Activity as a registered trader: The liability traps

Here on the blog I have already presented numerous legal forms and the corresponding risks, but also advantages. However, there is also the possibility to offer an Esport team, a streamer or influencer career or other services as an e.K., i.e. as a registered trader.

The problem is that the HGB (German Commercial Code) applies to the transactions of a registered merchant, and therefore the various commercial customs, such as the obligation to give notice of defects according to § 377 HGB, apply to the registered merchant. The so-called commercial letter of confirmation must also be observed.

Even though freelancers and small traders do not have to register in the commercial register, they have the choice to do so as so-called “Kann-Kaufmann”.

Advantages of registration

The main advantages of registration are that you can conduct your business under one company. Contrary to what many people think, according to the Commercial Code, the company name is not the company as such, but the “name of the merchant”. Without being a registered merchant, you are not allowed to act as a “super marketing agency”, for example, but must act under your own name in legal transactions. A registered merchant, on the other hand, can run a company and sell or bequeath under the company name. Another major advantage is that he can freely agree on a place of jurisdiction (as long as this is otherwise permissible). It may also be important to note that a registered merchant often has a higher reputation in business dealings. This is comparable to the fact that a GmbH usually has a higher reputation than a UG. The reason is simple. The registered merchant is subject to numerous obligations under commercial law, but many of them have been created or developed by case law to make legal transactions safe, fast and effective. This is of course an advantage for business partners. Another big plus can be that you can give procuration to an employee without this immediately being considered a GbR, which in turn has other advantages and disadvantages.

Disadvantages of registration

A disadvantage of the registration is that besides the costs for a business registration, there are also costs for a notary and the commercial register. Honestly, though, if you’re serious about starting your own business professionally, this one shouldn’t matter. It may be problematic that the registration is accompanied by an obligation for double-entry bookkeeping, depending on the circumstances, a balance sheet and possibly a regular inventory. Under certain circumstances, this can increase the effort and cost of, for example, a tax advisor. A little experience in business and commercial law is also necessary in order not to fall into the liability traps of the commercial letter of confirmation or the commercial duty to give notice of defects.

The customary commercial letter of confirmation is the written confirmation of a verbal conclusion of a contract among merchants. The pitfall here is that silence to a letter of confirmation from another merchant, unlike otherwise in civil law, means confirmation of a contract. A commercial letter of confirmation must therefore be objected to immediately if the circumstances or contract parameters listed therein are incorrect. Of course, this only applies if there have actually been contract negotiations beforehand. A letter of confirmation without any basis shall have no effect. However, the demands on this are not too great and negotiations, especially with Esport teams, streamers, influencers, agencies or the like about marketing campaigns and other collaborations happen all the time. In principle, therefore, the following applies: A merchant must respond to an offer, otherwise his silence is deemed to be acceptance and he is obliged to perform and/or pay damages.

The second major liability trap can be the so-called reprimand liability. If two merchants are involved in a commercial purchase (and this can also be a GmbH, a OHG, a public limited company, but not a GbR), the buyer must immediately inspect received goods for quality, quantity and type according to §§ 377 ff HGB (German Commercial Code) and immediately report recognizable defects as well as hidden defects immediately after their discovery. Warranty rights and the like do not exist in all rules otherwise for merchants! This obligation can be minimized to a certain extent, e.g. with the help of general terms and conditions, or the deadline can be extended. However, the general principles of the law governing general terms and conditions must be observed.

By the way, you guessed it: Since a corporation is a so-called actual merchant according to the HGB, these obligations also affect managing directors of corporations.

Result

It is true that the legal form of the registered businessman, offers numerous advantages, which is why this is also quite widespread. The risks are there, but manageable. However, how exactly one should appear in legal dealings as a streamer, Esport organization, influencer, agency, freelancer or similar is often a question of the individual case. For example, it depends on whether you are founding with partners, negotiating with investors, or much more. There is no right or wrong legal form. I will be happy to advise you on the relevant questions.