Comprehensive Study Material: Austrian Business Law (Wirtschaftsrecht)

This study material provides a detailed overview of Austrian Business Law, focusing on its structure, fundamental concepts, and key areas. It is designed to make the core content of Austrian business law understandable and to highlight important current topics, as presented by MMMag. Stefan Szücs at FH Salzburg Betriebswirtschaft.

Introduction to the Course and Legal Framework

Course Objectives and Structure

The primary goal of this course is to familiarize participants with the structure, fundamental content, and current topics of Austrian Business Law. The course is classified as an "ILV" (LV-immanent), meaning that assessment is primarily based on a 45-minute written exam (Klausur) and points accumulated from small homework assignments (Hausübungen). While the course largely consists of lectures by the instructor, active participation through questions from students is explicitly encouraged to foster understanding.

The course schedule includes several in-person sessions and a blended learning component, culminating in a final exam. Specific dates and units are:

Wednesday, 15.10.2025, 09:00 – 12:30 (4 units)
Thursday, 16.10.2025, 13:30 – 16:45 (4 units)
Friday, 17.10.2025, 09:00 – 12:30 (4 units)
Blended Learning (1 unit)
Exam: Friday, 31.10.2024, 13:30 – 14:15 (1 unit)
Total: 13 + 1 units

Key Areas of Business Law

The curriculum is broadly divided into two main categories:

Privates Wirtschaftsrecht (Private Business Law): This encompasses the legal relationships between private entities in a business context. Key sub-areas include:
- General Company Law (Allgemeines Unternehmensrecht)
- Company-related Transactions (Unternehmensbezogene Geschäfte)
- Corporate Law (Gesellschaftsrecht), covering both partnerships (Personengesellschaften) and corporations (Kapitalgesellschaften)
Öffentliches Wirtschaftsrecht (Public Business Law): This deals with the legal relationships between businesses and the state, or between businesses regulated by public law. A primary example is Trade Law/Operating Plant Law (Gewerberecht/Betriebsanlagenrecht).

Recommended Literature

While not mandatory, several ORAC legal scripts are recommended for deeper study:

Schummer, Allgemeines Unternehmensrecht, 10. Auflage, LexisNexis, 2024
Auer, Unternehmensbezogene Geschäfte, 15. Auflage, LexisNexis, 2023
Schummer, Personengesellschaften, 10. Auflage, LexisNexis, 2024
Mader/Janisch/Warto, Kapitalgesellschaften, 11. Auflage, LexisNexis, 2024

Additionally, the Kodex Unternehmensrecht 2025, 69. Auflage, as of 1.2.2025, is a valuable resource.

Access to Law (Zugang zum Recht)

A fundamental principle of law is that only norms (laws, regulations, etc.) that are accessible to legal subjects can be followed. Conversely, if norms are accessible, they must be obeyed. In Austria, the primary tool for accessing legal information is the Rechtsinformationssystem des Bundes (RIS), maintained by the federal government. The RIS provides access to a wide range of legal documents, including:

Laws (Gesetze)
Regulations (Verordnungen)
Supreme court jurisprudence (höchstgerichtliche Judikatur), which includes decisions in individual cases.

The RIS can be accessed online at www.ris.bka.gv.at. This platform is crucial for legal research and understanding the current legal landscape in Austria.

Exercises related to accessing legal information:

What is a "Firma" (company name)?
What is the minimum share capital of a GmbH (Limited Liability Company)?
What is the minimum nominal capital of an Aktiengesellschaft (Stock Corporation)?

General Company Law (Allgemeines Unternehmensrecht)

General Company Law forms a core part of Private Business Law. It covers several fundamental concepts essential for understanding business operations from a legal perspective.

Legal Classification (Rechtliche Einordnung)

Austrian Company Law (Unternehmensrecht) is classified as Sonderprivatrecht (special private law). This means it deviates from the general civil law (ABGB - Austrian Civil Code) in specific areas to better suit the needs of business transactions. The ABGB applies subsidiarily, meaning its provisions are used unless company law provides specific rules. Its application is generally restricted to legal relationships where at least one entrepreneur is involved.

The characterization of company law as special private law is evident in several aspects:

Reduced Need for Protection: Entrepreneurs are considered "professionals" (Profis) and are generally deemed less in need of legal protection compared to consumers.
Efficiency: It aims for simple and fast processing of business transactions.
Remuneration: It emphasizes the remunerative nature of services.
Enhanced Trust Protection: It provides extended protection for trust in business dealings.
Publicity: The commercial register (Firmenbuch) ensures transparency and publicity of important business facts.

The central piece of legislation in Austrian company law is the Unternehmensgesetzbuch (UGB), which is the Federal Law on special civil law provisions for enterprises. Prior to 31.12.2006, the Handelsgesetzbuch (HGB) was in force. The UGB is not an entirely new law but rather a further development and amendment (Novellierung) of the HGB, including a renaming of the legal title. Key changes introduced by the UGB include the replacement of the "Kaufmann" (merchant) concept with "Unternehmer" (entrepreneur), liberalization of company name law, and allowing the formation of OGs and KGs for any permitted purpose, regardless of size.

Content of the UGB

The UGB is structured into five books:

Allgemeine Bestimmungen (General Provisions): This book defines the concept of an entrepreneur, regulates company names (Firma), liability, the transfer of contractual relationships upon the sale of an enterprise, and the law of representation (Prokurist and Handlungsgehilfen).
Recht der OG, KG und stille Gesellschaft (Law of General Partnerships, Limited Partnerships, and Silent Partnerships): This book details the legal framework for these specific partnership forms.
Rechnungslegung (Accounting): This book sets out the accounting obligations for enterprises.
Unternehmensbezogene Geschäfte (Company-related Transactions): This book covers the specific rules for transactions related to the operation of an enterprise.
Seehandelsrecht (Maritime Commercial Law): This book deals with legal aspects of maritime trade.

Other Legal Sources

Beyond the UGB, other significant legal sources for company law include:

FBG (Firmenbuchgesetz - Commercial Register Act)
HandelsvertreterG (Commercial Agents Act)
MaklerG (Brokers Act)
AktG (Stock Corporation Act)
GmbHG (Limited Liability Company Act)
UmwG (Transformation Act)
SpaltG (Splitting Act)
Handelsbräuche (Commercial Customs)
AGB (General Terms and Conditions)
Incoterms

Peculiarities and Consequences of Company Law

The distinct nature of company law, as special private law, leads to several peculiarities and consequences:

Less Protection for Professionals: Entrepreneurs are considered "professionals" and thus require less legal protection than private individuals.
Increased Need for Legal Certainty: Business transactions demand clear and predictable legal rules.
Increased Need for Speed: The dynamic nature of business requires efficient and swift transaction processing.

