Director liability in offshore contracts: what Said v Butt still teaches us The principle in Said v Butt [1920] 3 KB 497 When can personal liability arise? Practical steps for offshore boards and in-house counsel

Boards of offshore companies often have to make difficult commercial decisions where the contractual consequences are not clear-cut. This can be particularly challenging in structures involving SPVs, holding companies and joint venture vehicles, where contractual obligations may sit with one entity while decisions are taken within a wider group. If a decision later gives rise to a breach of contract claim, can the directors who approved it also be pursued personally?

For boards and in-house counsel, that question matters. If recovery against the contracting entity becomes difficult, a claimant may look beyond the company and examine the conduct of the individuals involved.

The principle in Said v Butt, recently applied in IBM United Kingdom Ltd v LZLABS GmbH [2025] EWHC 532 (TCC) is that a director or other agent who causes a company to breach its contract will not ordinarily be personally liable for inducing that breach, provided they were acting bona fide in the course of their duties and within the scope of their authority.

In IBM, the Court summarised the rule as:

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The effect of the rule in Said v Butt is that a director of a company who caused his company to act in breach of contract cannot be found to have committed the tort of inducing a breach of a contract to which the company is party, provided that the director acted bona fide in the course of his duties as a director.

The Court went on to explain that the good faith enquiry is concerned with the proper performance of the director's duties and functions.

The UK Supreme Court also considered the principle in Lifestyle Equities CV v Ahmed [2024] UKSC 17. The Court emphasised that the normal position is that, where an agent causes its principal to break a contract, liability rests with the principal rather than the agent. If a contracting party wants direct recourse against the other party's agent, "it must ordinarily bargain for it".

The use of an SPV, holding company or other ring-fenced entity does not, without more, make its directors guarantors of the company's contractual liabilities.

However, Said v Butt is not a general immunity from personal liability. As Lifestyle Equities makes clear, the principle is concerned with procuring a company's breach of contract. It does not protect a director from liability for an independent tort which they personally commit or participate in.

The limits of the principle were considered in Antuzis v DJ Houghton Catching Services Ltd [2019] EWHC 843 (QB). The Court made clear that the focus of the bona fide enquiry is the director's conduct towards the company, rather than towards the contractual counterparty.

The directors in Antuzis had procured systematic breaches of workers' contractual and statutory rights. Their conduct could not properly be characterised as bona fide conduct in the company's interests, and they were held personally liable.

The BVI statutory position starts from a similar premise. Section 30 of the BVI Business Companies Act, Revised Edition 2020 provides that a director is not personally liable for the company's debts, obligations or defaults merely because they hold office, although liability may arise from the director's own conduct or under specific statutory provisions.

Those duties include acting honestly, in good faith and for a proper purpose, and exercising the required standard of care, diligence and skill. In group structures, directors should also be clear about the particular company whose interests they are considering. A decision that appears sensible at group level will not necessarily be appropriate for the individual contracting entity.

Where a company is in financial difficulty, directors also need to keep creditor interests in mind. Separate insolvency-related liabilities, including misfeasance and insolvent trading, may also come into play. Falling within the Said v Butt principle does not, however, resolve every question of personal liability. Separate exposure may arise ...