New Legislation On Extra-Contractual Liability: Directors And Employees Can Be Held Liable More Quickly By Third Parties For Their Personal Mistakes

• Published date: 19 March 2024
• Subject Matter: Corporate/Commercial Law, Employment and HR, Directors and Officers, Corporate Governance, Contract of Employment
• Law Firm: Claeys & Engels
• Author: Claeys & Engels

On 1 February 2024, the draft Act introducing Book 6 of the New Civil Code was approved in Parliament. This book contains the new rules on extra-contractual liability (formerly Articles 1382 et seq. of the Civil Code).

It expands the liability of auxiliary persons (e.g., (sub)contractors, directors of companies and employees) towards third parties as a starting point. The legislator leaves it up to the parties to make contractually deviating agreements. According to the latest information, the new rules will enter into force on 1 January 2025 and will also apply to existing contracts.

Under existing legislation, executing agents or auxiliary persons (e.g., employees, directors and (sub)contractors) enjoy far-reaching protection against possible claims by third parties (e.g., customers of their principal). Indeed, barring exceptional cases, such auxiliary persons cannot be held directly liable for their possible mistakes by an injured co-contractor of their principal, with whom they themselves do not have a contract.

The new Book 6 of the Civil Code changes this principle.

An example:

Client A enters into a contract with company B, whereby B undertakes to carry out certain works for A. In order to carry out all or part of these works, B engages an auxiliary person C. In carrying out the works, C commits an error, as a result of which A suffers damage.

Can injured party A approach C directly to obtain compensation for the damage?

Current regime

A contractual claim by A against C is clearly precluded in the absence of a contract between them. Except in exceptional cases (e.g., if the facts constitute a criminal offence), it is also not permissible for A to turn to auxiliary person C extra-contractually (this is the so-called "quasi-immunity of the executing agent"). In accordance with current case law, as a principle, it is also not permissible for contracting party A to turn extra-contractually against contracting party B (this is the so-called "prohibition of concurrent proceedings").

As a general principle, A can only bring a contractual claim against B, taking into account the clauses concluded between them (e.g., an exoneration clause).

These legal principles are abolished by the new legislation.

Future legislation

The new legislation leaves the choice to the injured party A: he can recover the damage ((extra)contractually from B or non-contractually from C. Unlike before, the damaged party will therefore henceforth have the possibility to recover the...