Austrian Law Blog:


Is a company liable for damages caused by culpable conduct of its subcontractors or agents? 

In the business sector it is common for companies to fulfill their contractual obligations towards their customers by commissioning subcontractors or agents. These persons are generally liable if they culpably cause damage to property or personal injury.

Nevertheless, for several reasons it can be difficult for a customer to collect compensation from a subcontractor or agent, in particular for mere pecuniary loss as the customer has no direct contractual relation-ship with them. Section 1313a of the Austrian Civil Code (“ABGB”) solves this situation by allowing a contracting party to claim damages directly from the principal, who is held liable for his subcontractor’s or agent´s culpably caused damage as if the damage would have been caused by the principal himself. However, in order to prevent excessive liability of the principal, the Austrian Supreme Court (“OGH”) has introduced an important limitation to this general rule: in several of its decisions the court has stated that section 1313a ABGB only applies if there is a material link between the agent´s conduct and the fulfillment of the principal’s contractual obligations (OGH – RS0028530). Damages that are in no relation to the agent´s duties and the fulfilment of the contract cannot be claimed from the principal.

The same principles apply also if a company employs a sub-contractor or agent for the fulfillment of its statutory (i.e. non contractual) obligations.  

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