When signing a contract with a natural person, companies shall carefully examine his personal status

[Case summary]

XX Media Company and Hong X (minor) signed on March 6, 2021, an Entertainment Livestreamer Full Agency Agreement, in which Hong X agrees that XX Media Company serves as his sole agent worldwide, enjoys the exclusive agency rights of all his livestreaming and entertainment businesses including internet performances and offline events; the term of cooperation is three years; XX Media Company earns a commission from the incomes of the performances and related businesses of its referrals; Hong X’s unilateral termination of the agreement shall constitute a fundamental breach of agreement and shall pay for damages of 300,000 yuan or ten times the total incomes of his earnings through XX Media Company (whichever is higher), and if the payment is insufficient to cover the economic losses, supplementation shall apply; and some other issues are stipulated. Upon signing the agreement, Hong X livestreamed and released short videos on TikTok through an account supplied by XX Media Company, and received 5,218,800 influences equal to 521,880 yuan. Hong X withdrew a sum of 89,878.42 yuan, and XX Media Company paid him via bank transfer 109,284.58 yuan. After July 17, 2022, Hong X stopped livestreaming on TikTok, and XX Media Company sued Hong X to the court for alleged breach of agreement, and requested that Hong X pay the damages of 300,000 yuan and the attorney’s fees.

[Court verdict]

When the two parties signed the Entertainment Livestreaming Full Agency Agreement, Hong X was less than 18 years old, and there was no evidence to prove that Hong X lived principally on his labor income, and therefore Hong X was a person of limited capacity for performing civil juristic acts; the principal content of the agreement was to be performed via livestreaming, and the rights and obligations as agreed were highly complicated, constituting a relatively complex civil juristic relation for a minor, and the signing and performance of such an agreement is not a civil juristic act that can be taken independently by a person of limited capacity for performing civil juristic acts; according to the Civil Code of the People’s Republic of China, Articles 145, the act of Hong X signing the agreement shall be valid if a consent or ratification is obtained from his legal representative, and Hong X’s legal representative expressly disagreed with and refused to ratify the agreement, therefore, the agreement was invalid. The court thus rejected all the requests of XX Media Company.

[Legal risks]