Definition and basics of association liability
Association liability describes the legal consequences and responsibilities that an incorporated or unincorporated association may incur in the course of its activities and business dealings. It particularly concerns the question to what extent an association, its governing bodies, and members are liable for obligations, damages, or breaches of duty to third parties or within the association. The legal framework for association liability is set out in the German Civil Code (BGB), specifically in sections 21 to 79 BGB.
Legal classification of associations
Legal capacity of associations
An association acquires legal capacity by being entered into the register of associations (§ 21 BGB). An incorporated association (e.V.) is a legal entity and can therefore itself hold rights and obligations. Unincorporated associations are merely non-legal-capacity civil law partnerships (§§ 705 et seq. BGB), and the liability situations can differ significantly.
Organ status and power of representation
The governing bodies of the association are, in particular, the board and, if provided for, other committees. The association is represented by the board (§ 26 BGB), which concludes legally binding transactions in the name of the association.
Types of liability within the scope of association liability
Internal liability within the association
Liability of the association towards its members
The association is liable to its members for damages caused by breaches of duty by its governing bodies during the management of affairs or organization of events, for example, when traffic safety obligations are violated. The liability can be modified or limited internally by provisions in the statutes; however, essential core obligations are indispensable.
Liability of members towards the association
Members are primarily liable to the association for payment of dues and for damages they cause by fault. Further grounds for liability can be stipulated in the statutes.
External liability of the association
Contractual liability
The incorporated association is liable with its assets for obligations arising from contracts it has entered into (§ 54 sent. 1 BGB in conjunction with §§ 21 et seq. BGB). This concerns, for example, rental, purchase, or employment contracts.
Liability in tort
The association is also liable for damages resulting from unlawful acts pursuant to § 31 BGB. If a governing body of the association, such as the board, causes damage in the performance of its duties, the association is directly liable.
Personal liability of the board
Bodies such as the board act on behalf of the association. Personal liability of a board member generally exists only in cases of culpable breach of duty. According to § 31a BGB, a board member is liable to a third party or the association only in cases of intentional or grossly negligent behavior. For ordinary negligence, the liability can be further limited in the statutes.
Liability towards third parties
Third parties who are harmed by the actions of the board may pursue their claims against the association, as long as the board member acted in the exercise of their official capacity (§ 31 BGB). If the power of representation is exceeded, personal liability of the board may arise in addition to the association (§ 823 BGB, §§ 280, 311 BGB).
Internal liability towards the association
Within the association, the board is only liable for damages to the association’s assets or breaches of duty if acting with gross negligence or intent (§ 31a BGB). This can be further restricted by provisions in the statutes.
Liability of members for association obligations
In an incorporated association, members are generally not personally liable with their private assets for the association’s obligations (§ 31 BGB). Creditors can typically only claim against the association’s assets.
Liability in the case of unincorporated associations
Unlike incorporated associations, in unincorporated associations the acting persons and, under certain circumstances, all members may be jointly and severally liable with their private assets (§ 54 sent. 2 BGB analogously, §§ 705 et seq. BGB).
Special liability cases
Liability in connection with events
If an association organizes a meeting, celebration, or competition, it has comprehensive traffic safety obligations. If the association fails to meet these obligations and damage occurs, the association is generally liable with its assets. Grossly negligent conduct can result in personal liability for the responsible individuals.
Tax liability
Board members are responsible for the association’s tax obligations, such as registration, payment, and proper use of funds for tax-privileged purposes. In case of violations, personal tax liability regulations may apply to board members (Tax Code, § 69 AO).
Liability in labor law
If the association employs staff, it is liable as an employer for compliance with labor law regulations (e.g., workplace safety, payment of wages). Board members or other authorized representatives may be liable for culpable breaches of these obligations.
Limitation of liability and insurance solutions
Options for limiting liability
Associations can reduce their liability risks by establishing clear statutory provisions, individual liability exclusions or limitations in contracts. Additionally, proper organization and documentation of decision-making processes, as well as informing and training governing bodies, are essential.
Insurance against liability risks
A financial loss liability insurance or a general liability insurance can be taken out to cover risks arising from the liability of governing bodies and the association itself. Directors and officers (D&O) liability insurance is another way to mitigate personal financial damages arising from breaches of duty.
