The effectiveness of actions by committees promoting the establishment of an association: Concerning the service contract of management entities specialized in improvement projects
Year: 2025
Type: article
Abstract: The “Committee for Promoting Establishment of Association” is an organization aimed at establishing an Association for an improvement project (a redevelopment and reconstruction project). It is a noncorporate entity with legal rights and duties only within the scope of tasks necessary for establishing an Association. “Management Entities Specialized in Improvement Projects” are entrusted by a Promoters’ committee or Association with the responsibility of fulfilling the requisites for the implementation of an improvement project and providing related consultation; they act as the Association’s helpers. Typically, in the Promoters’ committee stage, the committee selects Management Entities Specialized in Improvement Projects to conduct the tasks necessary for establishing an Association. However, after the establishment of an Association and the formation of its new executive team, disputes can arise when the effectiveness of the Service Contract of Management Entities Specialized in Improvement Projects, signed during the Promoters’ committee stage, is denied. According to Article 34, Paragraph 3 of the “Act on the Improvement of Urban Areas and Residential Environments” (hereinafter referred to as “the ACT”), “The rights and duties related to the Promoters’ committee tasks are fully succeeded by the Association.” Article 34 is directly related to the interpretation of the rights and duties of the Promoter’s committee that are transferred to the Association. The scope of the Promoters’ committee’s duties is limited to those necessary for establishing the Association as defined by urban redevelopment laws. If the Promoters’ committee exceeds its scope and engages in tasks that fall under the Association’s responsibilities, such actions are deemed invalid. If the Promoters’ committee and the Management Entities Specializing in Improvement Projects enter into a service contract that involves executing tasks related to the Association’s duties, the part of the contract that pertains to the Association’s responsibilities is deemed invalid. Here, Article 34, Paragraph 3 of the ACT should be interpreted strictly, as it is a special provision: under an invalid service contract, the Promoters’ committees’ rights and obligations shall not be fully succeeded by the Association. However, the Supreme Court has ruled that under an invalid service contract, all rights and obligations of the Promoters’ committee should be fully succeeded by the Association. Considering the Association would ultimately be responsible for returning any unjust enrichment arising from such an invalid contract, I agree with the Supreme Court’s decision. This study examines various issues raised in disputes between the Association and Management Entities Specialized in Improvement Projects selected by the Promoters’ committee to establish the Association. Such disputes can be resolved by creating a service contract with terms that limit the scope of services to the tasks associated with the Association’s establishment; the Promoters’ committee can enter into such a contract with the Management Entities Specialized in Improvement Projects after the Association has been established. This will allow the service contract to be signed as a direct contract rather than as the outcome of a competitive bidding process. Such institutional mechanisms can facilitate meaningful solutions to and reductions in related disputes.
Author: Haewon Yun
Language: English
Subfield: Law
Field: Social Sciences
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W4408824530