According to IC Wales, Berwyn Pearce, of Pontypridd, was aged 11 when he lost control of the bike. Pearce, now 18, suffered two broken ribs and a ruptured spleen.
Halfords, which sold and serviced Pearce's Apollo Guru bike, has now agreed to pay him £12,500 in compensation. The company has not accepted liability for the accident.
"The bike was a present from my mum and dad. It came in a box and my dad put it together but before the crash we took it down to Halfords to get it serviced. I'd taken it out three times before the brakes failed.
"The steering went as well and that's when I hit the tree."
Pearce's lawyer, Clare Griffiths of Russell Jones and Walker in Cardiff, said:
"When you take something to be serviced you expect someone to do a good job. It's particularly important with cars and bikes because, as this case show, you can be seriously injured."