Breach of duty regarding one’s own affairs on signing a declaration of membership
OLG Frankfurt am Main, judgment of 29 September 2014 – 23 U 241/13
Signing a declaration of membership of an investment in a ship fund triggers a limitation period of three years from the end of the year of signing according to sections 195 and 199 subsection 1 German Civil Code. The fact that the signatory claims he signed the declaration of membership without reading it first and under duress, did not stand up to scrutiny by the court.
On one hand, the claimant submitted for the first time in the professional case that he had signed under duress, which is why this new means of attack under section 531 subsection 2 German Code of Civil Procedure is not to be permitted. On the other hand, in the panel’s view the signatory acted with gross negligence according to section 199 subsection 1 no. 2 German Civil Code. The declaration of membership contained an unmistakable, obvious and unambiguous reference to the proprietary and entrepreneurial risks of the investment, which was also highlighted in print positioned directly above the signature line. Failure to read beforehand despite easy accessibility of the information source represents a serious breach of duty regarding one’s own affairs, according to the Higher Regional Court Frankfurt am Main, and is grounds for the accusation of grossly negligent conduct.
Additionally, the failure to read the declaration of membership should have led the signatory at least to pose a query to the advisor, as investments always offer specific indications of possible damage. Failing to make a query is thus simply incomprehensible and supports the accusation of gross negligence. The Higher Regional Court Frankfurt am Main saw in this outcome no contradiction to the Federal Court of Justice case law, according to which a grossly negligent lack of knowledge as meant by section 199 subsection 1 no. 2 German Civil Code is not present simply when an investor fails to read an investment brochure and only relies on the statements of his investment advisor. According to Higher Regional Court Frankfurt am Main, this case is not comparable with the present one, because the present case was about a declaration of membership with legal effect and not about a purely informative prospectus. In addition, the spoken word is of lesser impact than a simple and clearly written declaration of membership, in contrast to a general and highly detailed prospectus.
Any questions? Please contact: Dr. Daniel Kassing
Practice Group: Insurance & Reinsurance