OGH on the exclusion of liability in a mandate agreement of a private foundation subject to approval

Jan 27, 2021 Benn-Ibler Rechtsanwälte

When concluding a mandate agreement between a private foundation and a law firm to which one of the members of the foundation's board of directors belongs as a partner, no limitation of liability to gross negligence may be agreed.

Pursuant to Sec. 17 (5) of the Private Foundation Act (Privatstiftungsgesetz, PSG), legal transactions of the private foundation with a member of the foundation's board of directors require the approval of all other members of the foundation's board of directors and of the court, if - as in the present case - there is no supervisory board ("self-dealing").

Pursuant to Sec. 17 (5) PSG, the applicants sought the approval of a mandate agreement between the private foundation and a law firm operating in the legal form of a partnership under civil law (Gesellschaft bürgerlichen Rechts, GesbR), whose partner is also a member of the foundation's board of directors. The general terms and conditions of the law firm contained a limitation of liability to gross negligence.

According to the Austrian Supreme Court (Oberster Gerichtshof, OGH), such a limitation was in the exclusive interest of the law firm. The law firm had also not certified that it would not have been possible to commission another lawyer without such a limitation of liability. The fact that a "shortening of the communication channels" between the law firm and the private foundation benefited the company did not change the fact that the exclusion of liability led to the private foundation being placed in a worse position. The problem of the amount of the agreed hourly rates therefore did not need to be discussed any further.

The refusal of the lower courts to approve the contract does not constitute an error of judgement which the OGH is obliged to uphold.

OGH 6 Ob 151/20d (25.11.2020)