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It could be you!

Lotto Syndicate Agreements – Preparing for that big win written by Deirdre Farrell

It is not often appreciated by many lotto syndicate members  that a syndicate, whether formed with colleagues at work, acquaintances at a pub or family members and whether written or oral, is an agreement that is enforceable through the courts system. Should one member of a syndicate dispute a term of the agreement – for example a term relating to what share of the winnings that he or she is entitled – that member may be entitled to an order preventing the a lottery from paying out the prize winnings until the syndicate dispute is settled.  This could result in expensive legal proceedings and could mean that members of a syndicate would not receive their share of the winnings for a long time.  The costs of such proceedings could also have the effect of substantially depleting each member’s share of the winnings.

You may have read that the US lottery jackpot was recently won by an individual who scooped an incredible $590m!  The chance of winning this was 1 in 175 million.  Setting up a lotto syndicate however is a great way to increase one’s chances of winning lottery prizes.

It is sometimes not appreciated that there might be significant tax consequences for syndicate winners in the absence of sufficient evidence to show that a syndicate agreement did in fact exist between them.  Lottery winnings are received by syndicate winners tax free, however gifts from individuals to others are not and are subject to capital acquisitions tax which currently stands at 33% where the gift exceeds a tax free threshold particular to the relationship between the donor and the donee.

Having a written syndicate agreement in place should also be of concern to employers where syndicates are formed amongst employees.  Disputes between employee syndicate members could lead to a breakdown in important business relationships and could lead to disruption of business with consequent unnecessary loss to the employer.

There have been many publicised court disputes between syndicate members that could have been avoided if the agreement between the members had been reduced to writing.

Recently in March 2013 it emerged that members of a UK syndicate comprising 16 colleagues won GBP £1,000,000 in the Euromillions draw.  A dispute arose in relation to three members who did not contribute to the purchase price of the winning ticket.  History does not relate whether the remaining members of the syndicate covered the cost of the non-contributors’ share of the ticket purchase.  Notwithstanding this, the three colleagues in question argued that they were entitled to a share of the prize money.

Generally, lotto syndicate agreements provide for what happens when a member fails to contribute to a draw entered into on behalf of the syndicate.  A well drafted syndicate agreement should provide that failure by a member to contribute to the purchase price of a ticket for a certain number of consecutive draws would disentitle that member to a share of a syndicate’s win in any draw subsequent to the stipulated number of draws to which the member did not contribute.  The question also arises as to whether or not the member’s portion was paid for and by whom.  If it was paid for by the person who actually purchased the ticket, does this mean that they are also entitled to what would have been the non-contributing member’s share? There was no written lotto syndicate agreement between the members in this case however and a much publicised dispute ensued amongst the syndicate members.

The 16 individuals concerned all worked in the Driver and Vehicle Licensing Agency in Swansea where there were over 5,000 staff.  Senior Officials of the DVLA were engaged to resolve the dispute and there was major disruption of business as a result.  It was alleged that at one stage there was an altercation between a number of the syndicate member workers and that security had to be called to diffuse the tension.

It appears that the DVLA dispute may have been resolved but as the workers in question signed a confidentiality agreement, the exact outcome is unclear.  What is clear however is that the absence of a well drafted agreement resulted in very serious disruption to the business of the DVLA with inevitable knock-on cost.

As will be seen from the foregoing example, in order to ensure the seamless and immediate payment of tax free lotto winnings to syndicate members a formal agreement setting out all of the essential terms should be  put in place and signed by all syndicate participants.  Such an agreement should include the following terms:-

 

  1. The date of the agreement;
  2. The appointed manager’s name – the appointed manager is responsible for creating and maintaining the syndicate agreement, collecting funds from each player, keeping a record of payments, purchasing tickets, storing the tickets safely, checking the tickets to see if the syndicate has won and dividing the winnings amongst the members;
  3. The names of the members of the group;
  4. The games and numbers to be played;
  5. Which draws will be entered i.e. the National Lottery on Wednesday, Saturday or one or both of the twice weekly Euromillions draws or some other games;
  6. How much each member will pay per draw and when and how payment is to be made;
  7. Clarification that there is no “ownership” by a member of any particular line of numbers;
  8. How winnings will be split (for example, the manager may be entitled to an extra bonus by way of reward for assuming the responsibility of this role);
  9. What happens if a member fails to pay their contribution at any time;
  10. If the group has a big win, whether the members will agree to publicity or not;
  11. The agreement must be signed and dated by each member of the group and should be witnessed by, I suggest, a solicitor.  Copies should be given to each member and the original kept in a safe place.

Update:
On 15th May 2016 the Sunday Independent published Deirdre Farrell’s advice in relation to alleged interest charged on unpaid lotto winnings.

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Who owns the copyright in your computer software programs?

Many businesses outsource the development of their software to independent specialists. Whilst very often great care and attention is given to preparing and agreeing a software specification and the price or cost of the works to be undertaken. It frequently transpires that there are no other written terms of the agreement in existence.

This can lead to many legal problems but one of which the non-lawyer may not be aware is that, in the absence of a formal assignment in writing, ownership of the copyright in the resulting program will automatically be vested in the “author” of the program. The “author” is the person who “creates” or writes the software and that person’s copyright will not expire until 70 years after his/her death! The Copyright and Related Rights Act 2000 (“CRRA 2000”) incorporates the foregoing principles and also contains a definition of what are described as “acts restricted by copyright”. These acts include a restriction by anyone other than the copyright owner, who has the exclusive right, from :

  • coping the program and/or;
  • adapting the program.

Such restrictions could have very serious fiscal consequences for the user or “would be” owner of the software. The CRRA 2000 specifically provides that to be effective, a transfer or assignment of copyright must be in writing and signed by or on behalf of the owner. A properly drafted Software Development Contract should therefore contain a form of assignment of copyright consistent with the requirements of the legislation. Failure to address this issue at the very outset can give rise to very expensive and time consuming disputes and may lead to litigation.

Readers should also be aware that the CRRA 2000 provides not only that infringement of copyright is actionable by the owner for damages and for appropriate injunctive relief where necessary but that such an infringement may also constitute a criminal offence punishable on summary conviction by a fine of up to €1,905.00 and or 12 months imprisonment or, on conviction on indictment, to a fine of up to €127,000 and or 5 years imprisonment. Not to be taken lightly! Companies, partnership and individuals can all be the subject of a wide range of legal proceedings all of which could be avoided by taking timely legal advice in advance of concluding a contract.

An important point to note is that the CRRA 2000 clearly distinguishes the position of an employee who writes software in the course of “employment” from that and an independent contractor. In the former case the employer is the first owner of the copyright. In such circumstances however it would be prudent for the contract of employment to contain an appropriately worded clause to cover this point for the avoidance of any doubt.