The developer sought approximately 1.3 billion won from the contractor, but the court awarded only 8.3 million won—about 0.6 percent of the claimed amount. The developer was also required to bear all litigation costs. The sole deciding factor in this ruling—which effectively resulted in a loss for the plaintiff—was which set of drawings should be used to determine the defects.
In this article, we will summarize the details and key issues of this ruling by the Seoul Central District Court, as well as the practical implications it holds for construction companies.
Case Background
According to legal circles on the 30th, the 23rd Civil Division of the Seoul Central District Court (Presiding Judge Lee Jeong-jae) effectively ruled against the plaintiff in a lawsuit filed by Company A, the developer of a commercial building in Gwangju, Gyeonggi Province, against joint contractors B and C, seeking the return of unjust enrichment.
Here are the details. In 2021, Company A entered into a construction contract with Company B and others for the new construction of a commercial building. In September 2022, reflecting increases in raw material and labor costs, the parties signed an amendment to the contract increasing the construction payment by 1.5 billion won. The building was completed in July 2023, 67 days later than originally scheduled.
The Settlement Agreement, and What Followed
Immediately after completion, both parties confirmed the outstanding construction payment at approximately 5.6 billion won and drafted a settlement agreement stipulating that all claims and obligations related to the construction costs would be considered settled upon full payment. Company A paid the entire construction cost in accordance with the agreement.
The problem arose afterward. After finalizing the settlement, Company A filed claims against the contractors seeking the return of construction funds, liquidated damages for delay, and compensation for damages resulting from incomplete or defective work.
The Developer’s Argument
Company A’s claims were twofold. The first concerned the construction payment. The special provisions of the construction contract stipulated that if the total floor area changed, the unit price per pyeong would be applied to the revised area; therefore, Company A argued that since the total floor area had decreased by approximately 100 pyeong due to design changes, the construction payment should also be reduced. The second concern was construction quality. Company A claimed that the ceiling texture, exterior wall finishes, and elevators were constructed differently from what was specified in the original design documents or the special provisions of the contract.
Both claims were based on the original design documents and the special provisions of the construction contract. In fact, the court-appointed expert, in line with Company A’s argument, recognized the failure to install the ceiling texture as a defect and calculated the repair costs accordingly; thus, the initial expert assessment results were unfavorable to the contractor.
The Contractor’s Defense
The contractor cited a Supreme Court precedent. The legal principle holds that the presence of defects in a newly constructed building must be determined based on the final, confirmed design—which resulted from design changes agreed upon by the parties—and the as-built drawings that served as the basis for the occupancy permit.
What was crucial here was not the legal principle itself, but the process by which the contractor proved that this principle applied to their case. Through fact-finding inquiries and other means, the contractor demonstrated that the design had been modified following consultations with the building owner to correct errors in the original design documents, and that they had obtained both the relevant government agency’s approval for the design change and the occupancy permit. Furthermore, they even obtained a response from the appraiser stating that, based on the design documents for the occupancy permit, the items contested by Company A constituted standard construction practices. It was this evidence that overturned the initial, unfavorable appraisal results.
Criteria for Determining Defects
The court accepted the contractor’s argument. It held that, unless there are special circumstances—such as the contractor arbitrarily altering the design documents without the consent of the building owner or the construction supervisor—the existence of defects “must be determined based on the final, approved drawings.”
In this case, the court determined that the final drawings had been finalized following meetings between the building owner and the contractor and approval of design changes, and that the occupancy permit had been granted based on those drawings. Consequently, most of the items contested by Company A—including the ceiling texture, exterior wall finishes, and elevators—were recognized as having been constructed properly in accordance with the as-built drawings.
Construction Payment and Liquidated Damages
The claim for a refund of overpaid construction costs was also rejected. The court reasoned that since the total construction cost had been finalized in accordance with the wording of the amendment contract—a dispositive document—it could not be reduced again on the grounds of a decrease in gross floor area. The fact that the full construction cost had been paid after completion and a separate settlement agreement had been reached also served as a basis for this ruling.
The claim for liquidated damages was also dismissed. The court reasoned that Company A was aware of the delay in completion and, although it could have offset the liquidated damages against the construction costs under the contract, it chose not to do so; instead, it finalized and paid the outstanding construction costs in full. Furthermore, the court held that the parties had agreed, pursuant to the settlement agreement, that no liquidated damages would accrue.
However, the court ruled that the contractors must bear the cost of 8.3 million won, consisting of the difference resulting from changes to the interior finishing work in the common areas and electricity charges incurred during construction.
Practical Implications of the Ruling
The key point for contractors to note in this ruling is not the victory itself. Rather, it is the fact that claims based on the original design documents and special contract provisions can still be filed even after both completion and final settlement have been finalized.
Attorney Jo Young-woo of Sejong Law Firm, who represented the contractor, emphasized that contractors need to thoroughly prepare, on a regular basis, “evidence supporting the legality of design change procedures and the proper interpretation of contract documents.”
The word “routinely” is key here. What saved the contractor in this case was not evidence created after the dispute began, but rather records of consultations and the history of permits and approvals that already existed during the construction process. Because the facts—that meetings with the building owner took place, that design changes were agreed upon during those meetings, and that these led to permits and occupancy approvals from the competent authorities—were preserved in chronological order, they could be reconstructed through a fact-finding inquiry. If the design changes had been carried out solely through verbal agreements and on-site practices, the outcome might have been different even under the same legal principles.
There is a point Digital Presso focuses on here: it is not uncommon for the outcome of construction disputes to hinge not on the quality of construction, but on the record of agreements. In this case, the ceiling texture and exterior wall finishes in dispute were not actually installed incorrectly. They had been changed through consultation; it was simply a matter of proving the procedure by which that consultation took place.
Digitalpresso’s B2B comprehensive construction platform, RenameDP, focuses on documenting this consultation process as part of the site’s daily operations. When drawings and notes are attached to site-specific chats for discussion, those conversations are archived along with their timestamps, and AI generates daily summaries—so a record of “what was discussed and when” is preserved without the need to draft separate meeting minutes. When combined with electronic approval workflows and document management, decisions such as design changes are stored along with their approval histories. Ultimately, it is these records that become the subject of fact-finding investigations years later.
If you are assessing the risk of post-completion disputes, I recommend starting by examining how on-site consultations and changes are currently being documented.
This ruling reaffirms the legal standing of as-built drawings that have undergone design changes. At the same time, it clarifies that this standing is recognized only when the legality of the procedure is proven. The outcome would be different if changes were made arbitrarily without the consent of the building owner or the supervising engineer.
Ultimately, the challenge for contractors is not to avoid changing the drawings, but to document the process of making those changes. Design changes on-site are a constant occurrence and will continue to happen. I hope to see more construction sites where, even years later, it remains clear that those changes were made by mutual agreement.
The Korea Economic Daily, “[Exclusive] If Constructed According to the As-Built Drawings… Court Rules ‘Differences from the Original Design Do Not Constitute Defects’,” 2026 — https://www.dnews.co.kr/uhtml/view.jsp?idxno=202608300726263910814
Ruling by Civil Settlement Division 23 of the Seoul Central District Court (cited in the article)
Comment by Attorney Jo Young-woo of Sejong Law Firm (cited in the article)
This content was produced by Digital Presso Co., Ltd. and references the above materials. Please refer to the original text for further details.
