The figure of the Sole Manager in the Temporary Union of Companies (UTE’s).
The only legal provision referring to the U.T.E’s organization mode is the requirement of “Single Manager” figure, which is constituted as the single representative entity of the temporary union and, therefore, will have representation powers in the negotiation and procedure areas.
In the applicable legislation, we can find the following references to this figure:
“There shall be a Temporary Union single Manager, with sufficient powers from each and every member to exercise the rights and contract the corresponding obligations. The Temporary Union actions will be carried out through the Manager, appointed for this purpose, stating it in all acts and contracts signed on behalf of the Union” (art. 8 d. of Law 18/1982, of 26 May, on the tax regime of the U.T.E.).
“Employers who join in temporary unions shall be jointly and severally bound and shall appoint a union representative or sole agent with sufficient powers to exercise the rights and fulfil the obligations arising from the contract until its termination, without prejudice of the existence of joint powers that they can grant for collections and payments of the significant amount” (article 69.3 of Law 9/2017, of 8 November, on Public Sector Contracts).
In practice, the Manager figure is usually complemented by a “Management Committee”, which will be the body in charge of planning the direction of the project for which the U.T.E. was created, controlling its execution and designing a concrete work plan. This figure will be composed, unless otherwise indicated, by a representative and an alternate from each of the U.T.E member companies. Thus, if such a Committee exists, the figure of the Single Manager would be relegated, internally, to the decisions taken by this collegiate body.
In any case and irrespective of whether or not its decision-making power is high, the fact remains that a Manager must always be appointed and that s/he must have sufficient power from each and every member of the companies forming the U.T.E., powers which, normally, will be conferred by the By-Laws. There is nothing to prevent the Manager from being required to join forces in the exercise of certain powers, obliging him or her to act jointly with other persons or entities -in fact, it is common in practice for the delegation of powers to carry out large collections and payments-, as long as this specification is expressly and clearly stated in the U.T.E. By-Laws and that the person or persons next to whom it shall act to exercise the designated powers.
By virtue of the foregoing, this figure is presented as a legally authorized person to contract and act on behalf of the U.T.E. at issue, linking its decisions to the U.T.E. itself and, due to its lack of legal personality, to the grouped entities. Its figure would be assimilated to the agent’s figure, and the provisions of the Civil Code for that purpose would apply, except that no member of the U.T.E. could revoke the granting power to its own will, but in any case the procedure specially provided by the By-Laws for the Manager’s dismissal must be followed. Otherwise, the Manager would come to represent a party (which has not revoked power) and not the Union.
The trust which underlies the delegation of these representation powers has a particular importance in view of the fact that the liability of the U.T.E. members will be joint and direct, against third parties, by the acts carried out for the benefit of the common good, without prejudice of the further intern return actions. Consequently, any creditor of the U.T.E. may head against any of the associated companies or entrepreneurs, or against all of them simultaneously, without having to previously head against the assets in the U.T.E’s common fund or, of course, to have exhausted them. This liability is also unlimited, which means that the U.T.E. members will be liable for the debts of the latter with the totality of their available funds (depending on their own corporate regime, if they were legal persons) and not only with those who were agreed in the temporary union. The existence of internal agreements between the U.T.E members that attribute liabilities to only one of them is inoperative and, according to our Supreme Court, in any case will prevent the joint and several liability of the participants towards third parties.
It should be noted, however, that such liability may be preached only in respect of acts and contracts which have been arranged by the person with legal and statutory powers to bind the U.T.E.; this is, the Manager. In addition, two other conditions appear whose existence has to be proved in order for liability to arise by the U.T.E members: (i) that, in the granting act, the Manager would have recorded his status as such; and (ii) that are operations carried out for the benefit of the common project; in this way, this liability regime could not be preached by those acts manifestly carried out for the benefit of one of the U.T.E. members the or the Manager itself.
In any case, the Manager should report back for its acts and actions, and its actions shall be monitored by the higher bodies or, if they are lacking, by the representatives of the U.T.E member companies. In this sense, Judgment 253/2016, of 11 November, of the First Instance Court Nº 3 of Torrent, confirmed on appeal by the Provincial High Court of Valencia in Judgment 238/2017, of 9 June, establishes that a U.T.E. is assimilated to a kind of “internal civil society” which is governed, ex art. 1669 of the Civil Code (Código Civil), by the provisions relating to the “community of goods”, which would equate the UTE manager to a similar figure of a community of goods’ administrator, which in turn, in the absence of specific regulation in the CC, the jurisprudence undertakes that the applicable legal regime, to determine eventual liabilities incurred in the exercise of his is position, is the non-contractual liability from Art. 1902 of the CC.
Legal Area at Devesa & Calvo Abogados