Bundesgerichtshof (Sixth Civil Senate) 9 November 1993, BGHZ 124, 52, with case note.

This case is first published in the German Law Archive courtesy of:

Translated German Cases and Materials under the direction of Professors P. Schlechtriem, B. Markesinis and S. Lorenz

Translated by Mrs Irene Snook

[Before undergoing an operation which would leave him sterile, the 31 years old plaintiff had some of his sperm frozen in order to have children later.  Through the fault of the university clinic, this sperm was lost.  The plaintiff demands damages from the clinic.  Both lower courts rejected his claim.  The Federal Supreme Court quashed the appeal decision for the following reasons]

According to the Appeal Court, the plaintiff’s general right of personality was not infringed.  The destruction of the sperm deprived him of his liberty to decide whether, how, and when his sperm was to be used for fertilisation; but this freedom was not covered by the general right of personality, which only protects this legal position in principle.  The general right of personality protects personal integrity but not personal activities.

II. These deliberations are legally unsound.
…..
2.  As a result of the negligent destruction of his sperm, the plaintiff’s claim for damages is well founded.

a) According to a controversial but more or less dominant legal opinion, a part of the body separated from it becomes a physical object, with the result that a person’s right to his own body is transformed to a right of ownership in the separate part of his body (references).  In legal literature, some authors are of the opinion (reference) that this result applies to frozen sperm; and the Appeal Court follows this view.  Accordingly, the destruction of the sperm would not amount to a physical injury to which § 847 BGB links a claim for damages for pain and suffering.

The Court holds that this view is too narrow.  This Division has given the concept of physical injury, as expressed in §§ 823(1), 847(1) BGB, a wide meaning.  It considers the right to one’s own body as a legally formulated section of the general right of personality. It also interprets as “physical injury” – expressly mentioned in § 823 I BGB and treated separately from “impairment to health” – every unjustified intrusion of bodily integrity, unless the owner of the right has given his consent (references).  It is not the physical matter as such that is protected by § 823 I BGB but rather a person’s entire area of existence and self-determination, which is materially manifested in the body (references).  The provisions of § 823 I BGB protect the body as the basis of human personality.

In view of modern medical possibilities and in respect of the body as object of the protected right, a person’s right of self-determination, emanating from his right of personality, acquires additional significance.  Medical advances allow the extraction of body parts for later re-implantation.  This applies for instance to transplants of skin or bone parts intended for transplantation to other parts of the same body.  Where, with the consent of the person affected,  parts of a body are taken out in order later on to be re-implanted as a means of preserving or improving bodily functions, the legal opinion that § 823 I BGB comprehensively protects corporeal integrity in order to guarantee a person’s right to self-determination will lead to the following result. In view of the protective purpose of this paragraph, these extracted parts continue to form a functional unity with the remaining body even during their separation from it.  It therefore seems necessary to classify the damage to or destruction of such extracted body parts as a physical injury in the sense of §§ 823 I , 847 BGB.  The result is different where, according to the wishes of the person concerned, the separated parts of his body are not intended to be used or re-integrated at a later stage.  For such cases of final severance, the normal legal consequence applies, i.e. that at the point of separation the severed body parts lose all links to the protected entity of the “body” and become “objects” in the legal sense.  The reason for the latter result lies in the concept that, given every person’s right to self-determination, the body and its now separate parts no longer form a functional unity.  This outcome applies in particular to donated organs which, under the will of the donor, are intended to be implanted into another person, or to blood donated for third persons.  Even in such cases, claims for damages can arise if the donation is used or destroyed in breach of the express or tacit intentions of the donor. For even under these circumstances the right of personality influences the right to ownership in these objects (references) although only under the specific restrictive preconditions developed for cases of injury to the right of personality.