These peculiarities result in:

Extended Private Autonomy: Greater freedom for parties to contractually arrange their affairs.
Publicity and Trust Protection: Mechanisms like the commercial register ensure transparency and protect the trust of third parties in business dealings.
Speed of Transactions: Legal provisions are designed to facilitate quick and efficient business processes.

Concept of Entrepreneur and Enterprise (Begriff Unternehmer – Unternehmen)

Since January 1, 2007, the traditional concept of "Kaufmann" (merchant) has been replaced by the broader term "Unternehmer" (entrepreneur) in Austrian law. While the term "Unternehmer" was not entirely new to the Austrian legal system (e.g., found in § 1 Abs 1 Z 1 KSchG - Consumer Protection Act), its scope and definition were often unclear. The UGB now provides a more structured approach to defining an entrepreneur.

A person, whether natural or legal, is qualified as an entrepreneur under the UGB if one of the following conditions is met:

1. Entrepreneur by Entrepreneurial Activity (Unternehmer kraft unternehmerischer Tätigkeit) – § 1 UGB

According to § 1 Abs 2 UGB, an enterprise is defined as "any permanently organized activity of an independent economic nature, even if not aimed at profit." This definition breaks down into several key elements:

Independent Activity (selbständige Tätigkeit): The activity must be carried out on one's own account and risk, implying entrepreneurial risk.
Economic Activity (wirtschaftliche Tätigkeit): This involves offering services or goods on the market for remuneration.
Permanent Activity (dauernde Tätigkeit): The activity is not a one-off event but is designed for a multitude of transactions over time.
Organization (Organisation): The activity must be structured as a system characterized by division of labor and planning.

It is irrelevant whether the enterprise is financed by its own or external funds, or if the entrepreneur possesses specific professional training.

2. Entrepreneur by Legal Form (Unternehmer kraft Rechtsform) – § 2 UGB

§ 2 UGB designates legal entities operating in specific legal forms as entrepreneurs, irrespective of the purpose, type, or scope of their actual activities. For these entities, there is no need to verify whether they actually operate an enterprise. Examples of legal forms covered include:

Aktiengesellschaft (AG - Stock Corporation)
Gesellschaft mit beschränkter Haftung (GmbH - Limited Liability Company)
Sparkassen (Savings Banks)
Versicherungsvereine auf Gegenseitigkeit (Mutual Insurance Associations)

Legal forms not covered by this provision, and thus not automatically considered entrepreneurs by legal form, include Offene Gesellschaften (OG), Kommanditgesellschaften (KG), and Privatstiftungen (Private Foundations).

3. Entrepreneur by Registration (Unternehmer kraft Eintragung) – § 3 UGB

A person is considered an entrepreneur if they are wrongfully registered in the commercial register and act under the company name (Firma). This applies even if the third party was unaware of the wrongful registration. The legal consequences include increased statutory default interest (§ 456 UGB) and the duty to give notice of defects (§ 377 UGB). This provision is particularly relevant in cases where an entity remains registered in the commercial register despite no longer conducting entrepreneurial activities.

4. Entrepreneur by Appearance of Law (Unternehmer kraft Rechtsschein)

Beyond the statutory definitions, legal doctrine and jurisprudence have developed the concept of an "entrepreneur by appearance of law." This applies when someone creates the impression of being an entrepreneur, even if they are not in reality, and a good-faith third party relies on this appearance. Such a person must allow themselves to be treated as an entrepreneur by the third party. For example, if an individual pretends to be a reseller to a wholesaler to obtain favorable purchasing conditions, they will be subject to entrepreneurial duties, such as the duty to give notice of defects within a reasonable period, even if they are not a genuine entrepreneur.

Enterprise Size and its Relevance

The concept of an entrepreneur is generally independent of the enterprise's size, meaning even "Kleinunternehmer" (small entrepreneurs) are covered. However, certain provisions in the UGB do take enterprise size into account:

Accounting Obligation (Rechnungslegungspflicht): Regulated by § 189 UGB and § 221 UGB, this obligation often depends on turnover thresholds.
Obligation to Register in the Commercial Register (Pflicht zur Eintragung ins Firmenbuch): Specified in § 8 Abs 1 UGB, this can also be tied to size criteria.

Freelancers (Freiberufler)

Traditionally, freelancers such as doctors, lawyers, and tax advisors were not necessarily considered entrepreneurs, as the HGB linked entrepreneurship to commercial activity. Under the UGB, freelancers become entrepreneurs if their professional activity is carried out within a legal form explicitly listed in § 2 UGB (e.g., as a GmbH). Freelancers who are not entrepreneurs have specific rules:

They have the option to "opt-in" for the application of Book 1 UGB (§ 4 Abs 2 UGB).
Book 3 UGB (Accounting) does not apply to them (§ 189 Abs 4 UGB).
Book 4 UGB (Company-related Transactions) is applicable to them.

Case Study Example: Football Club as Entrepreneur

A football club (FC) organizes weekly tournaments, selling snacks, drinks, and club merchandise for a fee. It orders 100 white T-shirts with a team photo from Happy Copy Shop GmbH, but receives pink T-shirts. The question arises whether the club is an entrepreneur and how the legal situation should be assessed. If the club offers food and drinks for voluntary donations instead of a fee, this changes the assessment of its entrepreneurial activity.

Case Study Example: X-GmbH and Enterprise Size

X-GmbH operates nationwide, supporting young people in job searches free of charge, funded solely by donations and subsidies. The question is whether the UGB applies to X-GmbH, and where enterprise size plays a role in the UGB. This highlights the distinction between profit-oriented commercial activity and non-profit activities, and how legal form can influence entrepreneurial status.

Company Name (Firma)

The company name (Firma) is regulated in §§ 17 – 37 UGB. It is defined as the name under which an entrepreneur conducts their business and signs documents (§ 17 Abs 1 UGB). The primary functions of a company name are to distinguish legal entities and to inform the public about the person or ownership of the enterprise. Crucially, the company name identifies the entrepreneur, not the enterprise itself.

