Background
As their contract was ending, an instructor at an exam preparation academy moved to a newly opened rival academy in the same neighborhood — very close to the original academy. The contract set out a non-competition obligation and liquidated damages for breach, and Changchun represented the academy.
The Issue — Once the Contract Ends, Is the Instructor Free?
The instructor took the view that with the contract at an end they were free to move, but the contractual non-competition extended for a set period and distance after termination. The key questions were ① whether the covenant was valid (the case law assesses validity from the totality of factors including the employer's protectable interests, the duration, area and subject matter, and whether consideration was provided); ② whether the instructor's move breached it; and ③ whether the agreed liquidated damages had to be paid.
How Changchun Helped
Changchun (attorneys Jaesun Yoon and Donghwan Shin) established liability in damages under the covenant by ① proving that the two academies were plainly in competition in distance, target students and subjects; ② setting out the circumstances of the move and evidence of disparagement of the original academy; and ③ showing that the stipulated sum was an agreed measure of damages (Civil Act art. 398), claimable on proof of non-performance alone, and that its amount was not unjustly excessive.
Acting for the academy, Changchun obtained recognition of liability for breach of the non-competition covenant. Changchun represents academies in disputes of this kind against departing instructors, making clear that a non-competition covenant must be honored after termination — that "the contract is over, so that's that" does not follow. (Outcomes depend on the facts of each case and may differ.)