b) On the basis of these considerations, the frozen sperm, which the owner of the right of personality intended to use for future procreation, represents a special case.  On the one hand, the sperm has permanently been separated from the body.  On the other, it is intended to fulfil a bodily function, i.e. that of procreation.  In any case when, as here, the preservation of sperm was meant as a substitute to the lost capability of procreation, this sperm is no less valuable than a woman’s egg cell or other bodily parts in respect of: 1) the corporeal integrity of the owner of the right of personality and of personal self-determination, which is part of it, and 2) due to the importance and its particular potential.  As explained above, even after their separation from the body, the latter are covered by the protection of §§ 823 I and 847 I  BGB.  As with egg cells, taken from the body to be fertilised and re-implanted, the frozen sperm represents for the owner in this particular case, the protected right. For it is his only chance of using his bodily functions in order to sire children to whom he can pass on his genetic material.  In view of the similarity and equal value of both bodily parts: a) for their need to be protected against tortious acts and b) because of the protective purpose of the relevant tort provisions, this equal status must also be manifest in the legal consequences provided by the law of torts.  Even in cases like this, where frozen sperm is not directly covered by the factual text of the tort provisions which outline and determine the protected right of corporeal integrity, those provisions must, nonetheless, at least be applied analogically given the above-described circumstances.  The general right of personality legitimises such extensive and extended legal application of §§ 823 I and 847 I BGB for a person whose right of personality is not differently or less intensely affected than a woman’s right is by destruction of her egg cells, extracted from her body and intended for re-implantation.  Just like the woman in that case, the plaintiff had a claim for damages for pain and suffering based on § 847  I BGB.

3.  (There follow general statements on how to calculate the amount of damages for pain and suffering due and some specific guidelines for this particular case.)

Comment

Under German law, § 847 BGB, claims for compensation for pain and suffering are only admissible in cases of physical injury and deprivation of liberty but not in cases of damage to property.  In order to provide a claim for damages the court, therefore, had to treat certain parts of the body, separated from it, not as objects but rather as remaining parts of that body. Since in this case there was no pecuniary loss, a claim for damage to property would have failed.  The complications that arise from §253 BGB are discussed in greater detail in B. S. Markesinis, The German Law of Obligations, vol. II,  The Law of Torts, 3rd ed. (1998) pp. 25,  66,  380-90.

©1998 University of Oxford. Since 2002: © Translation The University of Oxford and Professor Markesinis 1998. HTML edition © 1998 Gerhard Dannemann.

Bundesgerichtshof (Full Senate for Civil Matters) 9 July 1986, BGHZ 98, 212, with case note.

This case is first published in the German Law Archive courtesy of:

Translated German Cases and Materials under the direction of Professors P. Schlechtriem, B. Markesinis and S. Lorenz

Translated by Mr. Tony Weir, Trinity College, Cambridge

Reasons:

I. In the autumn of 1981, when the well-appointed dwelling of which the plaintiff is owner-occupier was undermined and rendered unstable by the incompetence of the defendant in constructing a row of houses lower down the steep slope on which it was built, the city authorities prohibited its occupation for a period of five weeks. The cost of reconstruction is no longer in issue between the parties, but the plaintiff also claimed DM 3,000 plus interest as compensation for the loss of use of her house, alleging that during this period she and her husband had to stay in a camper on neighbouring land, an allegation which the defendant counters by stating that they used the house every day.

The Landgericht and Oberlandesgericht rejected this part of the plaintiff’s claim, and the plaintiff appeals again.

In agreement with the courts below that even if the plaintiff had entirely lost the use of the house for the period of the prohibition this was not an economic loss but an uncompensable immaterial loss, the Fifth Civil Senate would have dismissed the appeal, but in the interests of uniformity of case law it submitted the following question to the Full Senate for Civil Matters pursuant to 137 of the Law on the Court System (GVG):

1. Does temporary inability to continue using a piece of property, such as a dwelling, as a result of a tortious invasion of one’s ownership constitute a compensable economic loss, even if no extra costs or loss of income are involved?

2. If the harm consisting of loss of use is compensable, how is the measure of compensation to be computed?

II. The request for a decision (published in VersR 1986, 189 = WM 1986, 266 = JZ 1986, 387) explains in detail that the decisions of the Bundesgerichtshof on the compensability of loss of use of property are hard to reconcile.

The Third, Sixth, Seventh and Eighth Civil Senates are in principle favourable to compensation if public opinion would regard the personal use of a thing as having an independent economic value and the loss is “felt by”, “perceptible to”, the owner who could and would have used the thing had it not been damaged. Since the decisions of the Third Civil Senate of 30 September 1963 (BGHZ 40, 345, 349f. and NJW 1964, 717 = VersR 1964, 380) this has been the basis on which the individual owner of a motor car has been granted compensation for temporary loss of its use even if he did not hire any substitute. The principal reason for such decisions in tort and cognate areas is that things such as motor cars are commonly bought precisely in order that they be permanently available, so that to impair their use is to impair the economic counterpart of the price paid (BGHZ 40, 345, 348, 350; 63, 393, 397; 74, 231, 234; 76, 179, 185; 86, 128, 131, 133). They emphasise that the price which property will fetch depends on its current availability and that the market itself puts a value on the usability of a thing, as is indicated by the costs of hire (references); it would not be right for the tortfeasor to benefit from the fact that the victim has put up with the drawbacks of not being able to use his property [references].

