The managing director and sole board member of a construction company ordered goods on credit in the summer of 2022. The goods were delivered as agreed, but the company failed to pay the purchase price.
Shortly after the New Year in 2023, the company was declared bankrupt.
The supplier sued the managing director of the purchasing company, claiming compensation for the loss incurred as a result of the company's failure to pay for the goods.
The managing director was ordered by the Court of Appeal to compensate the supplier for the loss.
The Supreme Court reached the same conclusion as the Court of Appeal. There were strong grounds for finding that the managing director had acted in a manner giving rise to liability through his responsibility for the company's financial management. The Supreme Court nevertheless found it unnecessary to reach a final conclusion on this issue, as the managing director had in any event acted wrongfully when the goods were ordered. When the supplier asked about the company's ability to pay, the managing director stated that the financing was in place and that there was no reason for concern.
In its judgment, the Supreme Court stated that it is at the core of the duty of loyalty in contractual relationships to refrain from providing incorrect or misleading information.
Intentional or negligent breaches of this duty may give rise to liability for damages. The managing director's discretion to attempt to save the company from bankruptcy did not exempt him from personal liability.
The judgment sheds light on the management's duty to act when a company is experiencing financial difficulties, as well as the duty to provide information in contractual relationships.
Source: Supreme Court
