ADOR has filed a 43.1 billion KRW lawsuit against Danielle, notifying her of the termination of her exclusive contract, and stated that she can no longer work as a NewJeans' member. Right now, attention is focused on how the 'penalty,' a fine for breach of contract, was calculated at 30 billion KRW.
According to the entertainment industry on the 8th, ADOR filed a lawsuit totaling 43.1 billion KRW against Danielle, her mother, and former ADOR CEO Min Heejin last month. The penalty amounts to 30 billion KRW, alongside a claim for 3.1 billion KRW in damages for non-fulfillment of the contract. ADOR is also claiming 10 billion KRW in damages against Danielle's mother and former CEO Min Heejin, holding them responsible for NewJeans' departure and the delay in their return.
The total amount of 43.1 billion KRW is the sum of 13.1 billion KRW in compensation for actual damages caused by the breach of contract and 30 billion KRW in penalty clause for the breach of contract.
Article 15, Clause 2 (Termination or Cancelation of Contract) of ADOR-NewJeans exclusive contract, which was previously disclosed in a court ruling, states, "Under the circumstances described above, even though the plaintiff (ADOR) is faithfully performing its important duties according to the contract, if the defendants (NewJeans' members) unilaterally terminate this exclusive contract during the contract period or violate important contract terms with the intent to unilaterally terminate it, the defendants shall pay the plaintiff the amount specified in Clause 1 of this Article as a penalty, separate from the damages in Paragraph 1 of this Article."
The criteria for calculating the penalty clause are also included in the exclusive contract. It is defined as: "Regardless the period of entertainment activities, the amount shall be calculated by taking the monthly average revenue during the period in which actual sales occurred within the two years before the contract ends, and multiplying it by the number of remaining months in the contract term."
Previously, all five members of NewJeans (Minji, Hanni, Danielle, Haerin, and Hyein) notified ADOR of their contract termination on November 29 last year. Based on that date, ADOR's annual revenue for the prior 2 years was approximately 110.3 billion KRW in 2023 and 111.2 billion KRW in 2024.
Since NewJeans is the only artist under ADOR, ADOR's revenue can be viewed as NewJeans' revenue. Divided by the five members, the annual revenue per member is roughly 22 billion KRW. Divided by 12 months, Danielle's monthly revenue is estimated to be around 1.8 billion KRW.
NewJeans, who debuted in July 2022, had an exclusive contract with ADOR until July 2029. Multiplying Danielle's average monthly revenue of 1.8 billion KRW by the remaining 56 months of the contract results in approximately 100.8 billion KRW. ADOR set the penalty at 30 billion KRW, which is less than 1/3 of that amount.
A penalty clause is different from liquidated damages. While liquidated damages strongly focus on compensating the other party's losses, a penalty clause is similar to a 'fine,' where it is agreed in advance that the debtor will pay a certain amount of money or provide other benefits to the creditor if they fail to fulfil their obligations.
The Supreme Court has ruled that a penalty clause is not automatically invalid simply because the amount is large. The penalty cannot be reduced even if the actual damages are smaller.
However, if the amount is significantly far too high compared to the actual damage, the court may decide that all or part of it is invalid under Article 103 of the Civil Act (Violation of Public Order and Morals). Therefore, it appears that ADOR set the penalty at 30 billion KRW to avoid the risk of the clause being ruled invalid, which would lower the penalty amount.
Meanwhile, the lawsuit filed by ADOR against Danielle has been assigned to Civil Division 31 of the Seoul Central District Court (Presiding Judge Nam Insoo), which is also currently handling the lawsuit over the termination of the shareholder agreement between HYBE and former CEO Min Heejin, as well as the claim for the stock purchase price after the put option was exercised.
1. [+101][-15] Seriously, Mincheonji has completely ruined the girls... She used these girls, who should be singing and performing at their peak, as hostages. And in the end, their image has hit rock bottom.
2. [+68][-8] Whoa... They earn that much?? That's incredible...