Legal consequences of liability breaches
If liability arises for the association or its bodies, claims for damages, obligations to pay sums of money, or even criminal consequences may follow. The specific form of liability depends on the individual case, the type of violation, and the assertion of claims.
Literature references
- German Civil Code (BGB), especially §§ 21-79, § 31, § 31a, § 54
- Tax Code (AO), especially § 69
- Literature commentary on association law
- Specialist publications on liability in association law
Notice: This article provides a comprehensive overview of association liability and highlights the most important aspects for a legal encyclopedia. This overview does not replace detailed legal advice.
Frequently asked questions
When is an association as a legal entity liable for damages to third parties?
An association is generally liable as a legal entity for damages caused by its governing bodies, in particular the board, in the performance of its duties for the association (§ 31 BGB). The prerequisite is that the damaging conduct can be assigned to the organized sphere of activity of the association and that the act is connected to the association’s activities. Liability also exists if a board member acted with gross negligence or intent. In certain cases, tort liability under § 823 BGB is also possible, for example, if a third party is harmed due to culpable violation of traffic safety obligations. Furthermore, liability in the area of employees should not be forgotten: if an association employee infringes third-party rights in the course of their duties, the association can be held liable for vicarious agents (§ 831 BGB).
In which cases can the board be held personally liable?
Board members of an association are generally personally liable if they culpably breach their duties, i.e., with intent or negligence. According to § 31a BGB, liability towards the association and its members is limited to intent and gross negligence if the board acted on a voluntary basis or receives remuneration not exceeding 840 euros per year. With respect to outsiders, i.e., third parties, the board is personally liable if the breach of duty is due to their own fault, for example, if statutory or statutory provisions are disregarded, prescribed safety measures are omitted, or funds are misused. Personal liability may also arise if the board concludes contracts in the name of the association that the association is unable to fulfill (delayed insolvency), or if taxes and social contributions are not properly remitted.
Is the association also liable for the misconduct of individual members?
As a rule, the association is not automatically liable for the misconduct of its members, unless they act as governing bodies or with explicit authorization for the association. Unauthorized conduct by a member in private matters does not create liability for the association. However, it is different if members act in the performance of tasks assigned to them by the association or in an official capacity (e.g., as team leader or at events organized by the association) and thereby cause harm to third parties. In such cases, the association may be held liable as principal for vicarious agents under § 831 BGB, in which case the association can assert defenses such as faulty selection or supervision.
How is liability regulated in the case of voluntary activities?
Voluntary activities are subject to special liability privileges. According to § 31a BGB and § 31b BGB, volunteers are only liable towards the association and its members for intent and gross negligence. Liability for ordinary negligence is expressly excluded so as not to hinder voluntary engagement. For damages to third parties, general tort law provisions apply, provided the volunteer acts as a governing body or authorized representative of the association. Many associations provide separate liability insurance for their volunteers to minimize any remaining liability risk.
What is the significance of the association’s statutes for liability regulations?
The association’s statutes can contain specific liability rules that further define responsibilities among members, towards the association, and externally. For example, they may set out liability exemptions for certain groups or limit liability, or regulate internal compensation processes. However, statutory provisions must not violate mandatory legal requirements (e.g., § 31, § 31a, § 823 BGB). The statutes may also stipulate that certain activities may only be carried out with appropriate insurance. Importantly, the statutes only affect the internal relationship – externally, the legal liability standards remain authoritative.
How can the association minimize its liability risk?
To minimize liability risks, it is advisable to take organizational and legal precautions: these include obtaining suitable insurance coverage (e.g., association, event, financial loss, and D&O insurance for the management body), training office holders in liability matters, careful selection and briefing of members and officials, clear assignment of responsibilities, and regular review and update of association statutes in line with current legal requirements. In addition, compliance with legal regulations, in particular regarding traffic safety obligations and the supervision of minor members, should be thoroughly documented.
How is association liability regulated with regard to events?
When holding events, the association assumes a variety of statutory and contractual safety obligations. It must take all reasonable measures to prevent dangers and ensure the safety of participants. Breaches of these obligations can give rise to compensation claims from third parties, for example, in the event of accidents due to inadequate security or faulty equipment. In addition, prior to the event, it is necessary to review which public-law permits, insurances, and official requirements must be observed. In the event of damage, both liability of the association as a legal entity and personal liability of the responsible association officers may apply, particularly if they have acted with gross negligence.
