Legalize, Revise and Amend 2023–I was once told that in Korea, the purpose of signing a contract or agreement was to formalize the partnership. Over time terms would be subject to change and re-negotiation.
My Korea-facing experience has been that the contract fundamentally solidifies the working relationship. However, to maintain the partnership’s contractual obligations, the contract will require ongoing changes to reflect business conditions. In contrast, a legal agreement in the West is immutable.
Challenges
Major differences in how Korean and Westerners perceive legal agreements can surface during negotiations and even after the contract is in place. In particular, requests by Korean teams for change after change and alterations to a Western company’s standard agreements and contracts can cause considerable frustration, especially for their legal counsel.
Some document “redlining” may occur in the West, but legal teams may see unprecedented levels of questioning the most basic “boilerplate” contractual language. Or, again, no changes may be asked in the early stage, but brought up later when it was thought key points were agreed upon.
Unsurprisingly, as I often see in my legal training, “legalize,” terms that are rarely found outside of NDAs, LOI, and Agreements. ( BTW, Unlike in the past when I, too, poorly understood terms like “indemnification,” now in my USC Gould School of Law business law studies do have an understanding).
Great patience may be required to walk Korean teams through the Western legal terminology and clarification on what cannot be changed within the document to maintain compliance with state, local, and international laws.
Finally, it is not uncommon for terms to be revisited and questioned by other departments— often with limited or no international legal or business experience— despite months of work between the Western and Korean lead teams!
As the Ink dries…
Perhaps more concerning is that terms mutually agreed upon within the binding agreement can be subject to re-interpretation.
Over time, as Korean team members are reassigned to the project, the new staff will be unfamiliar with previous compromises and understandings.
This new staff, often in response to changing business conditions, will have different expectations and want to implement fundamental changes that alter the agreement. This will require amending the original agreement with all the associated time and costs. In the worst cases, Western companies will not be open to altering what they feel is fair and binding, resulting in seriously jeopardizing the relationship and creating potential legal action.
An example comes to mind.
Over time negotiations in what had been a very promising partnership lapsed from an agreement to be executed by year-end to a rather long dragged-out ordeal. Specifically, a bottleneck developed each time revisions in content were proposed by the Korean team. These changes needed to be reviewed and okayed by the American working-level team before the Korean team would submit to their leadership. Once the Korean leadership approved, the proposed changes then had to be reviewed by the American team’s legal counsel. As one can imagine, if the American counsel had edits, the entire process would restart.
I analyzed the situation that had been occurring for months and as Step One suggested bringing all those involved together in weekly conference calls to address the major concerns. A second call was also scheduled as needed for the legal counsels.
Step two, I pressed both sides to recognize that the relationship was very positive and sound despite obvious frustration and doubts that an agreement would ever be signed. To ease the bottleneck, I stressed the need to compromise and minimize future revisions to achieve a signed agreement. With all parties collaborating and aligned, the project progressed to a signing in a timely manner.
This week I built upon excerpts from Korea Perspective,( 2015).
As always…I am open to discuss any questions. And I’m also happy to steer you in the right direction.
Plus, our team can provide the support and resources needed for your market entry.
Legalize, Revise, and Amend 2023
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