2. As I explained there, it has long been held by the Supreme Court (see, e.g., here and here) that a director of a company commits a tort towards a company's creditor, and is therefore personally liable towards that creditor, if the director enters into an obligation on behalf of the company while he knew or reasonably should have known that the company would not - or not within a reasonable period - be able to fulfill its obligation and would not offer recourse for the damage suffered by the creditor as a result of the malperformance, unless the director is able to show that he personally did not make a sufficiently serious mistake in this respect. In other words, this framework concerns situations in which the director essentially raised a wrong impresson - in a culpable way - of the company's solvency when entering into an agreement on behalf of the company with a third party. The framework is designed to offer a third party some protection against directors who enter into obligations on behalf of the company too carelessly.
3. I discussed the contours of director liability in tort more broadly in post No. 7, post No. 11 and post No. 37. I explained there that normally only the corporation is responsible and possibly liable for the consequences of its actions, although a corporation is incapable of acting itself (it is after all a legal fiction) and its actions can always be traced back to those of human beings, typically its directors; the legal realm, those human acts are attributed to the corporation. As the corporation is normally the only party that can be liable towards it creditors, the type of director liability addressed above - in which the director is personally liable in addition to the corporation, that is unable to pay - is seen as a form of 'secondary liability'. This secondary liability approach makes sense, as otherwise liability of the corporation would result in liability of its director and the distinct corporate prsonality of the corporation - with its rights and duties - would be without real meaning The logical outcome is a higher threshold for director liability in tort vis-a-vis - for example - a creditor of the corporation.
4. Post No. 71 was picked up by Steve Bainbridge as follows.
The whole business is curious from an American perspective. In the first instance, under American law, a director acting alone and qua director is not an agent of the corporation. See Restatement (Second) of Agency § 14C (1958) (an individual director is not an agent of the corporation or its shareholders); Arnold v. Soc'y for Sav. Bancorp, 678 A.2d 533, 539-40 (Del.1996) (“Directors, in the ordinary course of their service as directors, do not act as agents of the corporation ... A board of directors, in fulfilling its fiduciary duty, controls the corporation, not vice versa.”).
A director who purports to enter into an obligation on behalf of the corporation thus is not an actual agent of the corporation. As a matter of agency law, there simply is no corporate obligation.
I suppose that in some cases, there could be sufficient facts suggesting that the board of directors has cloaked a single one of its members with authority to act so as to create apparent authority. In such a case, however, the corporation would be liable to the third party (assuming all other elements of the claim are met), not the agent.
As for cases in which a director acting without either or apparent authority, "the director essentially raised a wrong impresson - in a culpable way - of the company's solvency when entering into an agreement on behalf of the company with a third party." I suppose there might be a claim for fraud, based on the director's own misconduct in making the representation:
"Under traditional agency and tort law doctrine, corporate officers and directors are generally immune from personal liability for the acts of the corporation. The exception, of course, is if the officer or director personally participates in the tortious or illegal acts of the corporation. Under traditional principles of tort and agency law, corporate officers can be held personally liable for their own wrongful acts, regardless of whether they were acting in an official capacity or at the direction of their principal when they committed those acts."--Lynda Oswald, 44 IDEA 115 (2003)
Yet, given the well-established principle that directors acting alone cannot bind the corporation, query whether the plaintiff would be able to satisfy the reliance requirement. Also, the scienter requirement probably would pose a problem.
My sense is that in US law, these sort of tort claims are very rare. Anybody want to correct me?
I can't answer Steve's question as to how US law deals with these situations, but I can provide some additional clarity as to the Dutch approach.
5. Under Dutch corporate law, the board as well as individual board members have the power to act on behalf of the corporation, unless the articles of association provide otherwise. If the director did not have the power to represent the corporation, only the corporation can invoke this lack of power. In cases like these, where the third party wants to claim damages from the director because the corporation does not pay what it is bound to pay, the focus in litigation is generally on whether the director personally committed a tort towards the third party, for example because he knew or should have known when entering into the agreement on behalf of the corporation that the corporation would not be able to pay and would not offer recourse for the damage suffered by the third party. This is one possible scenario, but there are more; see my previous posts on the subject. In this setting, the main question - at least under Dutch law - is therefore under what circumstances a director can be personally liable in tort towards a third party, in addition to the corporation (whether based on contract or tort), which would be the exception to the rule that only the corporation is liable. These sort of tort claims are brought frequently before Dutch courts. If there indeed is a significant difference in the way Dutch law and US law tackle these kind of issues, this may have to do more with different conceptualizations of director liability in tort than with anything else; under Dutch law, this liability is not based on some notion of fiduciary duty, but on violation of the general unwritten duty of care that is to be observed by all actors in society outside the contractual realm. Under Dutch law, this possibility of tort liability - although the exception to the rule - is a logical consequence of the way tort liability is perceived.