Liability of the partners in a company purporting to be a civil law

The choice of the civil form for a company carrying on commercial activities does not exempt its partners from joint and several liability for the debts incurred, since the commercial nature of its object prevails.

The recent Judgment 466/2024 of 28 June, handed down by the Barcelona Provincial Court (ECLI:ES:APB:2024:7351), deals with the issue of the liability of the partners of a company which, although incorporated as a civil partnership, carries out commercial activities. In this case, the liability of a partner for a debt contracted by a company that operated as a civil law partnership, but in reality, carried out business activities in the hotel and catering sectors, which implied a special consideration of its legal regime.

As it was carrying on a business activity in the hotel and catering sector, the Court held that the regime for commercial companies, in particular the partnership regime, should apply, at least as far as relations with third parties were concerned. This criterion had previously been applied by the same court in its judgment of 22 November 2016 (ECLI:ES:APB:2016:13788).

On that occasion, it was established that the company’s business purpose, even if it was organised as a civil partnership, implied a legal consideration as an (irregular) commercial company due to its actual activity. Therefore, the partners are jointly and severally liable for the debts incurred on behalf of the company, both among themselves and with the entity itself.

This ruling highlights an important distinction in the liability regime for partners in civil partnerships versus shareholders in commercial companies (even if irregular). In civil partnerships, partner liability is, in principle, joint and subsidiary, as provided by Article 1698 of the Civil Code. However, in commercial companies, such as partnerships, shareholders are jointly and severally liable among themselves and subsidiarily liable with respect to the company, as set out in Articles 127 and 237 of the Commercial Code. Thus, the benefit of excussion allows shareholders to defend against direct claims until the partnership’s assets have been exhausted.