1. The Client's Situation
In entering into a non-exclusive (rather than domestic-exclusive) reseller agreement with an overseas software developer, the client received a draft English-language template contract and requested a review of the legal and commercial risks. In particular, the client was concerned about whether excessive burdens were being shifted onto it with respect to the relationship between the EULA (End User License Agreement) and the reseller agreement, the scope of liability in the event of intellectual property infringement, audit and reporting obligations, and the cap on damages. There was also a need to reorganize the overall contract structure so that any disputes that might arise during sales to domestic customers in the future would not all be attributed to the client's responsibility.
2. Your Legal Team's Advice
Your Legal Team first advised the client to formally request from the supplier all relevant materials forming the basis of its claims, such as the terms and conditions, usage rules, and consent forms. Next, we examined whether there existed a provision charging the full one-year usage fee on the basis of a single one-time installation, and the possibility that such a provision could constitute a "clause unfairly disadvantageous to the customer" or a "clause in breach of the duty to explain" under the Act on the Regulation of Terms and Conditions. We also organized the procedures that could be initiated going forward, such as a request for review of the terms and conditions by the Fair Trade Commission and an application for dispute mediation with the Korea Consumer Agency, thereby preparing a strategy to respond to the supplier's unilateral billing demand.
3. Result
By formally requesting the terms and conditions and the basis for the charges from the supplier, the client was able to clarify the facts and, on the basis of potential legal issues, induce a reconsideration of the billing demand. A foundation was secured for attempting, in future negotiations with the supplier, a reasonable adjustment rather than bearing the full one-year cost. The client also secured response options allowing it to choose whether to initiate additional legal procedures.