Company Name vs. Brand (Marke)

Unlike a brand, which protects goods and services and can be transferred independently, a company name cannot be sold without the enterprise for which it is used (§ 23 UGB). Both a company name and a brand possess economic value; the value of a company name is often referred to as "goodwill" or "Ruf der Firma" (reputation of the company).

Types of Company Names

Personenfirma (Personal Company Name): Consists of the civil name of the sole proprietor or a partner.
Sachfirma (Factual Company Name): Derived from the object or nature of the enterprise's business.
Fantasiefirma (Fantasy Company Name): An invented word or a common word that has no direct connection to the enterprise's business.
Gemischte Firma (Mixed Company Name): A combination, for example, of a partner's name and the enterprise's business object.

Formation and Restrictions of Company Names

While the UGB has liberalized the formation of company names compared to the former HGB, it still mandates the inclusion of legal form suffixes (e.g., GmbH, AG) as per § 19 UGB, § 5 GmbHG, § 4 GenG, and § 2 PSG (for private foundations, which use a legal form suffix rather than a company name). Beyond these, § 18 UGB imposes further restrictions:

Identification Function (Kennzeichnungsfunktion): The company name must be suitable for identifying the enterprise.
Distinctiveness Function (Unterscheidungsfunktion): It must possess distinctiveness to differentiate it from other companies.
Truthfulness (Firmenwahrheit): It must not contain any misleading information or cause confusion.

Furthermore, certain terms like "Kreditinstitut" (credit institution) or "Bank" can only be used by enterprises holding the appropriate concessions, as stipulated by laws like § 94 BWG (Banking Act).

Principles of Company Name Law

The following principles guide the use and regulation of company names:

Company Name Truthfulness (Firmenwahrheit): The name must not be misleading or create confusion.
Company Name Continuity (Firmenkontinuität): An existing company name can generally be continued, preserving its "goodwill."
Company Name Unity (Firmeneinheit): Only one company name is permitted for a single enterprise.
Company Name Exclusivity (Firmenausschließlichkeit): Every new company name must be clearly distinguishable from existing ones in the same location.
Company Name Publicity (Firmenöffentlichkeit): The company name and any changes must be registered in the commercial register.

Protection of the Company Name

The company name enjoys both private and public law protection:

Private Law Protection (§ 37 UGB): Unauthorized use of a company name by another party (e.g., on business stationery or in advertising) can be prohibited, and the infringing party may be liable for damages. Additional protections include:
- Claims for injunction, removal, and damages under § 43 ABGB (name protection).
- Claims for injunction, removal, and damages under § 9 UWG (protection against confusion).
- Cancellation claims under § 32 MSchG (trademark protection).
Public Law Protection: Unauthorized use of a company name can lead to administrative penalties, such as fines up to € 3,600 (and potentially more) under § 24 FBG. Furthermore, an inadmissible entry in the commercial register can be deleted ex officio by the commercial register court under § 30 Abs 2 UGB.

Commercial Register (Firmenbuch)

The Commercial Register (Firmenbuch) is a public register maintained by the courts, designed to disclose important facts about enterprises for business transactions. Its legal basis is found in §§ 7 – 16 UGB, the FBG (Firmenbuchgesetz), and the relevant ordinances (VO zum FB).

Competence and Management

Substantive Competence (Sachliche Zuständigkeit): Courts of first instance that handle commercial matters, such as the Landesgerichte (Regional Courts) and the Handelsgericht Wien (Commercial Court Vienna).
Local Competence (Örtliche Zuständigkeit): Determined by the seat of the enterprise.
Single Judge Competence (Einzelrichterkompetenz): Decisions are made by a single judge, not a panel.

Structure of the Commercial Register

The Commercial Register is structured similarly to the land register, comprising:

Hauptbuch (Main Register): Contains all entries related to the enterprise.
Urkundensammlung (Collection of Documents): Stores the documents upon which the entries in the main register are based.

Both the main register and the collection of documents are stored in a database (§ 29 FBG). Since September 2005, all commercial register courts have converted their document collections to electronic databases, enhancing accessibility and efficiency.

Obligation to Register (Eintragungspflicht)

Generally, entrepreneurs are obliged to register in the commercial register. However, there are exceptions, such as non-entrepreneurial OGs. Legal entities that use a company name are also generally required to register, with exceptions like private foundations, whose names are not considered company names. Associations (Vereine) are not registered in the commercial register but in the separate Vereinsregister (Associations Register).

The UGB distinguishes between:

Mandatory Facts (eintragungspflichtige Tatsachen): These facts *must* be registered.
Registrable Facts (eintragungsfähige Tatsachen): These facts *can* be registered.

Furthermore, entries are categorized into general and special entries (§§ 3 ff FBG). General entries apply regardless of the legal form, while special entries are specific to certain legal forms and are noted in addition to the general entries.

The majority of facts are mandatory for registration. Non-compliance with registration obligations can be enforced through fines of up to € 3,600, which can be repeatedly imposed. Decisions on fines are also published (§ 24 FBG). §§ 30 ff UGB also mandate the registration of changes to existing facts (e.g., company name, seat) to ensure the register remains current and reflects the actual legal situation.

What is Registered in the Commercial Register?

General entries (§ 3 FBG) include:

The company name (Firma)
The legal form (Rechtsform)
The seat (Sitz) of the enterprise
A brief description of the business purpose (Geschäftszweigs)
For sole proprietors, their name and date of birth; for other legal entities, the names and dates of birth of authorized representatives (including the start and type of their authorization)
Names and dates of birth of procurists (including the start and type of their Prokura)
Insolvency-related restrictions on disposal (e.g., the opening of insolvency proceedings)

Special entries (§§ 4 ff FBG) include, for GmbHs and AGs:

The amount of share capital (Stammkapital) or nominal capital (Grundkapital)
Names and dates of birth of supervisory board members
Judgments that declare resolutions of general meetings or shareholders' meetings null and void

Publicity of the Commercial Register (Öffentlichkeit des Firmenbuchs)

The commercial register is public, meaning anyone can inspect both the main register and the collection of documents (§ 9 Abs 1 UGB) and request extracts (§ 9 Abs 2 UGB). All entries are also publicly announced ex officio. This announcement occurs in the Ediktsdatei (www.edikte.justiz.gv.at) and the Amtsblatt zur Wiener Zeitung (§ 10 Abs 1 UGB), now primarily on the Elektronische Verlautbarungs- und Informationsplattform des Bundes (EVI) (§ 6 WZEVI-Gesetz).

