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Managing Director’s Liability for Prize Notifications – Federal Court of Justice Decision
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In connection with so-called prize notifications sent to consumers, the question arose whether and to what extent the managing director of a legal entity can be held personally liable for the resulting claims. The Federal Court of Justice addressed this liability issue and clearly rejected an extension of personal responsibility (BGH, judgment of 3 February 2005 – III ZR 315/03; source: urteile.news).
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Prize notification as a legal basis for an obligation
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Under the relevant statutory provisions, a prize notification to consumers, irrespective of the actual promise of a prize, gives rise—under certain conditions—to a claim for performance or damages. As a rule, this claim is directed against the sender of the prize notification, for example a corporation, but not directly against its corporate representatives.
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No personal liability of the managing director
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The BGH stated that a managing director does not automatically have to be personally responsible for prize notifications made in the name of the company. Decisive was that the prize notification is attributable to the company’s business activities. In principle, the managing director of a legal entity—especially a GmbH—is personally liable for tortious acts only in exceptional cases, for example for his or her own unlawful act or for intentional immoral damage. However, this requirement is not met merely by sending a prize notification to consumers.
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Requirements for piercing liability
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For personal liability of the managing director due to “existence-destroying interventions\” or under general tort-law principles, qualified misconduct is required. According to the Federal Court of Justice’s decision, such misconduct, in the form of active deception or immoral damage by the managing director himself or herself, is generally not present in the context of sending prize notifications. The mere signing of form letters by the managing director is not sufficient to establish direct liability toward third parties.
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Practical significance for corporate officers of legal entities
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The Federal Court of Justice’s decision emphasizes that the business activities of the legal entity must be clearly separated from the personal sphere of management, provided that no further extraordinary circumstances are added. Personal liability of management—subject to specific exceptional cases—cannot, in any event, be assumed without further ado in connection with prize notifications.
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Finally, it should be noted that distinguishing between organizational duties and personal responsibility in the field of company law is highly complex. Anyone who, as a corporate officer or shareholder, is confronted with questions of liability and responsibilities in the business context can find further information in the area of legal advice in company law on the website of MTR Legal Rechtsanwälte.
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