Opposed to these decisions are cases involving property which public opinion regards as an amusement (swimming pool – BGHZ 76, 179, 187), a luxury (fur coat – BGHZ 63, 393, 398; caravan – BGHZ 86, 128, 133), or a pastime (speedboat – BGHZ 89, 60, 64), property whose use is life-enhancing but without any independent economic value.

In 1967, in the wake of these decisions, the Eighth Civil Senate, in a holding limited to cases of breach of contract, awarded damages to the owner of a house rendered temporarily uninhabitable by the post-contractual fault of a tenant (WM 1967, 749 = (in part) NJW 1967, 1803). Likewise, the Seventh Civil Senate in 1985 has awarded the owner of a parking garage damages against a contractor because some parking spaces were unusable owing to the failure of the contractor to make good defects in his work, the finding that their use had an independent economic value being admittedly reinforced by reference to the purpose of the rule that the contractor guarantees the quality of his work (BGHZ 96, 124).

By contrast the Fifth Civil Senate in its decisions of 14 May 1976 (BGHZ 66, 277) and of 21 April 1978 (BGHZ 71, 234) expressed reservations, repeated in its present request for a decision, about allowing damages for loss of use outside the “restricted area of typical mass risks”, and in its decision of 30 November 1979 (BGHZ 75, 366) it adopted the position, so far as tort law is concerned, that no compensable economic loss is involved in infringements of the right to use land where the loss of use is less than total.

Writers are on the whole against treating the loss of the personal use of property as an economic loss, regarding it rather as a possible source of loss, giving rise where the planned use would be purely personal to immaterial losses not capable of compensation. [References to eight writers]. A few writers approve of the result reached by the courts in cases of damage to motor cars, while entertaining serious doctrinal objections [citing six writers]. A minority accepts that damages may be awarded for loss of use of property: [citing 11 authors]. A few writers would give damages for wasted expenditure due to a loss of use [citing five authors], or for the resulting need [one author].

III. The Full Senate is of the view that the rule as to motor cars in private use can be extended at any rate to things which the owner needs to have constantly available for use in his domestic arrangements, such as the house he lives in; the temporary loss of the chance of using it as a result of a tortious invasion of his property rights constitutes a compensable economic harm to the extent that the owner would have used the thing during the period in question. Given this limitation, neither the law itself nor the need for legal certainty offer a conclusive objection; indeed, to leave such losses without compensation would be to fall short of just and full compensation for economic losses.

1. The BGB does not define the concepts of wealth or economic harm in the law of damages but leaves it to writers and the courts to develop them. Like the Reichsgericht before it, the Bundesgerichtshof generally employs the “difference method” to ascertain whether the estate of the claimant has suffered an economic loss: rather in the manner of an accountant it compares the situation after the occurrence of the harmful event with the situation which would have existed without it (BGHZ  27, 181, 183f.; 40, 345, 347; 75, 366, 371; 86, 128, 130).

In its request for a decision the Fifth Civil Senate is right to point out that the temporary loss of personal use of a thing does not show up in the “difference method”, in which loss of use figures only if there is a cost in procuring a substitute involved or some loss of income from its use in acquisitive economic activity or onerous obligations are incurred which would have been avoided had the thing still been available.

a) Meanwhile the Bundesgerichtshof has recognised that the difference method is value-neutral and that one must still, in the light of the purpose of liability law and the compensatory function of damages, determine what factors should be included in the difference procedure. In this sense there is a normative input into the difference method, which is not actually laid down by law [reference]. Certainly when one is making the comparison an economic harm will always take the form of a diminution of the positive or an increase in the negative aspects of the claimant’s estate, but it is for the judge to decide what factors are to be taken into account for the purposes of compensation.

b) In doing this the court must remember that it is not only the “having” of wealth that makes it important but also the “using” of it, the option it affords the owner of advancing his goals in life by actualising its potential (references to von Savigny, von Tuhr and Kohler). This functional aspect of wealth is protected by law. The fact that wealth is used in other contexts than business would be being ignored if only the monetary aspects of the loss of use of property resulting from a tort were taken into account: its use in the domestic sphere can also be “rewarding” and economically activating and its impairment can likewise affect the economics of the person affected, even if no actual loss of income results.

