How to claim a debt from a Temporary Business Association?

Temporary Business Associations (TBA) are a common form of business collaboration to carry out specific projects in construction, services, or supplies. However, like any entity, they may incur debts with suppliers or subcontractors. In these cases, the regulations establish that the liability of its members is joint and several towards third parties, which means that the creditor can not only claim from the TBA, but also from each of the companies that comprise it.

What is a TBA?

A TBA is a grouping of entrepreneurs, individuals or legal entities, residing in Spain or abroad, who temporarily associate to carry out a specific activity. Its main characteristics are:

• Limited duration: coincides with the work or service object of the contract, with a maximum of 25 years (or 50 in works with exploitation of public services).

• Exclusive purpose: to carry out a specific work, service, or supply, inside or outside Spain.

• Sole management: it must have a manager with sufficient powers to bind all members on behalf of the TBA.

• Formalization in a public deed, reflecting the contributions, financing of common expenses, and participation in results.

The TBA does not have its own legal personality: it acts through its partners, who directly assume the obligations.

Joint and several liability

One of the key aspects is that the liability of the members of a TBA is not limited to the contributions committed. They are liable with all their personal or business assets.

This means that if the TBA incurs debts —for example, with a subcontractor—, the creditor can demand payment from any of the partners. If one of them assumes the entire debt, they will have the right to later claim the proportional part from the others according to the bylaws.

In addition:

• Internal agreements that seek to limit the external liability of one of the partners are invalid against third parties.

• Joint liability only arises with respect to acts carried out by the sole manager on behalf of the TBA and always when they are operations for the common benefit.

The member companies are also jointly liable to the Tax Administration for the tax obligations arising from the TBA.

Claiming a debt from a TBA implies taking into account that the creditor can address indistinctly the group or any of its members, who are jointly and severally liable. This configuration provides greater security to the third party, but requires the companies that are part of a TBA to exercise extreme caution in the economic and contractual management of the group.