Legislations and their Implications on Interest Limitations in Loan Contracts after the IMF crisis in Korea

Contract law has certain economic functions, such as allocating risks and reducing opportunism and transaction costs by clarifying stipulations between contracting parties and applying the principle of disclosures with respect to hidden information, and hidden actions of a party. By considering these points, I examine what aspects will be considered when formulating loan contracts. I will also try to study topics related to the fairness of contracts as well as the freedom to contract in regulations, including the Interest Limitation Act and the Act on Registration of Credit Business, Etc. and Protection of Finance Users. Since today's society is a financial society, I will try to comprehend, in facts that it has reduced the imbalance of economic power and mitigated economic disparities by interest limitations in loan contract. At the same time, I will also analyze Japanese legislation that influenced the drafting of the Korean Interest Limitation Act, as well as the German laws that influenced both Japanese and Korean laws in this sphere, although there are pertinent differences between them. Through these comparisons, I will examine the necessity of regulating of interest limitations in Korea and whether the regulations are reasonably related to social functions and the fairness of contracts. Based on these facts, I will inductively study legislations on interest limitations in Korea related to social functions and the fairness of contracts.