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Celebrities' social deviations often extend beyond simple private life to issues of contract and trust. In particular, acts subject to criminal punishment, such as drunk driving, can fundamentally damage trust between the public and the contracting party. The recent case of actress Kim Sae-ron terminating her contract with her agency Gold Medalist after a drunk driving accident has once again brought to light how obligations and responsibilities are settled in management contracts when a celebrity's fault occurs.
1. Legal Structure of Management Agreement
The nature of a celebrity management contract is somewhat different from that of a general agency contract or subcontract contract. In civil law, a contract of agency is defined as a relationship in which the agent handles the affairs of another person, and a contract of subcontract is structured to complete a certain object and receive compensation for it. A management contract contains both elements of delegation and subcontracting, but it does not stop at simply delegating a legal act or completing an object.
According to case law, since the compensation borne by the manager under an exclusive management contract is a service for handling business for the celebrity, it has been judged that the exclusive management contract has the nature of a 'delegation' or an 'anonymous contract similar to delegation' (Seoul High Court Decision 2004Ra143, May 11, 2004). However, recently, large management companies have strengthened the obligations of celebrities for the purpose of recovering the efforts and capital invested in discovering and nurturing celebrities, and celebrities often provide labor exclusively to the management company as employees and receive compensation in the form of exclusive fees and appearance fees. Therefore, it is difficult to simply understand a management contract as a delegation contract, and it should be viewed as an atypical contract mixed with the nature of employment and subcontracting.
2. Reasons for liability in the management contract clauses and their legal implications
Most of the management contracts described above include clauses that allow the agency to terminate the contract if the celebrity causes social controversy or receives criminal punishment, hold the celebrity liable for damages if the celebrity intentionally or through gross negligence causes damage to the company, and limit settlement if the celebrity is seriously at fault for the act that has had a significant negative impact on the company's image or business.
There is no explicit definition of serious liability under civil law, but generally, acts that are intentional or grossly negligent, acts that violate laws or social order, and acts that essentially violate the purpose of a contract with a management company are evaluated as 'serious liability.'
The recent controversies involving drunk driving, drug use, and sexual harassment committed by celebrities are acts for which the celebrity is seriously liable under the management contract. They are clearly illegal acts subject to criminal punishment, and especially in the case of celebrities who are active based on their public image, they result in serious damage to their credibility. It is not uncommon for celebrities’ illegal acts or social deviations to lead to serious violations of the management contract, and in many cases, liability for damages is discussed together depending on the specific case.
3. Can an exclusive contract that has lost trust continue?
If a celebrity causes serious fault and the management contract can no longer be fulfilled, it is difficult for the management company to maintain its contractual obligations. This is an issue that goes beyond simply determining whether or not there is responsibility, and requires examination of what legal effects will follow when the basis of the contract collapses.
In particular, acts that are subject to criminal punishment, such as drunk driving, drug use, and sexual crimes, fundamentally damage the public trust in the entertainer, and furthermore, make it impossible for the 'normal entertainment activities' that are the premise of the contract. It is not only practically meaningless for the management company to continue various projects or advertisements with the entertainer who is in a state of inactivity, but it can also result in damaging the company's image. In cases where the essential purpose of the contract becomes impossible to achieve, the contract is effectively nullified, and the agency can stop performing its obligations based on a legitimate reason. In addition, if actual damages occur as a result, there is a possibility that this will lead to issues of settlement or compensation according to the contract.
However, this does not mean that the management company is the only one with the authority to terminate the contract. In actual case law, there are cases where celebrities themselves can terminate their exclusive contracts if they meet certain requirements.
For example, in a case where celebrity A unilaterally terminated an exclusive contract with management company B on the grounds that the relationship of trust was broken during their activities, the court ruled that the celebrity could terminate the contract if the trust was fundamentally broken, as the contract was established and maintained on the premise of a high degree of trust between the contracting parties. In particular, the activities that the celebrity must perform under the exclusive contract are premised on the physical and mental intervention of the individual, so a third party cannot do so on their behalf, and forcing exclusive activities against their free will could lead to a violation of personal rights (Supreme Court Decision 2017Da258237, pronounced on September 10, 2019).
Therefore, if trust is broken to the extent that it is difficult to expect the contract to continue, the celebrity can also terminate the exclusive contract, and it is difficult to legally justify restricting this. In this way, management contracts should be understood as special contractual relationships based on personality and trust, not simple commercial transactions, and the criteria for termination should also sufficiently reflect this special nature.
4. Conclusion: The essence of a contract is ultimately trust.
A management contract is not simply a business entrustment relationship between a celebrity and an agency, but rather a highly mutually trust-based contract that operates around image, trust, and brand value.
Therefore, if a celebrity causes serious fault, contract termination and exemption of the management company from liability can be legally justified, and if actual damages are proven, a claim for damages can also be made. However, the agency does not have the authority to terminate the contract alone. If trust is fundamentally damaged, the celebrity can also terminate the contract, and there are precedents that recognize this.
The law judges based on the contract, but the contract ultimately presupposes trust between people. And when that trust is broken, it is no longer legitimate to force one party to perform the contract. It is necessary to remember that this point is still applied in the entertainment industry contract practice today.
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