All facts entered in the commercial register are considered known, leading to two key publicity effects:

Positive Publicity Effect (§ 15 Abs 2 UGB): Protects the person obliged to register. If a fact is registered and published, a third party must generally accept it as true. An exception is a 15-day grace period for legal acts performed shortly after publication, during which a third party can prove they neither knew nor should have known the fact.
Negative Publicity Effect (§ 15 Abs 1 UGB): Protects third parties who rely on the absence of an entry. As long as a fact that should have been registered is not entered and published, it cannot be invoked against a third party, unless the third party had actual knowledge of it.

Positive Publicity for Originally Incorrect Entries (§ 15 Abs 3 UGB): This provision addresses situations where an incorrect entry was made. If someone causes an incorrect entry or, being aware of its inaccuracy, fails to have it deleted, they must allow the incorrect entry to be invoked against them in business transactions. This applies unless they can prove that the third party did not rely on the entry or knew, or was grossly negligent in not knowing, its inaccuracy. This principle is known as Rechtsscheinhaftung (liability based on appearance of law).

Case Study Examples: Commercial Register

The statement "Every legal entity registered in the commercial register is an entrepreneur" requires critical assessment, considering the different types of entrepreneurs and exceptions.
A's request to inspect the articles of association of XY-GmbH out of curiosity is generally possible due to the public nature of the commercial register.
Schlampig GmbH's failure to submit annual financial statements despite repeated requests from the commercial register court would lead to enforcement measures, potentially including fines and ex officio deletion.
A silent partnership is a purely internal partnership and is generally not registered in the commercial register.

Auxiliary Persons of the Entrepreneur (Hilfspersonen des Unternehmers)

The general private law provides for representation, but the legislator found it necessary to create special rules for business transactions to better suit their dynamic nature. These special rules apply to various auxiliary persons, categorized as non-independent and independent.

Non-Independent Auxiliary Persons (Unselbständige HP)

This category includes individuals who act on behalf of the entrepreneur but are typically employees or have a more limited scope of authority.

Procurist (Prokurist)

The Prokura is a special business law power of attorney established by legal transaction. It authorizes the procurist to undertake all judicial and extrajudicial transactions and legal acts that the operation of an enterprise entails. It is regulated in §§ 48 ff UGB.

Essential Characteristics:

A procurist is a representative appointed by legal transaction.
They act in the name and for the account of the entrepreneur.
The power of representation is legally defined and cannot be restricted externally.

Granting of Prokura:

Requires an explicit declaration of intent that must be received by the procurist (not tacitly).
Does not require the procurist's consent.
Creates a legal "can" (Können) in external relations and a legal "may" (Dürfen) in internal relations.
Can only be granted by the entrepreneur registered in the commercial register or their legal representative.
The procurist must be a legally competent natural person.

Scope of Prokura (§ 49 UGB):

Legally defined and generally unlimited.
It is independent of the type of legal transaction, covering typical, ordinary, extraordinary, or regular business transactions.

Limits of Prokura:

Applies to external relations.
Does not extend to "Prinzipalgeschäfte" (principal transactions), such as registering the company name in the commercial register.
Does not cover "Grundlagengeschäfte" (fundamental transactions), like selling the entire enterprise.
Does not include private transactions of the entrepreneur.
According to § 49 Abs 2 UGB, it does not include the power to transfer the Prokura itself (though a procurist can grant an authorized agency).

Further Limits:

Gesamtprokura (Joint Prokura): Requires the procurist to act jointly with another person. However, each procurist is individually authorized for passive representation (receiving declarations).
Filialprokura (Branch Prokura): Can be granted for one or more branches, provided they operate under their own company name.

Signature (Zeichnung): When signing, the procurist adds their name and an indication of the Prokura (e.g., "per procura," "ppa," "als Prokurist") to the company name. The disclosure of the representation relationship is crucial. In cases of doubt, the transaction is considered a private transaction of the procurist.

Termination of Prokura:

Freely revocable by the grantor without needing a reason.
Can be terminated by the procurist.
Ends with the death or loss of legal capacity of the procurist.
Ends with the bankruptcy of the entrepreneur.
Ends with the merger of companies.

The termination of Prokura is a mandatory fact for registration in the commercial register and immediately terminates the power of representation. However, due to the publicity effect of the commercial register, if the termination is not registered, the Prokura remains valid towards third parties acting in good faith.

Case Study Examples: Procurist

Understanding the essential characteristics and function of Prokura, and the distinction between legal transaction-based and organ-based representation.
A case where an employee H falsely grants Prokura to P to appear as an entrepreneur. If P concludes a contract with V, and H later refuses to pay, H cannot claim P was not his procurist if V acted in good faith, due to the appearance of law.
A procurist P, whose employment contract requires consent for transactions over € 5,000, concludes such a transaction without consent. The legal transaction with the third party is generally valid because the Prokura's scope is legally defined and cannot be restricted externally.

Authorized Agent (Handlungsbevollmächtigter)

The Handlungsvollmacht (HVM) is a weaker form of representation in company law compared to Prokura. It refers to any power of attorney granted by an entrepreneur within their business operations that is not Prokura. It is regulated in §§ 54 ff UGB. There are no formal requirements for granting an HVM. The grantor can be the entrepreneur or a procurist.

Scope of Handlungsvollmacht:

Primarily determined by the grantor.
Types of HVM (§ 54 UGB):
- General-HVM: Extends to the entire business operations of the specific enterprise.
- Art-HVM: Authorizes only a specific type of transactions (e.g., purchase and sale transactions not exceeding a certain amount).
- Einzel-HVM: Granted only for a specific transaction.
Unlike Prokura, restrictions on HVM are effective against third parties if they knew or should have known about them.

Signature: The authorized agent adds their signature to the company name with an indication of the representation (e.g., "in Vollmacht," "i.V.," "i.A."). It is crucial not to confuse HVM with Prokura. In cases of doubt, the transaction is considered a private transaction of the authorized agent.

Termination: Similar to Prokura, HVM is freely revocable by the grantor without needing a reason. It also terminates upon termination by the authorized agent, death or loss of legal capacity of the authorized agent, bankruptcy of the entrepreneur, or merger of companies.

