References without law book default to BGB.

Case - GmbH Representation

Facts

Adam (A) and Eve (E) are both directors of the Paradise GmbH (P).

E orders 14 tons of apples from Lucifer (L) in P’s name. A few days later, L calls A and demands payment from P. A refuses to pay the bill. In his opinion, E couldn’t represent P without him.

Can L demand the purchase price from P?

Solution

Slides Solution

• Issue: Can L demand the purchase price from P in line with § 433 II BGB?
• Rule: For such a claim, there needs to be a valid sale of goods contract (§ 433 BGB), which is formed by two matching DoIs (offer and acceptance, §§ 145, 147 BGB), both with the intention to be legally binding.
• Application:
  • Can P enter into a contract? → (+), P is a legal person and can enter into contracts but cannot act itself. It must be represented by its directors (§ 35 I GmbHG).
  • Valid representation by E in line with §§ 164 et seqq. BGB?
    • 1. Own DoI by E → (+)
    • 2. In the name of P → (+)
    • 3. With authority → (-), in general, directors can only act jointly (§ 35 II GmbHG).
    • → (-), no valid agency.
• Conclusion: L cannot claim the purchase price from P in line with § 433 II BGB.

Write-Up

Issue: Can L demand the payment of the purchase price from the company P pursuant to § 433 II BGB?

Rule: To have a valid claim under § 433 II BGB, a valid sales contract must have been formed between L and P. Since P is a GmbH (a legal entity), it has legal capacity to enter into contracts, but it must act through its statutory representatives (§ 35 I GmbHG). Under the law of agency (§ 164 I BGB), a company is legally bound if a representative makes their own declaration of intent, in the name of the company, and with the necessary authority. Furthermore, under § 35 II GmbHG, if a GmbH has multiple managing directors (Geschäftsführer), they are only authorized to represent the company jointly, unless the articles of association state otherwise.

Application: E made her own declaration to order the apples and expressly did so in P’s name. However, because P has multiple managing directors (A and E), they are only authorized to represent the company jointly (§ 35 II GmbHG), unless stated otherwise. The facts do not indicate any exception. Thus, E lacked the authority to represent the company unilaterally. Because E acted without the required joint representation of A, her declaration of intent does not legally bind P. Therefore, no valid contract was concluded between L and P.

Conclusion: L cannot demand the purchase price from P under § 433 II BGB.