercise of stock purchase options is subject to strict requirements of the 「Commercial Code」 and the 「Special Act on Fostering Venture Businesses」(hereinafter referred to as “Venture Business Act”), and the possibility of exercise may vary depending on the employee's employment type. Requirements for Exercising Stock Purchase Options The Commercial Code and the Venture Business Act stipulate that a person who has been granted stock purchase options must meet certain requirements, such as serving for a certain period. In particular, according to Article 16 of the Venture Business Act, employees to whom a venture business grants stock purchase options must work for a certain period before they can exercise them. For contract employees, the key issue is whether they are included in the definition of “employee” under the Commercial Code and the Venture Business Act. The concept of an employee is not clearly defined by law, and there is some room for interpretation according to precedents and academic opinions. Therefore, Law firm Veat comprehensively analyzed the stock purchase option grant agreement and relevant laws and regulations entered into by the client with the contract employee to review whether the contract employee could exercise stock purchase options. In addition, the startup lawyer carefully analyzed the stock purchase option grant agreement entered into by the client with the contract employee. They examined whether the agreement included a definition of “employee,” whether the status and rights of the contract employee were clearly defined, and other factors. They also compared the residency period requirements stipulated in the agreement with those stipulated in the laws and regulations to determine whether the contract employee could practically exercise stock purchase options. Legal Check Items Before an Employee Exercises Stock Purchase Options To determine whether a contract employee can exercise stock purchase options, it is necessary to verify compliance with the laws stipulated in the Commercial Code and the Venture Business Act, and especially startups should review various factors such as the employee's residency period and the time of possible exercise with a legal expert. Review of Requirements under the Commercial Code and the Venture Business Act Since both the Commercial Code and the Venture Business Act have provisions related to stock purchase options, it is necessary to first identify which law applies to the contract employee. It is also important to review whether those laws have been complied with. In particular, for startups, it is necessary to consider various factors such as the employee's residency period and the time of possible exercise and to work with a legal expert to refine the agreement and minimize legal risks. Review of Stock Purchase Option Grant Agreements Check the definition of “employee” in the agreement and the rights and obligations of the contract employee to confirm the time and procedure of possible exercise: It is necessary to examine whether the timing, procedure, and required period of residency for the exercise of stock purchase options are clearly defined. Also, it is important to review whether the agreement is legally valid if it is stricter or unfair than the legal requirements. Confirm Possible Exercise Time and Procedure It is necessary to examine whether the timing of exercise, the method of claim, the deadline, the method of payment, and the required period of residency are clearly defined. Review Possible Restrictions and Expiry It is necessary to check whether there is a possibility of restriction on exercise or expiry of stock purchase options according to specific conditions. Stock purchase options are an important means of attracting and rewarding talent in startups, but if they do not meet the requirements of relevant laws and regulations, they may lead to legal disputes. In particular, the possibility of a contract employee exercising stock purchase options may vary depending on the interpretation of the Commercial Code and the Venture Business Act, so it is recommended to receive a legal review in advance. Law firm Veat: A Partner Growing with Startups Law firm Veat, which has expanded and developed its business areas in various fields such as venture businesses, startups, venture capital (VC), and private equity fund (PEF) investment, deeply understands the characteristics of startups and provides optimal solutions in various corporate legal fields, including stock purchase option legal advice. In particular, Veat has launched a customized legal service for startups and venture capital (VC), called “Law Series”, providing legal advice tailored to each stage from initial founding to growth, and receiving high praise from startups and VCs. Together with Law firm Veat, which provides optimal solutions in various corporate legal fields, minimize legal risks in the growth process of startups. The business case mentioned above can also be confirmed on the Law firm Veat blog. - [Startup Lawyer] Legal Review of Requirements and Restrictions for Contract Employees to Exercise Stock Purchase Options Thank you. Law firm Veat
English translation for convertible bond subscription agreement in English for attracting overseas investment, successful case of Law firm Veat.
Law firm Veat received a request from cosmetics manufacturing company A (hereinafter "Client") to draft and review a Subscription Agreement for Convertible Bonds(Subscription Agreement for Convertible Bonds) for attracting overseas investment. The Client intended to attract investment by issuing convertible bonds to overseas investors and therefore needed an English Subscription Agreement. Law firm Veat drafted a draft agreement in accordance with the Client’s request and completed the final agreement by reflecting changes arising during the negotiation process between the Client and the investor. Investment-focused Law firm Veat, Reflects Key Investment Terms in the Contract
[Investment Lawyer] How to draft an amendment agreement for existing stock purchase agreements and minimize disputes!