Case Study Example: Authorized Agent

F, a branch manager of a jewelry store, has independent purchasing authority according to his contract and has handled purchasing for years. If the owner I disagrees with a price F negotiated with a supplier L for designer watches, the legal transaction is likely valid if F acted within the scope of his HVM, especially if the supplier was unaware of any internal restrictions.

Summary Comparison: Prokura vs. Handlungsvollmacht

A comparative overview highlights the key differences:

Feature	Prokura	Handlungsvollmacht
Entrepreneurial Status of Represented	Only registered entrepreneur	All entrepreneurs
Authorized to Grant	Only entrepreneur	Entrepreneur, procurist, or authorized agent
Form of Granting	Explicit declaration	Explicit or conclusive declaration
Commercial Register Entry	Mandatory fact	Not registrable
Scope	All transactions related to enterprise operation	Individual, specific, or all transactions related to ordinary enterprise operation
External Restrictability	Not possible	Possible
Transferability	Not possible	Possible with consent of represented

Excursion: Acting Without Authority (Handeln ohne Vertretungsmacht)

This situation is exclusively governed by the ABGB (§ 1019 ABGB). A person who acts in the name of another without proper authority (Prokura, HVM) is called a falsus procurator (sham representative). This can occur in two constellations:

No Prokura/HVM was granted at all.
The granted Prokura/HVM was exceeded.

The legal consequences are that the contract is concluded between the representative and the third party, and the third party may have a claim for damages against the representative.

Independent Auxiliary Persons (Selbständige HP)

This category includes auxiliary persons who operate independently in their business dealings.

Commission Agent (Kommissionär)

A commission agent buys or sells goods or securities for the account of another (the principal or Kommittent) but in their own name. They receive a commission for this service. This is regulated in §§ 383 ff UGB.

Types of Commission Transactions:

Purchase commission (Einkaufskommission)
Sales commission (Verkaufskommission)
Securities commission (Effektenkommission)
Occasional commission (Gelegenheitskommission)

Duties (§ 384 UGB):

To act with the diligence of an ordinary entrepreneur.
To safeguard the interests of the principal.
To follow the principal's instructions. If a commission agent disregards a price limit, the principal must immediately declare non-acceptance of the transaction; otherwise, the deviation is deemed approved.
To be responsible for the loss and damage of the commission goods.

Claims:

Claim for Commission (Provisionsanspruch): Arises if the transaction was executed.
Reimbursement of Expenses (Aufwandersatz): For expenses incurred by the commission agent for the purpose of execution that were necessary under the circumstances (e.g., storage, transport, postage, telephone charges).

Commercial Agent (Handelsvertreter)

A commercial agent is continuously entrusted by an entrepreneur with mediating or concluding transactions in the name and for the account of the entrepreneur. They carry out this activity independently and commercially, as defined by the HandelsvertreterG (Commercial Agents Act). Commercial agents are considered entrepreneurs under § 1 UGB.

Duties:

Main Duty: To safeguard the entrepreneur's interests with the diligence of an ordinary entrepreneur (mandatory law).
To strive for the conclusion of business.
To inform the entrepreneur about business conclusions.
Prohibition of accepting rewards from third parties (e.g., if a third party benefits from the non-conclusion of a transaction).

Rights & Claims:

Right to Support: From the entrepreneur (e.g., necessary information, warnings about business reversals).
Claim for Commission (Provisionsanspruch): For every transaction concluded through their activity.
Reimbursement of Expenses (Auslagenersatz): Not for general office expenses, but for costs related to permanent employees.
Compensation Claim (Ausgleichsanspruch) after Contract Termination: For introducing new customers or significantly expanding business relationships.

Broker (Makler)

A broker is someone who, based on a private law agreement, handles transactions with a third party for a client, without being continuously entrusted with it (§ 1 MaklerG - Brokers Act).

Essential Characteristics:

A broker can be any natural or legal person.
They act for another person.
They receive individual assignments (no continuous contractual relationship).
They mediate the conclusion of contracts.
They receive a closing commission based on the success principle.

Franchise Agreement (Franchisevertrag)

A franchise agreement involves mutual obligations:

Franchisor's Obligations (Franchisegeber): Granting usage rights to intellectual property (e.g., trademarks) and providing know-how.
Franchisee's Obligations (Franchisenehmer): Operating in their own name and for their own account, distributing contractually designated products ("branded goods") according to the franchisor's specifications, and paying a fee ("franchise fee") to the franchisor.

Company-related Transactions (Unternehmensbezogene Geschäfte)

Company-related transactions are defined as all transactions of an entrepreneur that belong to the operation of their enterprise (§ 343 Abs 2 UGB). The determination of whether a transaction belongs to the enterprise is made objectively, based on common commercial practice, and as extensively as possible to protect business traffic. For enterprises established by legal form (§ 2 UGB) and public legal entities, all their transactions are always considered company-related.

Unilateral and Bilateral Company-related Transactions

A crucial distinction is made between:

Unilateral Company-related Transaction (einseitig unternehmensbezogenes Geschäft): A transaction that belongs to the business operations of only one contracting party, but not the other.
Bilateral Company-related Transaction (zweiseitig unternehmensbezogenes Geschäft): A transaction where both parties are entrepreneurs, and the transaction belongs to the business operations of both.

This distinction is important because not all provisions of Book 4 UGB apply equally to both types of transactions.

Specific Rules for Company-related Transactions

Presumption of Remuneration: For the non-entrepreneur who is a contracting party in a unilateral company-related transaction, the presumption of remuneration under § 354 UGB applies, as per § 345 UGB.
Joint and Several Liability (Solidarschuldverhältnis): While § 889 ABGB generally presumes a partial liability relationship (Teilschuldverhältnis) for divisible obligations undertaken jointly by multiple persons, § 348 UGB establishes the opposite rule for entrepreneurs: in case of doubt, a joint and several liability relationship arises when multiple entrepreneurs jointly undertake a divisible obligation.
Damages for Lost Profit: Unlike §§ 1323, 1324 ABGB, which only compensate for positive damage in cases of slight negligence and lost profit only for gross negligence or intentional acts, § 349 UGB stipulates that in company-related transactions, the damages to be compensated always include lost profit, even in cases of slight negligence.
Exclusion of Laesio Enormis: According to § 351 UGB, the application of § 934 ABGB (laesio enormis - excessive lesion) can be excluded in company-related transactions, either by individual contract or in general terms and conditions (AGB). This differs from § 935 Satz 1 ABGB, which generally prohibits such exclusion.

