Unfair contracts have been an issue lately; is there a way to prevent them in advance?

Recently, unfair contract clauses have frequently become an issue in content-based platform contracts involving creators, BJs, entertainers, and the like.

First, you should check whether the penalty clause is excessive.

A penalty imposed upon termination or breach of a contract must be at a level that “reasonably compensates for the anticipated loss,” and if it is excessively high, it may be judged void under the Act on the Regulation of Terms and Conditions.

Second, you should examine whether the income distribution structure is fair .

If the platform or agency unilaterally takes a high commission rate and you, the creator, have virtually no remaining profit, this may be an unfair contract that abuses the principle of freedom of contract.

During negotiations, it is advisable to disclose the revenue distribution structure transparently and, if necessary, to request supporting evidence.

Third, you should examine whether the termination clause and the contract term are balanced.

If the grounds or methods for terminating the contract are excessively restricted, or if the contract term is excessively long while early termination is impossible, this can become a cause of a major dispute in the future.

At a minimum, grounds for termination and a legitimate procedure should be included in the contract, and it is advisable that the contract term not exceed the ordinary range.

Finally, if the wording of the contract itself is ambiguous or a particular clause leaves room to vary depending on interpretation, it is advisable to have an expert review whether it is an unfair contract.

In particular, phrases such as ‘to be determined at the agency's discretion’ and ‘subject to consultation, but the decision-making authority rests with the agency’ can, in effect, entrench an unfair position close to an exclusive contract, so caution is required.