Law firm Veat received a request from entertainment company A (hereinafter "Client") and drafted and reviewed a modification agreement for the investment contract, and provided legal advice specifically regarding the release of the non-compete obligation in the stock purchase agreement. The Client entered into a stock purchase agreement, purchasing shares of the invested company, and consequently imposed an obligation on the representative of the invested company not to engage in competing businesses for a certain period, i.e., a non-compete obligation. This provision is generally included to prevent the leakage of the company’s core technology and trade secrets and to protect the interests of the existing investor. However, due to changes in the business environment, the Client deemed it necessary to release the non-compete obligation so that the representative of the invested company could engage in competing businesses. Accordingly, Law firm Veat received a request from the Client and proceeded with the contract adjustment process. The Client and the counterparty agreed to release only the non-compete obligation, maintaining the major conditions of the stock purchase agreement, such as clauses prohibiting the misappropriation of technology. When modifying only specific provisions of a contract, we assisted in drafting a separate modification agreement to prevent conflicts with the existing contract and to ensure legal validity. Law firm Veat explicitly stated in the modification agreement that the non-compete obligation clause in the existing stock purchase agreement had been deleted and that other clauses (e.g., prohibition of misappropriation of technology, confidentiality obligations, etc.) remained unchanged. Also, clear legal phrasing was inserted to ensure that the contract modification did not affect the overall validity of the existing contract, and clauses were added to guarantee that the modified agreement between the parties was legally valid. Law firm Veat drafted and provided a modification agreement that prevented potential legal risks arising from the non-compete obligation and faithfully reflected the Client's objectives. Also, we thoroughly reviewed whether the modified clauses were appropriately adjusted within the overall context of the existing contract, and reflected relevant laws to maintain legal validity and minimize potential disputes arising during the execution process. The Importance of Drafting a Modification Agreement Investment contracts play an important role in operating businesses in various industries, including startups and IT companies. However, after the contract is concluded, it may be necessary to adjust the content due to changes in the business environment or new agreements. In such cases, it is common to enter into a modification agreement, and legal review is essential. Especially when modifying only some provisions of a contract, it is important to maintain consistency with the existing contract, and failure to do so clearly can lead to legal disputes. A modification agreement is a document used when adjusting certain conditions while maintaining the existing contract. If this is not properly drafted, there is a risk of legal disputes due to conflicts with the existing contract. Especially when releasing specific provisions from the existing contract, you must review ▲whether the provisions of the existing contract are automatically invalidated ▲whether other provisions other than the released provision remain valid ▲whether the parties’ intentions are accurately reflected. Considering the importance of these contracts, careful legal review is essential. Unexpected changes may occur in the process of startups and companies entering into and operating investment contracts. If it becomes necessary to modify the contract, a legal professional must review it. As described above, investment contracts and modification agreements are essential elements of business operations, requiring careful legal review. Accordingly, Law firm Veat, based on years of experience and deep expertise, not only provides contract drafting, but also
Wage and severance pay claims lawsuit, Law firm Veat led to the victory of the corporation.