Purchase of Goods (Warenkauf)

The purchase of goods refers to the acquisition of movable tangible things. Key legal consequences in this context relate to default:

Creditor's Default (Gläubigerverzug / Annahmeverzug): Occurs when the debtor is willing to perform, but the creditor does not accept the performance. Under § 1425 ABGB, the debtor can deposit the performance with the court. Additionally, § 373 UGB allows for deposit in a public warehouse or a self-help sale.
Debtor's Default (Schuldnerverzug / Leistungsverzug): Occurs when the debtor fails to perform their owed service when due. Possible legal consequences include withdrawal from the contract (after a grace period), accrual of default interest (for monetary debts), and a claim for damages.

If a debtor is in default, the creditor can insist on contractual performance or withdraw from the contract. To give the debtor a final chance to perform, a reasonable grace period must be set with the declaration of withdrawal (§ 918 ABGB). The contract is terminated only after the fruitless expiry of this grace period (exception: Fixgeschäft, cf. § 919 ABGB). If the debtor is at fault for non-performance, they are also liable for damages, with the amount of damages in company-related transactions being a specific consideration.

Default Interest (Verzugszinsen): If a debtor is in default with a monetary claim, default interest accrues. The rate depends on whether it's contractual (agreed upon, often in GTC) or statutory. Under ABGB, statutory default interest is 4% p.a. (§ 1000 iVm § 1333 ABGB). Under UGB, if the default is culpable, it's 4% p.a. OR the base interest rate + 9.2% p.a. (§ 456 UGB).

Duty to Examine and Give Notice of Defects (Untersuchungs- und Rügeobliegenheit)

In company-related purchases, the buyer has a duty to examine the goods and give notice of defects. Defects that the buyer discovered or should have discovered during proper business operations after delivery must be reported to the seller within a reasonable period. Failure to do so results in the loss of warranty claims and claims for damages due to the defect.

The inspection of goods is a prerequisite for the notice of defects. These are "duties" (Obliegenheiten), not strict "obligations" (Verbindlichkeiten); failure to comply leads to loss of rights.
§ 377 UGB refers to "proper business operations" for determining a reasonable period for inspection. Generally, goods should be inspected immediately upon delivery.
A presumption of approval (Genehmigungsfiktion) exists for untimely notice of defects, meaning "everything is in order" (§ 377 Abs 2 and 3 UGB).
The notice of defects can be given informally, but for evidentiary purposes, a registered letter is recommended.

The legal consequence of a late or omitted notice of defects is that the goods are deemed approved. The buyer loses all rights under ABGB arising from a defective delivery, including warranty claims (§§ 922 ff ABGB), claims for damages due to the defect itself (§ 933a ABGB), and claims based on error (§§ 871 f ABGB).

Case Study Examples: Company-related Transactions

A and B, both entrepreneurs, contract for Russian caviar. Due to sanctions, delivery is impossible. If A's employee M spoils A's existing caviar stock, B's claim for damages against A would include lost profit due to § 349 UGB.
D, a food retailer, receives hazelnut slices from C. D delays inspection for a month, then finds them spoiled. D's failure to inspect and give notice of defects within a reasonable time (immediately upon delivery, as per § 377 UGB) means the goods are deemed approved, and D loses warranty and damage claims.
E, a coffee plantation owner, agrees to deliver coffee to F. F refuses acceptance. E can sell the coffee to Z via self-help sale after warning F, and claim any difference in price as damages from F.

Corporate Law (Gesellschaftsrecht)

Corporate law is a branch of private law, governing the relationships among partners, between partners and the company, and the company's external legal relationships. The GesbR (Gesellschaft bürgerlichen Rechts - Civil Law Partnership) is regulated in the ABGB, highlighting its private law nature. The field is significantly influenced by European law, particularly concerning corporations (Kapitalgesellschaften) like the Aktiengesellschaft (AG), due to their cross-border activities and capital market relevance (RL 2007/36/EG).

Concept of a Company (Gesellschaft)

A company is a legal community founded by a legal transaction involving at least two persons, aiming to achieve a specific common purpose through organized cooperation. Individuals wishing to form a company must choose from a closed list of legal forms provided by the legislator (the *numerus clausus* of legal forms).

Private Foundations (Privatstiftungen)

A private foundation is not a company and has no partners. It is an asset dedicated by a founder, possessing legal personality (bearer of rights and obligations). Like corporations, private foundations are established by registration in the commercial register and must have a minimum dedicated asset value of € 70,000.

Classification of Companies

Companies can be classified by various criteria, with the most practical distinction being between:

Personengesellschaft (Partnership): Characterized by the personal involvement of partners and often unlimited liability.
Kapitalgesellschaft (Corporation): Characterized by capital contributions and limited liability for partners.

Another important distinction is between Innen- (internal) and Außengesellschaft (external), referring to whether the company acts externally as a legal entity.

Partnerships (Personengesellschaften)

Key partnership forms include:

Gesellschaft bürgerlichen Rechts (GesbR - Civil Law Partnership)
Offene Gesellschaft (OG - General Partnership)
Kommanditgesellschaft (KG - Limited Partnership)
Stille Gesellschaft (Silent Partnership)

Civil Law Partnership (Gesellschaft bürgerlichen Rechts - GesbR)

The GesbR is regulated in §§ 1175 – 1216e ABGB. Historically, it was the only partnership form available in the early 19th century and served as the foundation for later legal forms. A GesbR has no legal personality; it cannot sue or be sued as a company. It can be a purely internal partnership (Innengesellschaft) or an external one (Außengesellschaft), but it is not registered in the commercial register (§ 2 FBG).

The significance of GesbR has diminished due to § 8 Abs 3 UGB, which mandates registration as an OG or KG if several persons operate an enterprise in the form of a GesbR and exceed the turnover threshold of § 189 UGB (€ 700,000 annual turnover for accounting obligations). However, it remains relevant for specific structures like ARGEs (consortia), especially in construction.

