A structural problem I found in the standard contract while looking into NewJeans’ penalty fee
Under the standard contract, the contractual penalty is calculated by multiplying the average monthly revenue from the previous 2 years by the number of months remaining on the contract.
So the more an artist promotes and succeeds, the bigger the penalty gets, even though they’ve already honored more of the contract term.
There’s also case law concerning excessive penalties.
Injunction suspending the validity of an exclusive contract [the TVXQ case]
[Seoul Central District Court, October 27, 2009, Decision 2009Kahap2869]
【Issues】
A case partially granting an application to suspend an entertainer’s exclusive contract containing a lengthy contract term and an excessive liquidated-damages clause.
【Summary of the decision】
In a case where entertainers sought an injunction against their agency to suspend the validity of their exclusive contracts, the court found that the contracts—primarily characterized by lengthy terms and excessive liquidated-damages clauses—could be deemed wholly or partially void, or considered expired after a reasonable period, because the agency used its superior position to exercise unfair control and imposed excessive obligations and unfair burdens on the entertainers, excessively infringing on their economic freedom and fundamental rights in violation of public morals and social order. The need for provisional relief was also established so the applicants could independently pursue entertainment activities until the dispute over their rights was finally resolved in the main lawsuit. The agency was therefore prohibited, pending a judgment on the merits, from negotiating or entering into contracts with third parties for entertainment activities against the applicants’ wishes and from using its market power to obstruct their independent entertainment activities.
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Huh? If it weren’t written that way, wouldn’t people just break their contracts and leave once they got popular? The standard contract got rid of slave contracts, and if something is wrong with a contract, it can be terminated like Chuu from LOONA did. If a group fails, the agency takes on all the debt too. They can just promote for 7 years and leave afterward, so why is this being treated like a problem?
Doesn’t the interpretation get weird when you connect the NewJeans case to the standard contract? It’s true an artist can’t succeed alone, and the company’s production ability matters, but in this case the company was effectively Min Hee-jin, wasn’t it? Wasn’t their demand to terminate the exclusive contract a way of opposing Min’s dismissal because they knew perfectly well that her production was why they could become that successful?
Those rules were all written in blood. Why do you think they exist? 😭 The looser a contract is, the more people exploit it. Let’s not blindly attack it after looking at only one side. If you don’t want to pay a penalty, then as long as the company hasn’t done anything wrong, just fulfill the contract faithfully and there’s no problem. And if the company really is clearly at fault, that penalty clause shouldn’t be scary either, since you definitely won’t have to pay it! Let’s not show how immature we are by fixating on wording like “several times the penalty.” Just don’t do anything that incurs the penalty~ The world isn’t that easy, and you can’t solve everything by appealing to emotions.