Law firm Veat successfully represented Company A, which develops new drugs utilizing quantum computing and artificial intelligence (hereinafter referred to as "the client"), in a wage and retirement pay claim lawsuit filed by a former executive who resigned, winning a complete victory. The plaintiff, a former executive of the client, claimed that some of his wages were unpaid until his departure and that he should be recognized as having a right to retirement pay due to his tenure as an executive, and brought a claim for unpaid wages and retirement pay against the company after his departure. In response, Law firm Veat actively argued that the plaintiff's wage and retirement pay claims lacked a legal basis, based on legal analysis and review of the company's internal documents, and demonstrated that the matter could not be legally recognized. As a result, the court sided with Veat and the client, and dismissed the plaintiff's claims entirely. The Court's Ruling on the Claim for Unpaid Wages Regarding the unpaid wage claim raised by the former executive, Law firm Veat presented objective evidence proving the completion of wage payments through a thorough review of the facts and materials. In particular, salary payment records, employment contracts, and internal records that could prove that payments were completed up to the date of departure were submitted, and the court dismissed the plaintiff’s claim based on this. It is essential for companies to manage clear records of wage payments and other materials in order to win disputes with retirees. Therefore, all companies should thoroughly maintain employment contracts and records of salary payments to be prepared to respond quickly in the event of future disputes. The Court's Ruling on the Retirement Pay Claim pursuant to Article 388 of the Commercial Code While general employees are obligated to receive retirement pay under the Labor Standards Act, executives are compensated as determined by Article 388 of the Commercial Code, and the same legal principles apply to retirement pay. ▶ Article 388 of the Commercial Code and the Determination of Executive Compensation Article 388 of the Commercial Code "The compensation of a director shall be determined by a resolution of the shareholders' meeting if not stipulated in the articles of incorporation." That is, the compensation and retirement pay of an executive are determined by the articles of incorporation or a resolution of the shareholders' meeting, and if determined by the board of directors, it must be done by specifying the specific amount or delegating the total amount or limit amount. ▶ Non-existence of the Client’s Obligation to Pay Retirement Pay Law firm Veat discovered that there was no provision clearly stipulating the payment of retirement pay to the plaintiff by analyzing the client’s articles of incorporation and shareholders' meeting minutes. Furthermore, it actively argued that no resolution had been made by the company’s shareholders' meeting or board of directors regarding the plaintiff’s retirement pay. The court ruled, based on the legal principle that “retirement pay for a director is deemed compensation for a director and that a claim for payment cannot be recognized unless stipulated in the articles of incorporation or a resolution of the shareholders' meeting," and dismissed the plaintiff's claim for retirement pay. This case emphasizes the need for all companies to clearly define and manage provisions related to executive compensation and retirement pay, and clearly illustrates how Article 388 of the Commercial Code is applied in practice. Companies should clearly define the standards for payment of executive compensation and retirement pay in the articles of incorporation to prevent unnecessary disputes. Furthermore, compensation and retirement pay matters should be decided in advance through resolutions of the shareholders' meeting and board of directors and through formal procedures. When an executive retires, a thorough record of the wage and retirement pay settlement and related supporting documentation should be retained to be prepared for potential disputes. Finally, it is important to negotiate the terms of retirement pay and document them through legal experts when entering into an executive contract to establish clear standards. Law firm Veat provides strategic legal services to support companies in effectively responding to legal disputes such as lawsuits related to unpaid wages and retirement pay, based on its in-depth legal interpretation in the field of commercial law and abundant litigation experience. This case, like the one above, is one of the important issues in corporate management, and requires prior legal review and response strategies to resolve it. We will continue to strive to provide strategic legal services that resolve corporate legal disputes and, moreover, prevent them. The case study can also be viewed on the Law firm Veat blog below. - Successfully Led Veat to Client’s Victory in a Lawsuit for Claims of Unpaid Wages and Retirement Pay Thank you. Law firm Veat
Exclusive Distribution Agreement, Can it be Terminated? Legal Issues and Response Strategies.
Law firm Veat received a request from A Company, a medical AI platform, to review the termination of a distribution agreement. Recently, with the advancement of artificial intelligence (AI) technology, the number of startups developing medical AI platforms is increasing. These companies enter into various forms of distribution and supply agreements to expand their product market, in addition to technology development. Among these, exclusive distribution agreements are a contract type that can cause significant legal issues. Exclusive Distribution Agreement An exclusive distribution agreement is a contract in which a manufacturer (or supplier) grants a specific distributor (exclusive distributor) the exclusive right to sell products or services in a specific region or market. Through this contract, the exclusive distributor has the right to be the sole seller of the product in that region or channel, and the manufacturer can expand the market and efficiently manage distribution through the exclusive distributor. Exclusive Distribution Agreement Non-Exclusive