Background
In the exam preparation academy sector, it is common for a star instructor to breach their contract by moving to a competing academy or opening their own, taking students and other instructors along and dealing the original academy a serious blow. One such instructor breached a contractual non-competition covenant, moved to a competing academy, and then preemptively sued the academy for a declaration that "I bear no liability" (an action to confirm the non-existence of the obligation). Changchun represented the academy.
The Issue — Validity of the Non-Competition Covenant and the Legitimacy of the Liquidated Damages
The instructor advanced several arguments: ① the non-competition covenant was itself void; ② even if valid, the liquidated damages were excessive and should be reduced; and ③ the contract had ended through the academy's fault. The issues were whether the covenant was valid and whether the agreed liquidated damages had to be paid as stipulated.
How Changchun Helped
Changchun (attorneys Jaesun Yoon and Donghwan Shin), which has acted in many academy–instructor disputes, rebutted the instructor's arguments point by point, establishing with supporting precedent that ① the instructor and the academy had freely entered into the covenant as equal business operators, and that non-competition serves a legitimate purpose and necessity in the exam preparation sector; ② the stipulated sum is an agreed measure of damages (Civil Act art. 398), claimable on proof of non-performance alone without separate proof of loss; and ③ the amount did not fall within the "unjustly excessive" category under paragraph 2 of the same article.
Acting for the academy, Changchun established the instructor's liability for breaching the non-competition covenant and obtained recognition of liability for a substantial sum in liquidated damages. The case shows that an academy harmed by a star instructor's unreasonable departure can obtain proper compensation where the non-competition covenant is properly designed and proven. (Outcomes depend on the facts of each case and may differ.)