THE BOTTOM LINE
- Personal Liability Risk: Directors and executives can be held personally responsible for company contracts if they fail to make it explicitly clear they are acting on behalf of their limited liability company.
- Clarity is Non-Negotiable: Relying on subtle clues like a company registration number (KvK in the Netherlands) or a trading name in an email signature is not enough. Always use the full, official company name in all communications.
- The Burden of Proof is on You: The court places the responsibility squarely on the individual director to remove any ambiguity about who the contracting party is. If you are not clear, you risk being seen as the contracting party yourself.
THE DETAILS
A Dutch court recently held a director personally liable for over €19,500 in unpaid invoices, despite his claim that he was acting for his now-liquidated company. The case hinged on a simple but crucial question: who did the supplier reasonably believe they were doing business with? The supplier, an electrical installation company, had performed work on a motor ship and had only ever dealt with the director personally. All agreements were made orally, and invoices addressed to the director personally were partially paid. When the final invoices went unpaid, the supplier sued the director directly.
The court applied the Dutch doctrine of ‘justified trust’, a principle common in contract law globally. The fundamental rule is that a person is presumed to be acting on their own behalf unless they explicitly state otherwise. It was therefore the director’s responsibility to make it unequivocally clear to the supplier that he was not the client, but was merely representing his limited liability company, “[bedrijf 1] B.V.”. The court found that the supplier was entirely justified in believing they had a contract with the director as an individual, not with his company.
The director’s defense rested heavily on his email signature, which mentioned he was acting “on behalf of Motor Ship [ship’s name]” and included the company’s Chamber of Commerce (KvK) registration number. The court dismantled this argument, noting several critical failures. The signature did not include the official company name or the crucial “B.V.” suffix that denotes a limited liability entity. Furthermore, the director admitted in court that he had deliberately chosen not to use the full company name in his communications. This intentional ambiguity, combined with the lack of any other reference to the company, led the court to conclude that the director had failed to establish a contractual relationship between the supplier and his company, leaving him personally bound to the agreement.
SOURCE: Rechtbank Midden-Nederland