Distribution Agreement Sole Distribution Agreement Legal advice from Law firm Veat for termination of distribution agreements Interpretation of distribution agreements: Whether exclusive and exclusive rights exist The existence of a distribution agreement does not necessarily mean that exclusive and exclusive rights are granted to the exclusive distributor. This is because interpreting the contract solely based on its name or formal wording may lead to a different assessment of its actual content. According to a Supreme Court ruling (July 14, 2011, Case No. 2011Da31645, etc.), in interpreting contracts, the actual content of the contract should be emphasized more than the name or formal wording of the contract, and the judgment should be made considering the actual intention of the contracting parties. Therefore, whether the distribution agreement entered into by the client grants exclusive and exclusive rights must be determined based on the interpretation of the contract provisions and the actual transactional relationship. Even the courts do not apply uniform standards in relation to distribution agreements, and determine whether exclusive rights have been granted on a case-by-case basis. That is, when analyzing and interpreting the exclusive distribution agreement, the actual intention of the parties and the manner of performing the contract are important criteria for judgment. Legal procedures and response measures for termination of distribution agreements When terminating a distribution agreement, it is necessary to thoroughly review the termination reasons and procedures specified in the distribution agreement. Generally, the contract termination can proceed as follows: - Termination by mutual agreement First, it is the most amicable solution to proceed with the contract termination through consultation between the company and the exclusive distributor. To this end, the company can attempt consultation with the exclusive distributor through email or an official letter. If a mutual agreement is reached, the contractual relationship can be terminated without additional legal disputes, which is the most desirable method. - Termination based on termination reasons If mutual agreement is impossible, it is necessary to review whether termination reasons exist by analyzing the provisions of the distribution agreement. If a termination reason is recognized, the company can officially notify the contract termination and proceed with the necessary legal procedures. It is important to deliver the intention to terminate using a certified letter during this process. Sending a certified letter to notify the contract termination can be used as important evidence in the future if a legal dispute arises. It is necessary to clearly state the termination reason based on the provisions of the exclusive distribution agreement, especially if there is a possibility that the contract violation will be recognized as a termination reason. - Termination through legal action If a mutual agreement is impossible and the termination reason is unclear, seeking a judgment from the court is also an option. Legal action can take time, but has the advantage of securing clear legal grounds. The issue of whether exclusive and exclusive rights exist is likely to be a point of contention in this process, so thorough legal review in advance is necessary. Like the courts, distribution agreements are judged based on the actual content rather than the name or wording. Therefore, companies need to approach the interpretation of distribution agreements with caution. Also, contract termination should be considered in stages, prioritizing mutual agreement and reviewing legal termination reasons if that is impossible. Law firm Veat specializes in contract advice for startups and IT companies, and provides legal interpretation and strategic advice tailored to the needs of the client. We provide professional legal advice to help clients resolve various contract issues, including drafting distribution agreements, and recommend seeking expert advice to reduce legal risks and find effective solutions when going through the process of terminating distribution agreements. This case study can also be found on the Law firm Veat blog below. - Can exclusive distribution agreements (Exclusive Distribution Agreement) be terminated? Legal issues and response strategies Thank you. Law firm Veat
Content Startup for Copyright Revenue Distribution Contract Drafting Points
Law firm Veat drafted a profit distribution agreement for copyrighted works at the request of content startup A (hereinafter "client"). As the digital content industry grows, legal issues surrounding copyright are becoming increasingly important. Especially when developing new mobile games using intellectual property (IP) such as web novels or existing game products, it is essential to clearly define the profit distribution and rights relationship between the original copyright holder and the new game developer. Law firm Veat supported the client by drafting a copyrighted work profit distribution agreement, minimizing legal risks related to IP utilization and ensuring that each party receives a fair share of profits. Key Points for Drafting a Copyrighted Work Profit Distribution Agreement 1. Eliminate Ambiguity in Contract Interpretation through Clear Definition of Terms A mobile game based on a web novel is a complex content combining various copyrighted elements, and if the ownership of copyright for each element is not clearly defined, it may lead to disputes in the future. To ensure smooth cooperation between the contracting parties, it is necessary to clearly define the terms that must be specifically defined in the contract. - Terms related to the contract subject Original work (IP), new game product, derivative work, terms related to IP utilization - Terms related to IP utilization IP usage rights (license), scope of use (including domestic and overseas), IP reuse and derivative use, terms related to profit distribution - Terms related to profit distribution Revenue, in-app purchase revenue, advertising revenue, settlement period and method, terms related to intellectual property rights - Terms related to intellectual property rights Copyright ownership, joint copyright, intellectual property (IP) ownership and transfer, terms related to contract performance and termination - Terms related to contract performance and termination Reasons for contract termination, breach of contract and damages, dispute resolution clause Clearly defining these terms reduces ambiguity that may arise in contract interpretation and allows each party to understand the contract based on the same criteria. However, the terms and concepts that need to be defined may vary depending on the contract, so it is important to have sufficient consultation between the parties before entering into the contract and to have the contract drafted by a copyright specialist to match the purpose and situation. 