In South Korea, where endorsement by popular celebrities is the advertising norm, those who create trouble are increasingly having to dole out their own cash for harming the reputation of the company they represent.

The Seoul Central District Court ruled Wednesday that comedian Lee Soo-geun, who was sentenced to probation for illegal gambling in 2013, must compensate the company he was representing with 700 million won.

The ruling comes after the automotive company Bullsone filed a 20 billion won damage suit against Lee, claiming reparation for his part in “tarnishing the company’s image” as well as the financial losses the company suffered as a result of his social misconduct.

Lee is only one of many celebrities who have been rapped by the courts for allegedly violating their legal duty to “maintain a positive conduct” as models for their respective advertisers.

Last week, the court ordered actress Lee Seung-yeon, who was put on probation for drug abuse in 2013, to compensate the company she was representing by paying 100 million won. 

K-pop girl group Kara, who was entangled in a legal battle with its agency last year, was forced to pay 50 million won to the company that the group endorsed. Companies that hired actress Clara -- who is currently in a controversial dispute with her agency -- as their model, are reportedly preparing to file a damage suit against the actress.

What exactly are the legal grounds for the celebrities to compensate the companies they represent for what may seem like “private issues?”

One major source of legal power comes from the contents of the original contract signed between both sides.

Typically included in such contracts is a key clause stipulating that the star must maintain a positive conduct and refrain from any behavior that will damage the image of the company or its product.

Such a clause gives the advertiser legal power to file a damage suit against the hired model, who may have harmed the advertiser’s reputation through whatever form of public misconduct.

In determining the degree of responsibility as well as the amount of compensation that must be paid, the presence or absence of action-specific clauses is important, legal experts say.

Most contracts include a clause that outlines specific procedures for different situations -- in case the celebrity is indicted for criminal activities or commits acts publicly deemed immoral, the celebrity must pay back twice the amount originally received for the modeling service.

When such clauses are absent, the settlement process becomes more complex. The prosecution must provide evidence that clearly shows the amount of financial and public damage suffered due to lapses by the celebrity.

Perhaps more important is defining the so-called notion of “positive conduct and behavior” and its boundaries. 

For the notion is by nature subjective, it is often difficult to draw the line between a celebrity’s right to privacy and freedom of action, and the profit-related concerns of the company that hired them as models.

More often than not, a number of unfortunate celebrities suffer serious damage to their public image due to issues that are out of their control.

One such victim is actor Lee Byung-hun, who is married to actress Lee Min-Jung. Lee’s reputation plummeted when video footage suggesting that he was involved in a romantic relationship with a singer and model began circulating.

Though the court later proved that the two women blackmailed Lee for financial gains, he ended up losing many key advertising contracts as public opinion had turned against him.

To protect the rights of both the celebrities and the companies that hire them as models, it is important that both parties draw up clauses as specifically as possible when signing an advertising contract, legal experts said.

By Sohn Ji-young (jys@heraldcorp.com)