Representative Clause (Germany)
This clause contractually defines which individuals within the policyholder's organisation count as representatives, whose intentional or grossly negligent conduct is attributed to the policyholder as if it were its own fault.
- Clause type
- Condition
- Origin/Market
- German market
- Favours
- Insurer
- Negotiability
- Market standard
Purpose
Under German law, the policyholder is in principle liable only for its own fault; the VVG contains no general rule attributing the conduct of third parties to the policyholder. To stop a policyholder avoiding the consequences of intentional or grossly negligent conduct by effectively delegating risk management to a third party, the courts developed the doctrine of representative liability. The contractual representative clause gives concrete effect to this judge-made principle by conclusively naming the persons who count as representatives.
Effect and limits
Without a clause, representative status is determined case by case according to who manages the risk or the contract – for example, the site manager of a large construction project as representative of the contractor. The clause usually narrows this open-ended standard to statutory representatives (managing directors, board members, general partners), creating legal certainty for both policyholder and insurer; the fault of ordinary employees or managers below that level is not attributed to the policyholder.
Negotiation and practice
For businesses with decentralised structures, such as branch networks or construction groups, the precise wording of the clause has real economic weight, since an overly broad definition increases the attribution risk. For corporate policyholders, the conduct of company organs is additionally attributed under Section 31 BGB regardless of the contractual representative clause; the two levels of attribution need to be distinguished when assessing a claim.