For company debts, the entire company assets of a GesbR are liable. If insufficient, partners are solidarisch (jointly and severally) liable with their private assets. This solidary liability was introduced in 2015, replacing the previous proportional liability. Recent reforms have "modernized" GesbR law, clarifying aspects of management, representation, and liability, often aligning with OG law. A proposed amendment to lower the § 8 Abs 3 UGB threshold to € 500,000 was not realized.

General Partnership (Offene Gesellschaft - OG)

Since 1.1.2007, the term "Offene Gesellschaft" (OG) replaced "Offene Handelsgesellschaft" (OHG) and also encompasses "Offene Erwerbsgesellschaften" (OEG). The OG is regulated in §§ 105 – 160 UGB. It possesses its own legal personality, allowing it to acquire rights, incur liabilities, sue and be sued under its company name, and be registered in the land register and subject to bankruptcy. The OG cannot be a one-person company (§ 105 letzter Satz UGB), but there is no maximum number of partners, though the number is usually small due to the necessary trust relationship.

The OG now has Zweckoffenheit (openness of purpose), meaning it can pursue any permitted economic or non-economic (ideal) purpose, unlike the former OHG which was limited to commercial business. An OG is established by a partnership agreement and comes into existence upon registration in the commercial register (§ 123 Abs 1 UGB). Whether an OG is an entrepreneur depends on whether it operates an enterprise under § 1 Abs 2 UGB; it is not an entrepreneur by legal form.

Management (Geschäftsführung): The legal relationship among partners is primarily governed by the partnership agreement; otherwise, §§ 109 – 122 UGB apply (§ 108 UGB). Management is generally understood as any activity aimed at achieving the company's purpose, not affecting its fundamental principles. According to § 114 UGB, all partners are entitled and obliged to manage the company (Selbstorganschaft - self-management). Individual management applies to ordinary business, while extraordinary transactions require a resolution of all partners (§§ 115, 116 UGB). Extraordinary transactions are those exceeding the usual scope, outside the company's object, or unusual in terms of scope or risk. A managing partner must refrain from a measure if another managing partner objects (§ 115 UGB, now also § 1190 Abs 1 ABGB for GesbR). The appointment of a procurist requires the consent of all managing partners (§ 116 Abs 3 UGB), but revocation can be done by any partner authorized to grant it. A partner's management power can be withdrawn by court decision for important reasons (e.g., gross breach of duty, inability).

Profit and Loss Regulation: This involves three steps: profit determination, profit distribution, and the claim to the allocated profit share. Profit is determined by the annual financial statement for OGs subject to accounting obligations, or by other accounting methods for non-accounting OGs (§ 120 UGB). Profits are generally withdrawable, but only if it does not harm the company or if partners decide otherwise (§ 122 UGB). This right of withdrawal is dispositive and can be restricted or extended by the partnership agreement. There is no obligation for partners to make additional contributions (Nachschusspflicht) beyond their original contribution, unless contractually agreed.

Representation (Vertretung): The OG is represented by its partners. Each partner is individually authorized to represent the company, unless the partnership agreement stipulates otherwise (§ 125 Abs 1 UGB). This is evident from the main register (§ 3 Abs 1 Z 8 FBG). Every authorized partner mandatorily has passive individual representation power (§ 125 Abs 2 Satz 3 UGB). The power of representation is comprehensive (§ 126 UGB), extending to administrative authorities, and cannot be restricted externally. Similar to management, a partner's representation power can be withdrawn by court decision for important reasons.

Liability (Haftung): Since the OG has legal personality, it is liable with its entire company assets for its debts. Additionally, the partners are personally, unlimitedly, primarily, directly, and jointly and severally liable with their private assets for the company's debts (§ 128 UGB). Newly joining partners are liable for existing liabilities like old partners, and this liability cannot be restricted towards third parties (§ 130 UGB). A partner leaving an OG is not liable for debts arising after their departure, but remains liable for debts incurred before, if they become due within five years after departure (§ 160 Abs 1 UGB).

Termination: An OG can end due to expiry of time, a unanimous dissolution resolution, opening of bankruptcy proceedings over the company's assets, death of a partner (unless otherwise agreed), opening of bankruptcy proceedings over a partner's assets, termination/judicial decision, or the occurrence of agreed dissolution reasons.

Limited Partnership (Kommanditgesellschaft - KG)

The KG is a variant of the OG, regulated in §§ 161 – 178 UGB. Its key distinction lies in the liability of its partners: some partners, called Kommanditisten (limited partners), have their liability limited to a specific amount ("Haftsumme") towards company creditors. Other partners, called Komplementäre (general partners), are liable without limitation with their private assets, similar to OG partners (§§ 128 ff UGB apply to them). Limited partners are liable personally, primarily, directly, and jointly and severally, but their liability is not unlimited.

Management: Ordinary management is the sole responsibility of the general partners. Limited partners are generally not authorized for ordinary management (§ 164 UGB), though the partnership agreement can grant them management powers. Extraordinary transactions require the consent of all partners, including limited partners. Limited partners have a control right under § 166 UGB due to their limited management involvement.

Representation: A limited partner is excluded from corporate representation of the company (§ 170 UGB). However, this only applies to organ-based representation; limited partners can still be appointed as procurists or authorized agents.

Special Form: GmbH & Co KG: This is a KG where the (regularly sole) general partner is a GmbH. Often, the limited partners are also the sole shareholders of the GmbH. The main motives for this structure are liability limitation and tax advantages.

Silent Partnership (Stille Gesellschaft)

A silent partnership exists when an individual participates in an enterprise operated by another. The silent partner makes a capital contribution and is mandatorily involved in the profit in return. It is regulated in §§ 179 – 188 UGB. The silent partnership is a purely Innengesellschaft (internal partnership), meaning it does not appear externally as a legal entity and cannot be registered in the commercial register (§ 2 FBG). The only external manifestation might be the disclosure of silent partners' contributions (without naming them) in the annex to the annual financial statements of certain corporations or GmbH & Co KGs (§ 238 Abs 1 Z 16 UGB).

Limited Liability Company (Gesellschaft mit beschränkter Haftung - GmbH)

The GmbH is a juristische Person (legal person) with its own legal personality, regulated by the GmbHG. Its members (shareholders) make capital contributions (Stammeinlage) to the company, which form the share capital (Stammkapital). The GmbH is an Außengesellschaft (external company), acting as a bearer of rights and obligations in legal transactions. Generally, only the company itself is liable to its creditors with its entire assets; shareholders are not personally liable, provided they have made their contributions. However, shareholders are subject to a subsidiary liability (Ausfallshaftung) for the non-recoverability of another shareholder's capital contribution (§ 70 GmbHG).

