On February 12, 1996 a company and an entrepreneur concluded an authorized distribution contract according to which the distributor had to distribute cars manufactured by the supplier. The contract also provided that the supplier was entitled, among other things, to review the documents of the distributor and /or terminate the contract in the event of the distributor’s fault to fulfil his financial obligations.
The distributor’s debts had accrued since February 1996. A report drawn up by a supplier’s representative in July 1996 showed that there were high risks in continuing the commercial relationship with the distributor. In September 1996 the supplier prohibited the distributor to continue selling the cars through the existing sale-system, as that system was in breach of the distribution contract. However the supplier did not check whether the distributor complied with that prohibition.
On September 13, 1996 a potential customer concluded an agreement with the distributor according to which he would have paid to the distributor half the price of a car and was to receive the car after a period of 6 months from the date of the agreement. The potential customer, however, never received the car and sued the supplier for the refund of the amount that he had paid to the distributor.
The decision of the Polish Supreme Court confirmed the decisions already issued by the lower courts on the same case.
The Supreme Court deemed the distributor as directly liable for the damage caused. Nevertheless, he also deemed the supplier liable as well. According to Article 430 of the Polish Civil Code “whoever entrusts … the performance of an act to a person…shall be liable for the damage caused by that person in the performance of the act entrusted to him”. For this reason the Court concluded by saying that an entrepreneur distributing products through authorized dealers is obliged, towards the buyers of such product, to check the reliability of the dealer and supervise his/her commercial activity.