The Limited Liability Entrepreneur: Different Ways to Break the Synchronisation of Liability

The starting point of this article is the fact that various continental European legislators have broken with the model of synchronisation of liability and influence by not only allowing limited liability as a correlate of limited influence, but also for the purpose of limiting entrepreneurial risk. A quantum leap the starting point of which is the German limited liability company (GmbH) can be found at the end of the nineteenth century. This liability privilege serves to motivate larger sections of society to engage in entrepreneurial activity, which is desirable from an economic point of view and may be at the expense of non-privileged creditors. Once this synchronisation has been broken, there are no longer any fundamental objections to extending the liability privilege to the operations of a sole trader. This study shows that although the path to the limited liability sole trader has been travelled throughout continental European legal culture, different paths have been taken and travelled at different speeds. This is illustrated by a comparison between Germany/Austria and France.