If a member of an elected body breaches his or her duty to act with due care, this can have various consequences for the member. In this part, we will take a closer look at some of these possible consequences, namely the obligation to compensate for damage, the obligation to pay unjust enrichment and the creation of liability.

The primary consequence of a breach of the due care obligation is liability for the damage caused. There are basically two options, namely subjective liability under Section 2910 of the Civil Code (hereinafter “CC”) or strict liability under Section 2913(1) CC.

In the case of subjective liability, a wrongdoer who, through his own fault, violates a legal duty and thus interferes with an absolute right of the injured party shall compensate the injured party for what he caused. In the case of strict liability, if a party breaches an obligation under a contract, it shall compensate the other party or the person whose interest was manifestly served by the performance of the agreed obligation.

While in the case of subjective liability, the breach of duty, the occurrence of damage and the causal link require the existence of fault, whether in the form of negligence or intent, in the case of strict liability the last prerequisite, i.e. fault, is not required.

Although the case law of the Supreme Court has not yet pronounced on the question of the nature of liability for breach of the due care obligation, it is possible to estimate to some extent from the existing case law in which direction this case law should develop. In its decision in Case No. 27 Cdo 4593/2017, the Supreme Court states: ‘Although the relationship between a member of a statutory body and the legal person whose body it is is a contractual relationship (it arises on the basis of a consensual expression of will by the legal person and the member concerned), the scope of the representative’s authority is primarily regulated by the law and, within its limits, by the constituent legal act (cf. reasons R 10/2019). …”. The Supreme Court therefore states that the scope of the representative’s authority, i.e. the rights and obligations arising from the relationship between the represented party and the representative, is primarily determined by the law, and if the duty to exercise the function with due care is a mandatory statutory regulation, the liability should necessarily be directed more towards liability for breach of the statutory duty, i.e. it should be subjective. L. Novotná Krtoušová ¹ KRTOUŠOVÁ, L., Liability for acting with due care from the perspective of theories of legal persons, Journal for Legal Science and Practice 2/2020, p. 247 came to the same conclusion, albeit with slightly different reasoning, when she noted, “Given the close connection between the rights associated with the function of a member of the statutory body and the duty of care of a good manager in the performance of the function of a member of the statutory body, I believe that the duty of care of a good manager is also a status issue of a legal entity. Therefore, I consider a breach of the duty of care of a good manager in the exercise of the functions of a member of the statutory body to be a breach of a legal duty under section 2910 CC.”

In the case of liability for damage caused by a breach of the due care obligation, the burden of proof is partially reversed. Pursuant to Section 52(2) of the Act on Business Corporations (hereinafter “BCA”), if it is considered in court proceedings whether a member of an elected body of a business corporation has acted with due care, the burden of proof shall be on that member unless the court decides that he or she cannot fairly be required to do so.

Pursuant to Section 53(1) BCA, a person who has breached the due care of a good manager shall hand over to the business corporation the benefit which he or she has received in connection with such conduct. As in the case of compensation for damage caused by the performance of an official function, the reversal of the burden of proof applies.

The benefit to be released or compensated must be related to the conduct which caused the breach of due care. As a rule, it will be a breach of the duty of loyalty. Typically, it may be a breach of a duty of confidentiality (e.g. in relation to trade secrets, but also in relation to other information which it is not in the company’s interest to disclose) or a non-compete. The benefit must accrue to the member of the elected body. Benefits provided to other persons (e.g. close persons) are not sanctionable.

The benefits subject to the editorial obligation will generally be monetary or other benefits in kind. However, transactions in the form of services may also be considered. In the latter cases, if the benefit cannot be provided, the member of the body shall compensate the corporation in money.

In case a member of an elected body of a legal person has caused damage to the legal person and has not compensated the legal person for the damage caused by the breach of duty in the performance of his/her duties, although he/she was obliged to do so, he/she shall be liable to the creditor of the legal person for the debt of the legal person to the extent to which he/she has not compensated the damage, unless the creditor is able to claim performance from the legal person ( Section 159(3) CC).

From the foregoing, the following prerequisites for liability are apparent:

• the obligation of a member of an elected body to compensate the legal entity for the damage ² A claim for compensation by a legal entity does not have to be enforceable, final, or filed in court. It does not even have to be payable. According to the Supreme Court’s decision in Case No. 27 Cdo 59/2022, the purpose and purpose of statutory liability is to set up a fairer arrangement of relations for creditors in a situation where the recoverability of their claims against the legal entity is impaired and a member (or former member) of an elected body has caused damage to the legal entity by breach of duty in the performance of his or her duties, which he or she has not compensated.
• the fact that the damage has not been compensated to the legal entity,
• the legal person’s debt to the creditor,
• the impossibility for the creditor to enforce payment of the claim against the legal person ³ It does not require the legal entity to be insolvent; it is quite sufficient if the legal entity fails to pay its debt upon the creditor’s written demand.