Prohibition of legal transactions with oneself

The purpose of Article 108 of the Civil Code is to prevent legal acts from being performed in situations where there is a conflict of interest between the principal and the agent acting on their own behalf or on behalf of another principal. (P. Machnikowski (ed.), Obligations. General provisions and related provisions of Book I of the Civil Code. Volume I. Commentary, Article 108, Warsaw 2022).

Crucially, where the facts do not fall within the scope of Article 210 (for a limited liability company) or Article 379 (for a public limited company) of the Commercial Companies Code, the problematic issue arises of applying Article 108 of the Civil Code mutatis mutandis via Article 2 of the Commercial Companies Code. There is no possibility of, so to speak, mechanically applying the established prohibition on carrying out transactions ‘with oneself’ in practice. Each case requires examination in the light of the specific facts, and thus, for example,

1. on 12 January 2022, the Supreme Court adopted a resolution in which it ruled in favour of the appropriate application of Article 108 of the Civil Code to a debt assignment agreement concluded between two limited liability companies, in the conclusion of which one of them was represented by a proxy appointed by a member of the single-member management board, who is also the independent proxy of the other company.
2. The Supreme Court ruled against the possibility of performing a legal transaction in a situation where the same natural person is a party to the legal transaction both as an organ of the principal’s attorney, who is a legal person, and as the other party – in their own name and on their own behalf (see the Supreme Court’s judgment of 9 March 1993, I CR 3/93, Lex No. 3899).
3. In its judgment of 24 April 2018, V CSK 425/17, Legalis, the Supreme Court held that Article 108 of the Civil Code may be applied by analogy to legal transactions carried out by a natural person who, as an organ of a legal person, represents both limited liability companies.

As a general rule, the performance of a legal act in contravention of the prohibition under Article 108 of the Civil Code does not render the legal act void, but merely ineffective (in accordance with Article 103 of the Civil Code). To ‘rectify’ such a defective legal act, confirmation of the act by the competent body of the principal(s) is then required if the agent represented both parties. The only exception where the sanction of nullity may apply, in accordance with Article 103 of the Civil Code, is in the case of a unilateral legal act.

Exceptions to the prohibition on entering into transactions with oneself are:

• Consent expressed in the text of the power of attorney or
• No possibility of infringing the principal’s interests