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– October 24, 2024

Liability of a silent partner

In judgement 4A_342/2023 of 5 June 2024, the Federal Supreme Court states that a silent partnership is not sufficient to establish joint and several liability. This also applies if the relationship is known to the outside world.

The silent partnership is a special form of ordinary partnership and is characterised by the fact that the silent partner participates in the economic activity of another person, but does so without appearing to third parties. The element of the partnership is therefore formed internally, but is deliberately not publicised externally.

The main shareholder therefore acts in his own name and for his own account vis-à-vis third parties. The silent partner, on the other hand, does not represent the company, precisely because he does not wish to be externally bound. The main shareholder is therefore also solely liable for any debts of the company.

This also applies to situations in which the silent partner is involved in contract negotiations but the third party knows that the silent partner also wishes to remain silent. However, if the silent partner makes himself known to the outside world as a partner, the third party’s trust in the appearance created must be protected by joint and several liability in accordance with Art. 544 para. 3 CO.

The Federal Supreme Court thus holds that the mere assistance in managing a business or participation in a business discussion is not sufficient to trigger joint and several liability if no authorisation or connection is established with the third party.

If you have any questions on the subject of company law, our lawyers will be happy to assist you.

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