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Created on Friday, 07 November 2008 00:34

Last Updated on Friday, 28 December 2012 18:41

Private Matter or Business when being Consulted on Buying Company Shares?

The BGH had to decide on November 15, 2007 whether a person interested in buying share of a company is already acting as an entrepreneur or not (re III ZR 295/06).

[PPD_PAYTOREADMORE]

The defendant was interested in becoming self-employed by joining a GbR that ran a fitness studio. Upon invitation of the defendant, the suing tax consultant visited the defendant at her home to discuss her tax situation. The plaintiff alleges that during this visit he was assigned to draft a business plan for her start-up, which was also to assist in collecting grants and subsidies. The tax consultant worked 40 hrs à € 80 plus VAT and invoiced this amount. With letter of September 14, 2005, the defendant countermanded the contract in accordance with §§312, 355 BGB. The defendant argued that she hired the plaintiff “at her door (Haustürgeschäft)” such orders can be voided within two weeks (§355 I 2 BGB).

The case was dismissed. It was held that the plaintiff was not hired to draft the business plan as he had wrongly assumed. Contrary to his opinion, the defendant was acting as a consumer (§13 BGB) and not a businessperson (§14 BGB). At the time of the assignment, the defendant was neither acting as if engaged in a business nor as an entrepreneur. It has been held that an operational activity can be already assumed for start-ups when this activity takes place to start a business or self-employment. Decisive is the objectively determined purpose of the activity. The law does not refer to the existence or non-existence of any professional experience. Relevant is if the activity on its own merits is to be assigned to a more private or more professional / operational character. When the activities have a more private character then this refers to consumer activity and the rules on business “at the door” apply. A start-up typically acts on behalf of his or her profession is when renting an office, signing a franchise contract, purchase of company shares, etc.

In the reported case, the defendant was acting as a private person because she was only exploring the possibility to become self-employed. She wanted to understand the economical implications of opening a business. Only with the results of the prior consultation, would she be able to decide to or not. Since only the objective character of the activity matters, it is irrelevant that the defendant was fully motivated to buy shares in the company. Important is that this hiring assignment has not yet become part of starting up a business because it was still before this step.

A situation “at the door” is to be seen here. §312 I 1 no. 1 BGB explicitly determines that negotiation in private apartments, as took place here, fall into the scope of these consumer protection rules. However, §312 III no. 1 BGB stipulates an exception. The exception is that no right to void exists when the consumer invited the entrepreneur to visit him. Admittingly, the defendant invited the tax consultant but nevertheless did not hire him to draft a business plan. Therefore, this exception does not kick in. The invitation was exclusively to consult on her on the implications of opening a business.

Hint:

Normally, you have two weeks time to void an agreement. This two-week period starts after a consumer has been clearly instructed on his or her rights. Whenever the consumer is not clearly instructed that he has two weeks to void an agreement, then this right can be executed even after the two weeks have expired (§355 III 3 BGB).





Published on the old CMS: 2008/2/10
Read on the old CMS till November 2008: 266 reads