On 1 February 2024, the bill for the new Book 6 of the Civil Code was passed, with far-reaching consequences for extra-contractual liability. This new Book 6 replaces the well-known articles 1382-1386bis of the Civil Code and casts a new light on the liability of auxiliary persons such as directors, subcontractors and employees.
An important change can be found in article 6.3, §2, which extends the extra-contractual liability of auxiliary persons:
Ҥ2 Unless the law or the contract provides otherwise, the statutory provisions on extra-contractual liability apply between the injured party and the auxiliary persons of their co-contractors.
However, if the injured party claims compensation on the basis of extra-contractual liability for damage caused by the non-performance of a contractual obligation from an auxiliary person of their co-contractor, the latter may invoke the same defences as their principal can invoke under paragraph 1 with regard to the obligations to the performance of which the auxiliary person contributes.”
This article opens the door for injured parties not only to hold the company (contractually) liable for damages, but also to bring an extra-contractual claim against its directors. This brings an end to the so-called quasi-immunity of auxiliary persons.
What does this mean in concrete terms for the company and its directors?
From the intended entry into force on 1 January 2025, injured parties will be able to hold not only the company but also its directors directly liable. Previously, directors could only be held liable if the fault alleged against them constituted a criminal offence, a breach of the contractual obligation and the general duty of care, and if this fault caused damage that was not solely the result of poor performance.
This means that a director who, for example, fails to fulfil a contractual obligation of the company, can also be held directly liable by the injured party. The legislator does, however, provide for a limitation to this principle, whereby the directors can also invoke all defences arising from the contract between the company and the injured party, as well as all statutory defences (such as the limitations imposed by the CCA with regard to directors’ liability).
How can directors limit their liability?
The new Book 6 will in principle be supplementary law. Article 6.3, §2 of the new Civil Code regarding the extra-contractual liability of auxiliary persons also states “unless the law or the contract provides otherwise.” This means that parties can partially exclude or limit extra-contractual liability via their contract. In doing so, account must be taken of the prohibition to include a clause in the contract that exempts the debtor from intentional faults or faults that affect the life or physical integrity of a person.
It is therefore advisable when drafting new contracts to take into account not only contractual liability, but also the extra-contractual liability of directors. At the time Book 6 enters into force, the rules will also apply to existing contracts. It is therefore recommended to also adapt existing contracts to the new regulations.
Moreover, a limitation of liability can be provided for in the contracts between the company itself and its directors (e.g. management agreements).
Would you like to know more about directors’ liability or do you need legal advice or assistance in adapting your contracts or your company’s policy regarding (directors’) liability? Please feel free to contact us via the contact form on our website. We will be happy to assist you.