Directors and employees can be more easily held personally liable for professional mistakes
On February 1 st , the new Book 6 “Extra-contractual liability” of the Civil Code was approved by the Belgian House of Representatives. Besides some merely formal adaptations and some substantive renewals, the most important reform is the abolition of the quasi-immunity of the auxiliary.
1. Old regulation: relative concurrence prohibition
Before the reform of February 1 st , a principal could not directly hold the auxiliary of its contracting party (extra-contractually) liable for flawed performance of a contract. The principal did have a direct contractual claim against its contracting party, but it could not cumulate this contractual claim with an extra-contractual claim against the auxiliary unless two cumulative conditions were met, namely:
- the fault of the auxiliary was also a violation of the standard of care
- the fault caused damages other than damages purely due to the flawed performance of the contract
Thus, in practice, under the current (still in force) regulations, the principal cannot lodge a claim against a defaulting auxiliary for damages due to the poorly executed construction works if these damages would not have occurred if the construction works would have been executed correctly.
2. Reform
The new Book 6 of the Belgian Civil Code abolishes the requirement that the damages caused by the wrongful execution of the contract have to be “other damages”.
The impact of this reform on the contracting practice can hardly be overestimated. As a result, also directors of companies as well as employees will be more easily held liable for faults.
3. Panic?
Since the protection of the quasi-immunity of the auxiliary will be abolished, the importance of a decent contractual framework will be even more important.
First of all, the direct liability of auxiliaries can be contractually excluded to a large extent. Apart from that, defenses from the legal relationship between the director/employee and the company/employer can be invoked if the auxiliaries are held liable but only if they have been incorporated in said agreements.
The bill (and thus the abolishment of the protection of the auxiliary) will enter into force six months after its publication. It is highly recommended that parties subject their contractual regulations to a proper check, in order to counteract the potentially adverse effects of this new bill. The specialized team of Quorum will be happy to assist you in this.
