1. The system of direct payment under the former Fair Transactions in Subcontracting Act (amended by Act No. 12709, May 28, 2014; hereinafter “subcontract”) is to protect a subcontractor (i.e., a subcontractor) by bearing the obligation of direct payment of a subcontract price upon a direct payment agreement or upon a request of a direct payment, prior to the contractor and its ordinary creditors.

In such cases, the contractor shall bear the obligation to directly pay the subcontractor within the scope of the obligation to pay the contract price (hereinafter referred to as the "Enforcement Decree of the Subcontract Act").

Article 9(3) [Article 9(3)] At the same time, the subcontractor's claim for the subcontractor and the subcontractor's obligation for the contract price shall be terminated.

(Article 14(2) of the Subcontract Act. According to Article 14(1) of the Subcontract Act, where the case falls under subparagraph 2 of the same Article (hereinafter “the case where the ordering person, the prime contractor, and the subcontractor agree to pay the subcontract price directly to the subcontractor”), the subcontractor’s right to demand direct payment may arise within the scope prescribed by Article 14(1) and (4) of the Subcontract Act and Article 9(3) of the Enforcement Decree of the Subcontract Act even if the subcontractor does not request direct payment. However, in cases falling under subparagraph 1, 3, and 4 of the remainder, the right to demand direct payment

(see, e.g., Supreme Court Decision 2010Da24176, May 10, 2012). Whether a subcontractor requested a direct payment of a subcontract price under Article 14(1) of the Subcontract Act is the content and method of the subcontractor’s request to the subcontractor, the purpose and method of the subcontractor’s fulfillment, the reason and method for the subcontractor’s direct payment, whether and when the subcontractor increases the subcontract price, the purpose of the direct payment system, the interests of the subcontractor, and the legal effect of the subcontractor’s request for a direct payment.