Formation: Each shareholder acquires a share (Geschäftsanteil) linked to a capital contribution. The individual capital contribution must be at least € 70. The total share capital must be at least € 10,000 since 1.1.2024 (previously € 35,000 until 31.12.2023, with founding privileges under § 10b GmbHG old version). The GmbH is established by the articles of association and comes into existence upon registration in the commercial register. Registration requires the conclusion of the articles of association and the appointment of the managing director(s).

Organs of the GmbH: The GmbH mandatorily has two organs:

Geschäftsführer (Managing Director(s)): The company must have one or more managing directors (§ 15 Abs 1 GmbHG), appointed by shareholder resolution (not waivable). Shareholders can be managing directors (geschäftsführende Gesellschafter). Shareholders can issue instructions to managing directors (§ 20 Abs 1 GmbHG), and certain matters require shareholder resolution (§ 35 Abs 1 GmbHG). If multiple managing directors are appointed, joint management (Gesamtgeschäftsführung) applies in case of doubt (§ 21 Abs 1 GmbHG), with exceptions for danger in delay. Contractual arrangements for majority voting, division of responsibilities, or individual management are possible. Management and representation typically go hand in hand.
Generalversammlung (General Meeting): This is the supreme decision-making body, formed by all shareholders. It is responsible for all company matters not assigned to other organs by law or articles of association. It must convene at least once a year (§ 36 GmbHG). A general meeting is quorate if the legally or contractually specified portion of the share capital (e.g., 10% under § 38 Abs 6 GmbHG) is present. If not, a second meeting is convened, which is then quorate regardless of represented capital. Voting rights are generally based on the capital contribution (1 vote per € 10), but articles of association can stipulate otherwise, ensuring each shareholder has at least one vote.
Aufsichtsrat (Supervisory Board): A supervisory board is mandatory under certain conditions (§ 29 GmbHG), such as when share capital exceeds € 70,000 and shareholders exceed 50, or average employees exceed 300, or if it's a controlling company in a group with over 300 employees, or a personally liable partner in a KG with over 300 employees. It consists of at least three capital representatives (§ 30 GmbHG), with works council representation possible (§ 110 ArbVG). The supervisory board supervises management (§ 30j Abs 1 GmbHG), can convene general meetings, and must consent to certain transactions.

Change of Shareholders (Gesellschafterwechsel): Shares in a GmbH are transferable and inheritable. Transfer requires a notarial deed (§ 76 Abs 2 GmbHG). The articles of association can require company or other shareholders' consent for a transfer. If consent is required, the court can allow the transfer. The company can prevent a judicially ordered transfer by nominating another shareholder within one month (statutory nomination right; § 77 Satz 3 GmbHG).

Termination: A GmbH can end due to expiry of time, a shareholder resolution (simple majority, notarial deed required), merger, opening of bankruptcy proceedings, administrative order, or ex officio deletion by the commercial register court.

Stock Corporation (Aktiengesellschaft - AG)

The Aktiengesellschaft (AG) is a company with its own legal personality, where shareholders participate with contributions to the share capital divided into shares, without being personally liable for the company's debts. It is a legal person and the corporate form emphasizing capital accumulation. Not every AG is listed on the stock exchange.

Concept of a Share (Aktie): The term "Aktie" has a threefold meaning:

A share in the capital stock (Grundkapital).
Membership in the stock corporation, with associated rights and obligations.
A security in the narrower sense (share certificate).

The AktRÄG 2009 (implementing RL 2007/36/EG) reformed AG law. The GesRÄG 2011 introduced the principle of registered shares (§ 9 AktG), though bearer shares are possible for listed AGs. The type of shares must be stipulated in the articles of association (§ 17 Z 3 AktG).

Formation: The AG is established by the subscription of shares and comes into existence upon registration in the commercial register. The minimum nominal capital is € 70,000. Registration requires submitting the articles of association, contracts for special advantages/contributions in kind, documents on board and supervisory board appointments, the founding/audit report, and any necessary official approvals.

For single-person formations, the registration must indicate this and name the sole shareholder (§ 35 AktG).

Organs of the AG: The AG mandatorily has four organs:

Vorstand (Board): Can consist of one or more persons. The board represents the AG judicially and extrajudicially and manages it under its own responsibility (§ 70 AktG). Board members are appointed by the supervisory board for a maximum of five years, with reappointment possible. Revocation of appointment requires an important reason (§ 75 Abs 4 AktG). Unless otherwise agreed, representation is joint (§ 71 Abs 2 AktG).
Aufsichtsrat (Supervisory Board): Unlike a GmbH, an supervisory board is mandatory for every AG. It consists of at least three capital representatives (§ 86 Abs 1 AktG), with works council representation possible (§ 110 ArbVG). Its duties include appointing and dismissing the board, supervising the board, consenting to certain transactions (§ 95 Abs 5 AktG), convening general meetings if necessary, reviewing and approving financial statements, and handling legal disputes with the board. Incompatibility provisions apply to supervisory board members (§ 86 AktG).
Hauptversammlung (General Meeting): The assembly of shareholders, where shareholders exercise their rights. It must take place in Austria (seat of the company). Unlike a GmbH, it is generally quorate if at least one shareholder or representative with voting rights participates.
- Ordinary General Meeting (ordentliche HV): Held annually to present financial statements, management report, resolve on profit distribution, and discharge the board and supervisory board.
- Extraordinary General Meeting (außerordentliche HV): Convened for other reasons, such as a significant loss of capital.
All shareholders are generally entitled to participate, including holders of non-voting preference shares. The "RECORD DATE" principle (from RL 2007/36/EG, implemented in § 111 AktG) determines shareholder status for participation before the meeting. Every shareholder has a right to information on agenda items if necessary for proper assessment (§ 118 AktG), unless the information is already available on the company's homepage.
Abschlussprüfer (Auditor): Responsible for auditing the company's financial statements.

This comprehensive overview covers the essential aspects of Austrian Business Law, from its general principles and legal sources to the detailed concepts of entrepreneurs, company names, commercial register, auxiliary persons, company-related transactions, and various corporate legal forms.