Article 1(Purpose) #
The purpose of this Act is to contribute to the solid establishment of a credit society by providing for special cases to the Civil Act with regard to guarantees to protect guarantors who provide guaranties without consideration but only out of courtesy from suffering economic and mental harm and to establish reasonable practices for contracts on guarantee for pecuniary obligations.
Article 2(Definitions) #
The definitions of terms used in this Act shall be as follows: <Amended on May 17, 2010; Mar. 31, 2011; May 19, 2011; Jan. 16, 2016; May 29, 2016; Jun. 20, 2023>
1. The term "guarantor" means a person who provides a guarantee under Article 429 (1) of the Civil Act (hereinafter referred to as "guarantee"), excluding the following cases:
(a) Where an enterprise under subparagraph (1) of Article 2 of the Credit Guarantee Fund Act (hereinafter referred to as "enterprise") provides guaranties on another person's debt in relation to the business in which the enterprise engages;
(b) Where the representative, a director, a general partner with unlimited liability, or an oligopolistic stockholder under Article 39 (2) of the Framework Act on National Taxes of an enterprise, or a person who has de facto control over the management of an enterprise provides guaranties on the enterprise's debt;
(c) Where a person who has a special relationship with the representative, a director, a general partner, or an oligopolistic stockholder under Article 39 (2) of the Framework Act on National Taxes of an enterprise, or a person who has de facto control over the management of an enterprise, such as a spouse or a lineal ascendant or descendant, provides guaranties on the enterprise's debt, while sharing economic advantage with the enterprise or exercising influence, directly or indirectly, over the management of the enterprise;
(d) Where a person who has a partnership with a debtor assumes the partner's debt in a relationship with the partnership;
(e) Where a person falling under any of items (b) through (d) provides guaranties for an enterprise that has assumed another enterprise's debt in relation to the latter enterprise's debt;
(f) Where a fund is established pursuant to an Act or an agency responsible for the management of such fund and provides guaranties in order to guarantee the credit of an enterprise or a private individual;
2. The term "guarantee contract" means a contract entered into between a creditor and a guarantor, irrespective of its form or title, under which the guarantor agrees to perform a debtor's pecuniary obligations if the debtor defaults on repay his or her debts;
3. The term "financial institutions" means the following entities:
(a) Banks established with authorization under the Banking Act (including persons treated as banks pursuant to Article 59 of the aforesaid Act);
(b) The Korea Development Bank established pursuant to the Korea Development Bank;
(c) The Export-Import Bank of Korea established pursuant to the Export-Import Bank of Korea Act;
(d) The Industrial Bank of Korea established pursuant to the Industrial Bank of Korea Act;
(e) Investment traders, investment brokers, collective investment business entities, financial securities companies, and merchant banks under the Financial Investment Services and Capital Markets;
(f) Mutual savings banks under the Mutual Savings Banks Act;
(g) Agricultural cooperatives and the Nonghyup Bank under the Agricultural Cooperatives Act;
(h) Fisheries cooperatives and the Suhyup Bank under the Fisheries Cooperatives Act;
(i) Cooperatives under the Forestry Cooperatives Act;
(j) Credit unions under the Credit Unions Act;
(k) Community credit cooperatives and the Federation thereof under the Community Credit Cooperatives Act;
(l) Deleted; <Jan. 6, 2016>
(m) Insurance companies under the Insurance Business Act;
(n) Specialized credit finance companies under the Specialized Credit Finance Business Act (including those who have obtained permission or completed registration pursuant to Article 3 (3) 1 of the aforesaid Act);
(o) Deleted; <Jan. 6, 2016>
(p) Venture investment company and venture investment association under the Venture Investment Promotion Act;
(q) Post offices under the Postal Savings and Insurance Act;
(r) Small and medium enterprise cooperatives under the Small and Medium Enterprise Cooperatives Act;
4. The term "credit information relevant to debts" means information about loans, information about guaranties for debts, information about over-due loans, information about subrogated repayments, information about advance payments on guarantee, and information about default.
Article 3 #
Deleted. <Feb. 3, 2015>
Article 4(Specification of Maximum Amount of Guarantee) #
The maximum amount of a guarantee shall be specified in writing whenever a guarantee contract is made. The same shall apply to an extension of the guarantee.
Article 5(Creditor's Duty to Notify) #
(1) A creditor shall, if a principal debtor has not paid the principal, interest, and other debts for three months or longer or if the creditor becomes aware in advance that the principal debtor is unable to repay his or her debts by the deadline set for repayment, notify the guarantor of the fact without delay.
(2) Any financial institution that has entered into a guarantee contract as a creditor shall, if the principal debtor has not paid the principal, interest, and other obligations for one month or longer, notify the guarantor of the fact without delay.
(3) A creditor shall, upon receiving a request from a guarantor, inform the guarantor of the details of primary debts and whether such debts have been repaid.
(4) Where a creditor violates an obligation described in paragraphs (1) through (3), a guarantor shall be discharged from debts to the extent of loss caused by such violation. <Newly Inserted on Mar. 24, 2010>
Article 6(Continuing Guarantee) #
(1) A guarantee may be made for debts arising under a specific contract between a creditor and a principal debtor on continuous transactions or for debts arising continuously from any other transactions of a certain kind or from any specific cause. In such cases, the maximum amount of the guarantee shall be specified in writing.
(2) In any case under paragraph (1), a guarantee contract is void if the contract does not specify a maximum amount for the guarantee.
Article 7(Period of Guarantee) #
(1) If a guarantee contract does not specify a period of guarantee, the period is deemed to be three years.
(2) The period of guarantee may be extended. In such cases, if a guarantee contract has no specified period of guarantee, such period is deemed to be the period of guarantee as at the time the contract is concluded<Amended on Mar. 24, 2010>
(3) Upon the conclusion or renewal of a contract for the period of guarantee, a creditor shall notify the guarantor of the period of guarantee that is deemed under paragraphs (1) and (2). <Newly Inserted on Mar. 24, 2010>
(4) In cases where a creditor has extended the deadline for repayment for a debtor without consent of a guarantor, either the creditor or debtor shall notify the guarantor of the fact. In such cases, the guarantor may immediately perform his or her liability as a guarantor.
Article 8(Special Provisions for Guarantee Contracts Entered into by Financial Institutions) #
(1) Any financial institution that enters into a guarantee contract as a creditor shall provide the guarantor with the credit information relevant to the debtor's debts, which has been provided by the comprehensive credit information collection agency pursuant to the Use and Protection of Credit Information Act and shall request the guarantor to print his or her name and affix his or her seal or place his or her signature on the document. The same shall apply to an extension of the period of guarantee.
(2) A financial institution that provides a guarantor with the credit information relevant to the debtor's debts pursuant to paragraph (1) shall obtain consent of the debtor.
(3) Where a financial institution fails to provide a guarantor with credit information related with debts pursuant to paragraph (1), the guarantor may request such financial institution to the credit information related with debtor's debt as at the time a guarantee contract is entered into.
(4) If a financial institution does not comply with a guarantor's request to provide him or her with the credit information relevant to debts pursuant to paragraph (3) within seven days from the date of receipt of request, the guarantor may notify the financial institution of the cancellation of the guarantee contract within one month from the date on which he or she becomes aware of the fact. In such cases, the cancellation becomes effective one month after the date on which the financial institution receives the notice of cancellation.
Article 9 #
Deleted. <Feb. 6, 2009>
Article 10 #
Deleted. <Feb. 6, 2009>
Article 11(One-Sided Mandatory Provisions) #
Any contract unfavorable to a guarantor in violation of this Act is void.