No liability of the company for unauthorized actions of an employee
The Coburg Regional Court dealt with the question of the extent to which a company can be held liable for fraudulent activities of an employee if the employee acts independently and without the employer’s knowledge (Judgment of 11.01.2005, Ref.: 22 O 503/04).
Facts of the case
An employee of a freight forwarding company had offered a customer to transport his vintage car to Italy as part of a transport order. Contrary to the contractual agreements, the employee did not take the vehicle to the agreed destination, but unlawfully sold it to a third party. The victim then demanded compensation from the forwarding company for the loss incurred. The company rejected the claims, as it had no knowledge of the employee’s misconduct and had not explicitly authorized the order.
Court decision
The Coburg Regional Court denied the company’s liability for the fraudulent sale of the vehicle by the employee. According to the court’s findings, the employee acted autonomously and outside his contractual powers. For these so-called “self-serving actions,” a company is generally not held accountable, provided there are no indications of contributory negligence or a lack of employee supervision on its part.
Justification
An essential requirement for liability attribution is that the employee acted within his assigned duties and for the benefit of the company. The court stated that, in this case, there was no company-related activity, but the employee acted solely in his own interest and secretly. Therefore, the behavior does not create a replacement obligation for the employer for the resulting damage. Furthermore, the court found no reason to assume that the company had facilitated the employee’s actions or encouraged their occurrence.
Significance for companies
The ruling clarifies the limits of a company’s responsibility for unauthorized actions of employees that occur independently of their work-related activities and from their own initiative. For companies, awareness of the distinction between company-induced actions and an employee’s self-interests is crucial when liability issues arise within the framework of contractual relationships.
Companies, investors, or private asset holders facing legal issues related to liability for employee actions can rely on the knowledgeable support from MTR Legal for further advisory needs. Detailed information about the range of services is available under legal advice in commercial law.
