Legal Updates

An organ in a company cannot be both liable because of its position and independently

May 13, 2024

People who entered into transactions with a company contended that a director was liable to them for failed transactions - once by virtue of her position as a director, and once personally for her actions.

The Court rejected the claim. Israeli law stipulates that a company is liable for an action performed by its organ. However, attributing his action to the company does not detract from the possibility of imposing a personal liability on him when he was personally involved in the company's actions. Further, personal responsibility must be established as it is insufficient to determine that the organ is responsibility merely due to its position. Here, it was sought to attribute liability to the director both personally and by virtue of her position in the company, in a contradictory manner. Further, the director was not involved in the transactions at all and therefore she is not personally liable.