[News][JoongAng Ilbo] Breaking Business Partnership and Establishing a Gym Just 411 Meters Away... Surprising Court Decision

On November 4, 2023, the JoongAng Ilbo covered a successful case involving attorneys Song Jiwon and Choi Jihyun from a law firm.

Following the termination of their business partnership and the signing of a non-competition agreement, a request for an injunction against competition based on this agreement was submitted. However, the court surprisingly rejected all requests for injunctions against competition based on the non-competition agreement, accepting the legal arguments presented by attorneys Song Jiwon and Choi Jihyun.

In a more detailed explanation, the court stated that even though it may appear as if the fitness center property, which was previously jointly owned, became solely owned by one party, it cannot be considered a transfer of business assets under business law. The court further reasoned that in a business partnership involving only two individuals, the withdrawal of one party amounts to nothing more than the termination of the partnership, and therefore, Article 41 of the Commercial Act does not automatically apply.

Moreover, the court noted that while it could be argued that the parties agreed to impose the non-competition obligation on one party through a separate contract, the absence of specific details regarding the scope and duration of the non-competition clause rendered it excessively restrictive, potentially prohibiting similar business activities for a period of 20 years. As such, the court did not recognize the effectiveness of the separate "non-competition" agreement drafted by the two individuals.