I. Entrepreneurial company (Unternehmergesellschaft)

The Unternehmergesellschaft is not a separate legal form, but a special form of a limited liability company (Gesellschaft mit beschränkter Haftung – GmbH), a “small” GmbH. In accordance with § 5a para. 1 German Limited Liability Companies Act (Gesetz betreffend die Gesellschaften mit beschränkter Haftung – GmbHG), the Unternehmergesellschaft does not have to bear the designation “GmbH” in its name, but the designation “Unternehmergesellschaft (haftungsbeschränkt)” or “UG (haftungsbeschränkt)” in order to draw the attention of creditors to the existing limitation of liability.

II. Facts of the case

The parties are in dispute about a claim for damages due to incorrect investment advice and about the question of whether the defendant had passive legitimacy. In any case, it is undisputed that the defendant acted as a financial intermediary and representative of a UG vis-à-vis the claimant. The investment decisions made by the claimant on the advice of the defendant led, among other things, to the total loss of the invested capital. The claimant then demanded damages from the defendant personally for incorrect investment advice on the basis of contractual (an alleged investment advice contract existing with the defendant personally) and tortious claims (including culpa in contrahendo due to the claim of a personal trust exceeding the negotiating trust and due to immoral damage (sittenwidrige Schädigung)).
The lower courts dismissed the claim on the grounds that the requirements for asserting claims in tort were not met and that no contract had been concluded with the claimant; therefore, the claimant did not have passive legitimacy.

III. Decision of the BGH

However, in the opinion of the BGH, liability on the basis of a personal (prima facie) liability of the defendant pursuant to §§ 311 para. 2 and 3, 179 BGB (analogously) can be considered in addition to the UG.
In this context, the BGH also initially assumes that in the case to be decided a contract was not concluded between the claimant and the defendant, but between the claimant and the UG represented by the defendant, since it is a company-related transaction in which the intention of the parties involved is that the business owner – represented by the acting person – should become the contractual partner. According to the objective view of the recipient, the defendant acted as the representative of the UG and not for himself. Furthermore, the BGH assumes that the investment advice of the UG represented by the defendant was incorrect and in this respect there was a breach of duty by the investment advisor – in this case the UG – so that there is a claim for damages against the UG.
Contrary to the Court of Appeal, however, the BGH does not stop here and rejects the appeal, but comes to the personal liability of the defendant in addition to the UG pursuant to §§ 311 para. 2 and 3, 179 BGB (analogously), since the defendant did not express the limitation of liability of the UG to the claimant, but did in fact to a large extent not use the legal form “UG”. As a result, the defendant also had passive legitimacy.
According to established case law of the Second Civil Senate, the person acting on behalf of a GmbH is liable for violation of § 4 para. 1 GmbHG according to § 179 BGB (analogously) if, due to the lack of formal addition (GmbH or a generally understandable abbreviation of this designation), he generates the justified confidence of the contractual partner that (also) at least one natural person is liable. In the opinion of the Third Civil Senate, these principles also apply in the context of a UG. Consequently, the liability of reliance applies if the addition “Unternehmergesellschaft (haftungsbeschränkt)” or “UG (haftungsbeschränkt)” is omitted or inadmissibly abbreviated. The BGH states: „Since the statutory requirement must be complied with exactly and to the letter (BGH NZG 2012, 989 = WM 2012, 1629 marginal no. 16), prima facie liability also applies if the addition is incomplete, for example because the mandatory reference “haftungsbeschränkt” is missing. The mere reference to the legal form of the entrepreneurial company (UG) is therefore not sufficient as such, because – in contrast to the addition of the legal form “limited liability company” – the entrepreneurial company does not already bear the limitation of liability in its name. If only this reference is omitted, the impression can be created that at least one natural person has unlimited liability for the UG.”
Such prima facie liability could at most be precluded by the fact that the claimant knew or should have known of the actual liability circumstances or that they were irrelevant for him. However, this was not examined by the Court of Appeal and will have to be made up for in the new appeal proceedings – provided that the defendant’s submission is admissible under §§ 529 to 531 German Code of Civil Procedure (Zivilprozessordnung – ZPO).

IV. Consequences for the practice

Again and again, there are entrepreneurial companies that do not use the suffix “haftungsbeschränkt”. The ruling of the BGH shows that this can have considerable consequences and lead to personal liability of the person acting.
In the literature, it is increasingly suggested that the legally prescribed, unwieldy legal form suffix “haftungsbeschränkt” be deleted or at least modified so that in the future, for example, a legal form suffix “UG mbH” should also suffice. These considerations are to be welcomed. However, as long as such a simplification is not implemented by the legislator, entrepreneurial companies should strictly observe the legal form suffix in order to avoid personal liability of those acting on their behalf.