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Case 2 - Investment duties

Published online by Cambridge University Press:  22 August 2009

By
Georg Graf ,
Monika Hinteregger ,
Manuela Weissenbacher ,
Benoit Allemeersch ,
Alain Verbeke ,
Merete Clausen ,
Jarmo Tuomisto ,
François Barrière ,
Stefan Grundmann  and
George K. Lekkas
...Show all authors
Edited by
Michele Graziadei ,
Ugo Mattei  and
Lionel Smith
Georg Graf
Affiliation:
Professor of Private Law, University of Salzburg, Austria
Monika Hinteregger
Affiliation:
Professor of Civil Law, University of Graz, Austria
Manuela Weissenbacher
Affiliation:
Assistant to the Chair of Civil Law, University of Graz, Austria
Benoit Allemeersch
Affiliation:
Doctoral researcher Catholic, University of Leuven, Belgium; Attorney-at-Law bar of Brussels, Belgium
Alain Verbeke
Affiliation:
Professor of Private and Comparative Law, Catholic University of Leuven, Belgium
Merete Clausen
Affiliation:
Attorney-at-Law, Denmark
Jarmo Tuomisto
Affiliation:
Professor of Civil Law, University of Turku, Finland
François Barrière
Affiliation:
Junior Professor, University of Paris II, France
Stefan Grundmann
Affiliation:
Professor of Private Law European and International Private and Business Law, Humboldt University, Berlin, Germany
George K. Lekkas
Affiliation:
Attorney-at-Law, Athens, Greece
Niamh Moloney
Affiliation:
Professor of Capital Markets Law, University of Nottingham, England
Eoin O'Dell
Affiliation:
Fellow, Trinity College, Dublin, Ireland
Antonio Gambaro
Affiliation:
Professor of Comparative Private Law, State University of Milan, Italy
Michele Graziadei
Affiliation:
Professor of Comparative Private Law, University of Eastern Piedmont, Italy
Steve Jacoby
Affiliation:
Partner Kremer Associés & Clifford Chance; Lecturer, University of Luxembourg
Marielle Koppenol-Laforce
Affiliation:
Attorney-at-Law Houthoff Buruma, NV, Amsterdam the Netherlands
Pedro Pais de Vasconcelos
Affiliation:
Professor, University of Lisbon, Portugal
George L. Gretton
Affiliation:
Lord President Reid Professor of Law, University of Edinburgh, Scotland
Sergio Cámara Lapuente
Affiliation:
Professor of Civil Law, University of La Rioja, Spain
Cristina González Beilfuss
Affiliation:
Professor of Private International Law, University of Barcelona, Spain
Torgny Håstad
Affiliation:
Justice of the Swedish Supreme Court and formerly Professor of Private Law, Uppsala University, Sweden
Michele Graziadei
Affiliation:
Università degli Studi del Piemonte Orientale Amedeo Avogadro
Ugo Mattei
Affiliation:
Università degli Studi di Torino, Italy
Lionel Smith
Affiliation:
McGill University, Montréal
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Summary

Case

John is a professional investment manager. Sam decides to make use of John's services after learning that he is a skilful manager. In John's office, Sam signs a document granting John full investment powers over a capital value of €2,000,000. The terms of the document indicate that John's powers are to be irrevocable for the term of five years. These powers enable John, inter alia, to buy and sell any kind of asset, including immovables. The document also provides that John will credit all the income produced by the managed capital to Sam's bank account. It stipulates that John will be entitled to deduct an annual fee, calculated as a percentage of the capital value of the managed assets. Sam then writes a cheque payable to John for €2,000,000.

Alternative 1

In the second year of their relationship, Sam learns that John has made very risky investments that have done poorly. As a result, he has lost 50 per cent of the value of the capital. Does Sam have any legal recourse?

Alternative 2

In the second year of their relationship, Sam learns that John does not use his own judgement to make any of the investment decisions. Instead John relies exclusively on the recommendations in a well-known monthly financial newsletter. Does Sam have any legal recourse?

Discussion

AUSTRIA

Alternative 1

The contract between John and Sam is to be qualified as a contract of mandate in accordance with ss. 1002 ff. ABGB.

Type
Chapter
Information
Commercial Trusts in European Private Law , pp. 218 - 246
Publisher: Cambridge University Press
Print publication year: 2005

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