2. Restriction of the Scope of Intellectual Property (IP) Utilization Mobile games are inherently prone to having a scope of use that extends overseas, making how the scope of intellectual property (IP) utilization is defined a key issue. Especially, limiting the IP usage rights to domestic use allows for additional licensing agreements or separate negotiations for IP utilization overseas, providing more effective protection for the original copyright holder. Setting the scope of intellectual property (IP) utilization to domestic use requires additional negotiations for overseas distribution. This can restrict overseas distribution or the use by overseas subsidiaries, allowing the original copyright holder to more effectively protect their rights. Additionally, if considering overseas market entry, it may be necessary to conclude additional license agreements or include royalty provisions. If unauthorized overseas distribution occurs, it may be necessary to discuss legal recourse options with a copyright attorney with extensive experience. 3. Clarification of Profit Distribution Criteria and Method Profit distribution is one of the most important elements of the contract, and in this copyright-related contract, the profit distribution ratio between the original copyright holder and the new game developer was clearly defined, referencing the termsheet that each company had separately negotiated, and the settlement period (monthly, quarterly, etc.) and payment method (bank account deposit, royalty payment, etc.) were confirmed in advance, and it was clearly defined who the intellectual property rights created in the new game belong to. By clearly defining provisions such as profit distribution criteria and distribution method and the ownership ratio of the intellectual property rights of the game produced under this contract, it has been possible to distribute profits fairly and maintain a long-term collaborative relationship. 4. Provisions to Minimize Legal Risks Clearly setting the penalties for breach of contract and conditions for contract termination allows for prompt response in the event of a dispute, including a contract termination clause, including a mediation clause to resolve potential future disputes, specifying the competent court for dispute resolution, and confidentiality clauses to protect information obtained during the contract negotiation and collaboration process, can prevent legal risks in advance by drafting contracts. As the content industry develops, the importance of copyright and profit distribution agreements is increasingly emphasized, and Law firm Veat has supported stable business operations by reflecting thorough copyright utilization scope, profit distribution criteria, and legal protection measures, tailored to the needs of content startups. Law firm Veat’s TIP (Technology Intellectual Property) Team is a specialized team in the field of copyright and intellectual property rights, handling all legal issues related to copyright and intellectual property rights. The TIP team is composed of leading experts in the copyright field, including Oh Seung-jong, Attorney , who serves as chairman of the Copyright Committee, Choi Sung-ho, Representative Attorney , selected as a ‘Leading Lawyer’ in the TMT sector of Legal Times, An Il-woon, Attorney , who is active as a specialist of the Korea Copyright Committee, and Jeon Yong-hwan, Attorney , who has extensive experience in ICT regulatory sandbox and empirical service law consulting. If you need legal advice on drafting copyrighted work and profit distribution agreements, please feel free to contact Law firm Veat. The following is a sample case of this work, which you can also check on the Law firm Veat blog. - Key Points for Drafting a Copyrighted Work Profit Distribution Agreement for Content Startups Thank you. Law firm Veat
Is your overseas business legal? Legal risk analysis of the global settlement structure.
Law firm Veat informed the company operating a workforce intermediary platform (hereinafter referred to as the “Customer”) about the legal risks related to the settlement structure, designed to attribute revenue generated outside of South Korea to the overseas subsidiary. Check elements related to overseas subsidiary establishment and operation Many companies considering global market entry review the strategy of establishing an overseas subsidiary and operating it as a separate entity from the domestic business. However, when creating a settlement structure that attributes revenue generated outside of South Korea to the overseas subsidiary, it is essential to review legal risks in advance and minimize them. Law firm Veat conducted a legal review of generally overlooked aspects related to the overseas subsidiary settlement structure, focusing on the following issues for the Customer. ① Possibility of denial of inappropriate transactions and tax risk analysis Corporate Income Tax Act Article 52 (Denial of inappropriate transactions) ① The tax office or regional tax office with jurisdiction over the tax base may calculate the income of a domestic corporation even if the calculation of the corporation’s actions or income is recognized as reducing the corporation's tax burden due to transactions with related parties. In this case, the tax office or regional tax office shall calculate the income of each business year of the corporation without regard to the calculation of the corporation’s actions or income (hereinafter referred to as “inappropriate transaction”).
