Intent Is Inescapable: German Courts Rule Contract Clauses Cannot Shield Deliberate Misconduct
18.06.2026 - 10:34:48 | boerse-global.de
Managers who fail to file for insolvency on time risk losing their D&O insurance cover entirely. The Higher Regional Court of Frankfurt (OLG Frankfurt) decided in twin rulings that violating core duties—such as the obligation to file for bankruptcy—amounts to a knowing breach of duty. In cases where a managing director makes payments after insolvency has already set in, the burden of proof shifts: the manager must show they acted without fault (Az. 7 W 20/24, 7 U 134/23, and 3 U 113/22).
Even a nominee director cannot hide behind his role. The same court made clear that a Strohmann managing director is held to the same standards as a genuine one. The Federal Fiscal Court (BFH) reinforced this by ruling that sheer incompetence does not exempt a manager from liability for the company’s tax debts. Anyone who cannot actually run the business should have resigned (Az. VII R 23/19).
The duty of honesty extends into the courtroom. The Cologne Regional Labour Court (LAG Köln) upheld the dismissal of an employee who knowingly told falsehoods during an unfair dismissal hearing. The court stated that an “unsuccessful attempt” at procedural fraud irreparably destroys the trust relationship—regardless of whether the lie was ultimately decisive for the outcome (Az. 6 SLa 315/25). The message is blunt: contractual employment protections do not cover deliberate deception of the court.
For decades, forfeiture clauses and waivers have been a staple of German employment contracts. The Federal Labour Court (BAG) already drew a sharp line in June 2013: contractual exclusion clauses cannot bar claims for damages resulting from intentional misconduct—the law does not allow parties to contract around liability for deliberate acts (Az. 8 AZR 280/12). In November 2019, the BAG refined the rule: for the exclusion of liability in personal injury cases under the Social Code, a double intent is required—intention both for the act itself and for the resulting injury (Az. 8 AZR 35/19).
Works agreements and settlement deals are now under equally strict judicial scrutiny. On 3 June 2025, the BAG ruled that a so-called conditional settlement on vacation leave is only valid if it resolves an actual, existing uncertainty between the parties. A simple waiver of statutory minimum leave during an active employment relationship remains impossible (Az. 9 AZR 104/24). Even more consequential: on 27 January 2026, the BAG struck down a works agreement signed solely by the works council chair. Without a proper plenary resolution from the entire committee, the signature carries no weight. The court declared that apparent authority or enduring acceptance cannot replace democratic legitimacy (Az. 1 AZR 147/24).
The string of recent rulings leaves no room for ambiguity. Contractual frameworks set boundaries, but they cannot override the basic legal duties of loyalty, truthfulness, and accountability for intentional wrongdoing. For employers, managers, and works councils alike, the message is that formal processes and substantive good faith remain non-negotiable.
