advice for 16 year old ds with gaming support company

[hannibalismisunderstood]

Hi,

My son is big on coaching and had built up a big online presence in the gaming world with YouTube videos Etc.

He then decided to create a company that helps teams on online gamers to compete in competitions. He basically gets sponsorship for them to attend, uniforms and then coaches them as they play in the big pro gamer conventions such as insomnia Etc. He has a website, a professional logo, a team who help with various functions such as marketing but he has retained sole ownership. He set up a separate bank account in his name for funds to go in and out of so that when it's time to do the accounts it's nice and clear what's what. The teams who he supports sign a contract with him and basically pay 20% of any winnings to him/his company.

Tonight he has experienced a hostile takeover of one of his valuable teams and they are claiming that his contracts are void because 1) he hasn't registered his company and 2) he's under 18. This team could be worth a lot of money and increase his profile greatly so he is loathed to just roll over and let it happen but we don't know where he actually stands on this....

So, my questions are;

1. Does he need to register his company at this stage and with whom
2. Are all his contracts void as he is under 18
3. Does he have anyway of fighting this takeover?

Hi
Disclaimer: I'm not a lawyer but work in the field

1. unless he has incorporated a company at companies house then he does not have a company, he has an unincorporated business (sole trader). You cannot just call yourself xyz limited, you have to actually create the company, issue shares, appoint directors etc. However, a sole trader is able to enter into contracts; you do not have to be a company to enter into a contract.
2. contracts entered into by a minor are generally voidable by the minor but not by the other party. How old are the other parties to the contract?
3. I'm not sure what you mean by a takeover. Hostile takeovers are what happens when a buyer buys a company by offering to its shareholders without the blessing of management. Do you mean the team is trying to wriggle out of the contract it has with your son, or that someone else is trying to poach the team? Was the contract drawn up by a solicitor and properly executed by both parties?

(Assuming in the UK by the way)

Hi Ceeveebee

thanks, he hasn't called himself a limited company, just using a trading name fo example 'activated e-sports' (it's not that btw).

The team members have all signed an individual contract which include a set period, a renewal of that period and a break-clause at 6 monthly intervals. It has a termination section and an option for players to buy themselves out of the contract - see below;

"1. TERM: This contract runs for a period of six (6) months beginning on 02/11/2015 and terminating on 30/04/2015 or until both the organisation and the player come to the decision to terminate it/if a breach in contract is made and the opposing party wish to take no legal action (more can be found about termination in section six)."

"6. TERMINATION: Contract will be renewed for a subsequent six (6) months on the contract end date unless either the player or the organisation gives at least two (2) weeks’ notice prior to the contract end date or any sections are violated. The new contract will be signed on the contract end date with the same terms unless it has been otherwise agreed.

If any terms agreed in this contract are violated the opposing party has the legal right to terminate the contract without due notice. The organisation reserve the right to terminate this contract at any given time providing a valid reason and one (1) weeks’ notice is given.

6.1 It is possible to buyout of the contract if the player wishes for an early termination. The cost of this early buyout is of five hundred (£500) Great British Pounds Sterling.

1. SEVERABILITY: Both the player and the organisation agree that each term of this contract is severable and if any is determined by a court competent jurisdiction or administrative agency to be illegal or invalid, the validity of the remaining provisions shall not be affected and the illegal or invalid provisions shall be deemed not to be a part of this contract.

1. LAW: This contract is entered into, made under, and shall be governed by the laws of the United Kingdom (UK) in which Enraged eSports has its principle place of business. If a player is outside of the United Kingdom (UK) the laws of the United Kingdom (UK) shall govern."

**
I'm not sure how old the players are but they are generally between 15 and 25.

The takeover is another 'company' poaching the team just before a major competition. They have basically told him that they consider his contracts to be void and that he has no comeback with the players or the company itself.

The contracts were executed using 'Signable' (www.signable.co.uk/)

and yes in the UK....

just had confirmation - the players are all 18....

Hi Hannibal.
Difficult to say for sure as (1) I am not a lawyer and (2) I haven't seen the whole contract, but on the face of it I would argue that the players are in breach of contract and that if they want our early they need to pay the £500 (I'm assuming the date in para 1 is a typo as contract should end 30/4/16 not 15?)

I do t think you have any claim against the other company; it is the players who your son has a contract with.

Who wrote the contracts? Were they written by a lawyer? If so I would go back to them and get them to write a letter to the players.

(1) His "company" need not be registered as long as he isn't calling himself XYZ Limited or plc he is trading as a sole trader.

(2) If he is over 16 then the contract is valid unless he choses to void it.

(3) By hostile takeover I assume you mean a competitor of his wishes to to perform the same service for the team. That company can offer to do that and the team can chose to use that company. There is nothing your son can actually do to prevent that although there may be breach of contract consequences for the members of the team.

(4) Looking at the contract itself, the contract will need to be read as a whole and you can't just pick out individual clauses like that.

The wording is very strange it refers to clauses being violated which has no meaning in English law. (Although I would assume it refers to a breach of contract but a court would have to decide whether that was the meaning unless there is a definition of "violated" within the contract.) Is there a definitions page because it also refers to valid reasons? I assume there will be a definition for valid reasons either within another clause or a definitions clause otherwise what is deemed a valid reason.

Furthermore there is no such thing as UK law as there are different provisions within in the UK. It should state in England and Wales (or in Scotland or in Northern Ireland).

Has your son used the terms and conditions for an American company and then amended them himself?

Even if he has he may still have some comeback (re the buyout clause) although the dates of the contract are weird (end date before start date!)

Hi,

Thanks, yes it was a typo. I think they used an American template as these services are bigger over there and then tried to adapt it....

It looks like he needs to tell the players they are breaching their contracts and persue them for the fees or accept it this time and learn from this..... at least it's happened early on so whilst it's frustrating for him he won't have lost 'millions' so to say and has highlighted a gap he needs to resolve!!!

Thank you both so much!!

If he is making decent money I would suggest he gets some solicitors to look at his terms and conditions and ensure they comply with English law. I shouldn't really be more than £750 to get some done properly.

Also, even a sole trader has to tell HMRC that they're trading, I think within 3 months of start up.

But from a tax point of view, still only have to do a self-assessment

I second HerIam20's suggestion of getting an English (or Scottish or NI if you are in either country) solicitor specialising in contracts to draw up some proper wording. If your son has taken US wording and tried to adapt it is likely that the contract doesn't work at all. Law in the U.S. is quite different to English law.