Self-dealing

A self-dealing is a term from the right of Germany. It is when someone enters into a transaction either on their own behalf ( self- contraction) or on behalf of a person represented by him ( dual representation ) with himself as a representative of a third party. In accordance with § 181 BGB such transactions are permitted only if the parties involved have the representative allows the self- contracting or the transaction is solely to the performance of an obligation.

Example: The ( shareholder ) director of a GmbH purchases for the GmbH himself a plot of land from. Here a two-sided transaction is completed, although only one person, once, of course, as an organ of a corporation, is. Corporations exempt the company dominant CEO regularly already for tax reasons from the prohibition of self- contraction.

It is obvious that with such self-dealing is accompanied by a high risk of abuse. The actors in the manner described, for example, give to yourself or to otherwise promote themselves through the business the assets of those represented by him.

History

For the case of guardianship (now in German law: " Care" ) was therefore already in Roman law the rule: tutor rem pupilli emere non potest ( The guardian of the ward things can not buy).

Legal

Even parents as legal representatives must not business for himself and in representation ( § 164, Section 1, § 1629 paragraph 2, sentence 1, § 1795 para 1 No. 1, Section 2, § 181 BGB ) make their child (such as for example, a donation to the detriment of the child to the parents). Is the business for the child but legally only advantageous (gift of parents in favor of the child), the prohibition of self- contraction is teleological reduced: the protective purpose of the standard is not undermined by the action. In other cases the German law provides for the possibility to appoint a caretaker supplement or the decision of the guardianship court.

Even the applicable German civil law prohibits the making of self-dealing ( § 181 BGB). This is however to default rules, that is, as far as the delegate was in turn justified by a legal transaction, the representative may be exempted from this requirement.

The liberation of an agent from the prohibition of Insichgeschäftes ( self-dealing ) in accordance with § 181 BGB leads to 'exceptional form of neediness of the proxy. In the event that a procedural requirement is bypassed by the involvement of a deputy, 2 BGB in the shape of the main business must be granted the power to accept the wording of § 167 para. Just the exemption from the prohibition of Insichgeschäftes makes the notarised power of attorney is not necessary; is different, but at any rate, if there is added the intentional or constructive irrevocability. Factual irrevocability is, for example, before, if the grantor due to illness can not revoke, or if the agreement date is so close in time to the power of attorney, that any possibility of revocation is completely theoretical.

Excluded from the prohibition of self- contraction is in § 181 BGB the case that the business solely for the performance of an obligation ( which concerns regularly rem business) has been made. So, for example, a legal representative or an authorized representative may the statutory right to reimbursement of expenses ( § 670, § 1835 BGB ) out of the assets entrusted to it of his principal.