Top Korean Language Instructor Breaching Exclusive Contract... Court Orders 4 Billion Won Compensation

Transfer to Competitor Before Contract Ends
Appeals Court Reduces Compensation from 7.5 Billion to 4 Billion Won

A so-called ‘top instructor’ who transferred to a competitor despite having an exclusive contract period remaining has been ruled liable to pay tens of billions of won in damages to their former large private education company.

According to the legal community on the 17th, the Seoul High Court Civil Division 9 (Presiding Judges Seong Ji-yong, Baek Suk-jong, Yoo Dong-gyun) ruled in a damages lawsuit filed by Megastudy against Korean language instructor Yoo Dae-jong, ordering “Mr. Yoo to pay 4.03 billion won.”

Mr. Yoo signed a 7-year online lecture contract with Megastudy in September 2015. In 2017, he also signed an exclusive agreement for offline lectures, with the contract period set until December 2024. Mr. Yoo later became a star instructor by ranking first in Korean language sales at Megastudy.

On October 21, 2019, Mr. Yoo notified Megastudy that “he would no longer conduct online lectures.” In response, Megastudy requested compliance with the contract period and suspended offline lectures citing the discontinuation of online lectures.

Mr. Yoo argued that the online and offline lecture contracts were separate, so the offline lecture contract remained valid. However, when Megastudy rejected this, he transferred to the competitor SkyEdu starting November 2019.

Megastudy then demanded a total of 49.2 billion won in damages based on the damage compensation and penalty clauses in the contract with Mr. Yoo. Megastudy claimed that the compensation amount in the contract applied to both online and offline lectures.

[Image source=Yonhap News]

The damage compensation clause in the contract previously signed between Mr. Yoo and Megastudy states that “if Party B (the instructor) arbitrarily discontinues lectures without Party A’s (Megastudy’s) consent, Party B must pay double the instructor fees received and all financial support, plus double the amount obtained by multiplying the average monthly lecture sales by the remaining months of the contract period.”

The court ruled in the first trial that Megastudy’s interpretation was appropriate. However, it considered the demanded compensation excessive and ordered payment of 7.52 billion won.

However, the appellate court stated, “When Mr. Yoo initially signed the contract with Megastudy, it was clearly limited to online lectures, and offline lectures were added later, so the damage compensation clause should be interpreted as applying only to online lectures,” reducing the compensation amount.

Accordingly, the court calculated the scheduled damage compensation amount for Mr. Yoo at 22.2 billion won and ruled that Mr. Yoo must pay Megastudy approximately 3.3 billion won, which corresponds to 15% of that amount. The penalty of 700 million won was ordered to be paid without reduction.

The court explained the reason for reducing the damage compensation amount, stating, “If the scheduled damage compensation amount under this lecture contract is paid in full, the defendant would lose all compensation for lectures and other services provided to the plaintiff so far, which could constitute excessive compensation.”

Additionally, in a counterclaim filed by Mr. Yoo against Megastudy for lecture fee payment, the court upheld the first trial ruling that Megastudy must pay the instructor 580 million won.

The court recognized that the legitimate amounts Mr. Yoo should receive included 194 million won for online lecture fees over 8 months from 2019 to 2020, 56 million won for 4 months of textbook fees, and 339 million won in incentives.

This content was produced with the assistance of AI translation services.