[IT Litigation] Software Development Contract, Know-how for Examination Before Conclusion
Software, web pages, mobile application development contracts frequently lead to legal disputes. In particular, disagreements regarding the delivery of contractual deliverables often result in lawsuits. Law firm Veat intends to guide you through the key legal characteristics, issues, and a contract writing guide to prevent legal disputes that may arise in software development contracts. 1. Legal Nature of Software Development Contracts Generally, software development contracts have the legal nature of a 'contract for work'. That is, in a software development contract, the client (principal) commissions a developer (contractor) to complete specific software, and the developer is obligated to complete and deliver it. Regarding contracts for work, the Supreme Court of Korea has stated, ‘In a contract for work, the contractor’s compensation should be paid upon delivery of the completed work, and if delivery is not required, it should be paid without delay after the completion of the work, and the principal may refuse to pay the compensation until the delivery of the completed work or the completion of the work’ (Supreme Court, June 12, 2014, 2014 Da 10014, 2014 Da 10021). According to this precedent, the client has no obligation to pay compensation until the developer delivers the completed work. Also, the client can claim liquidated damages from the developer or terminate the contract for work if the developer fails to complete the work within the agreed period. 2. Legal Issues Related to Incomplete Software The most frequent issue in software development lawsuits is the determination of ‘completion’. The Supreme Court of Korea appears to review whether software has been completed by examining ① whether the major parts of the work have been produced as agreed, and ② whether it has the performance commonly required by social convention (Supreme Court, October 13, 2006, 2004 Da 21862). In principle, the client in a software contract is not obligated to pay compensation until the developer delivers the completed work. However, the Supreme Court of Korea, considering the nature of software and the nature of development contracts, recognizes an exception that ‘if the software is not completely unfinished but can be used after undergoing some supplementary work,’ the developer can claim compensation from the client based on the contractor’s performed work ratio (Supreme Court, June 12, 2014, 2014 Da 10014, 2014 Da 10021). 3. Cases Where Completion is an Issue in Software Development Contracts Generally, in contracts for work, the responsibility for asserting and proving completion lies with the contractor. Therefore, if a client files a civil lawsuit to claim compensation for a software contract, the developer is obligated to claim that the software, the contract objective, is completed and to prove its level of completion. However, if the developer finds it difficult to prove the completion or completion ratio of the software, the developer can request an evaluation of the contract objective to the court, and the court can determine the completion ratio of the contract objective through the evaluation procedure to determine the degree of completion. Compensation to the developer may be adjusted based on the completion ratio determined through the contract objective evaluation procedure (see Supreme Court, October 13, 2006, 2004 Da 21862). Contract Writing Guide to Prevent Legal Disputes When entering into a software development contract, it is important to include the content and scope of development, among other key items of the contract, in the contract to minimize potential disputes that may arise during the contract’s performance. Specify Development Scope and Functions The client should specifically describe and reflect in the contract the functions, user interface, algorithms, and other software requirements that are the subject of development. Set Development Schedule and Stage-by-Stage Delivery Criteria To prevent schedule delays or incomplete development, clear stage-by-stage inspection procedures should be established. Clarify Testing and Inspection Procedures Clear and objective inspection criteria should be established for inspection procedures before final delivery. Specify Compensation Payment Conditions Conditions for payment such as contractor’s performed work ratio and the discount condition for incomplete work should be specified in advance to prevent disputes. Clarify Ownership and Rights of Results If the copyright or source code of the software development results are not clearly defined, problems may arise during maintenance or improvement. Software Contract Legal Partner, Law firm Veat Law firm Veat has extensive expertise by handling numerous software development contract-related lawsuits and legal consultations in the IT and startup fields, including web page and application development. In particular, experts with high understanding of IT, centered on lawyers who majored in engineering, meticulously analyze cases and develop the best response measures. Law firm Veat supports the drafting of clear contracts by analyzing potential legal risks at the contract stage and providing effective legal response strategies when software development contracts arise. Furthermore, based on a deep understanding of IT and emerging technologies, we help IT/software companies operate their businesses stably in the changing legal environment of the digital age. If you need legal advice regarding software outsourcing, lawsuits, or other software contracts, please feel free to contact Law firm Veat. Thank you. Law firm Veat
[202502] Monthly Veat February Issue_ Shareholder Meetings, Prepare in Advance This Year!
Okay, here's the translated text, adhering to all your specific instructions: 안녕하세요. 저희 Law firm Veat입니다. 첨부된 자료는 **[2024년 5월 법무법인 비트 개인정보 처리방침 개정안]** 입니다. 개인정보 처리방침 개정안에 대한 자세한 내용은 첨부된 파일을 참고해주시기 바랍니다. 궁금한 사항은 언제든지 문의해주시기 바랍니다. 감사합니다. Law firm Veat 드림