Thus over and above the fact that a motor-car is often the most valuable item in a private person’s wealth, its usability is commonly the centre of his personal economy — he builds his life round it, especially if he is professionally dependent on it. It is even more obvious that the decision to have a home of one’s own to live in is first and foremost an economic one.

In market terms an element for the usability of such property is factored into its price, and its temporary loss is treated as a short-term depreciation, so if such loss involves a perceptible constraint on the owner’s management of his personal affairs for that period, this too is economically relevant. It would only be otherwise if one’s calculation were based exclusively on monetary gain or loss. Such calculation not mandated by the nature or quality of wealth.

2. Nor is it mandated by § 252 BGB. Its express coverage of loss of income when the use-value of property is diminished certainly reflects the legislator’s sense of the importance of using property for acquisitive purposes, since there is no corresponding provision for property used domestically, but we do not agree with the Fifth Senate that it represents a decision against granting monetary compensation for the loss of use of items of wealth when no loss of income occurs. The main aim of § 252 BGB was to make it clear, in contrast to earlier codes, that the entirety of the harm is to be made good, not just a proportion depending on the degree of fault (Mot. II 17f. = Mugdan, Materialien zum BGB vol. II 10); it implements the principle of full compensation which emerges from § 249 BGB. Consistent with this is § 252 sent. 2 BGB which the courts have hitherto taken to involve only a relaxation of the burden of proof designed, like § 287 Code of Civil Procedure, to avoid the claimant’s having to put up with inadequate compensation in cases where the harm is difficult to establish exactly (BGHZ 29, 393, 398; 74, 221, 224 with references). Given that the law aims to promote the positive use of property and provided always that damages are not allowed for loss of use in abstracto, which the BGB allows only exceptionally (§§ 288, 290, 849 BGB), to develop the law so as to include in the compensation of economic harms the use of property for private purposes analogous to profitable uses need not, as the Fifth Senate fears, lead to the claimant’s being unfairly advantaged in establishing his claim. In the case loss of use of a motor car the courts have insisted that the loss be “felt” by the victim, that he could and really would have used the car had it not been damaged, that is, that he was able and willing to make use of it. This restrictive rule can be applied to other kinds of property also, and puts the tortfeasor in the same evidentiary position as in claims for loss of profitable use; it also ensures that compensation for the loss of privately used property is geared to the individual case and involves no typification of the different kinds of property or tarification of the award.

3. Unless it is developed in this way, the law will have unsatisfactory results, especially as regards the very items of wealth which are of central importance to the individual’s way of life.

a) The codal rule which provides for restitution in kind draws no distinction as regards the economic nature of the loss of use. In principle, therefore, the tortfeasor must bear the cost of providing his victim with a substitute for an item he would have used for private purposes. But suppose the victim refuses to accept the substitute, which does not always indicate that he was not dependent on the property: then unless the proposed development is accepted, the tortfeasor would be relieved of the obligation to pay for what are real constraints on the victim’s living arrangements.

Payment of the capital value of property does not adequately compensate for loss of use-value, for although it is true that the market value of a thing includes an element for its usability so that use-value cannot be wholly severed from the inherent value of the thing, nevertheless payment of the inherent value of a thing only gives full compensation for the loss of use-value when it is paid immediately, for it takes no account of the diminution in value in the interim. To this extent use-value and capital value rest on different considerations: capital value goes to the condition of the property, use-value to its availability for use. Temporary loss of the latter is not adequately made good either by replacement of the thing or by interest on the diminution of the capital value; nor can the “advantage” lost be recaptured. At the most there is a saving in wear and tear and in the costs entailed in use, but the loss of use, temporary though it is, is definitive. In order to cover it, the difference method of computation of economic loss calls for an extended notion of value.

b) If there is no such extension, compensation based on the pure difference principle will unfairly discriminate against the use of property in the private economic sphere as compared with its use for acquisitive purposes, for which the tortfeasor is bound to pay damages in the absence of restitution in kind. The jurisprudence of the courts as regards the loss of use of motor cars, designed to take better account of the use of property for private purposes in line with the principle of full compensation for economic losses, needs to be extended to other kinds of property. Once the Bundesgerichtshof has developed its case law on the damages payable as regards each kind of property and practitioners are confident that it is stable, it would be right, not least on grounds of legal certainty and faith in the interpretation of the law, to proceed in the direction indicated.

The Full Senate is quite aware of the advantages of the difference method for the calculation of economic loss and of the need to limit compensation to the harm actually suffered by the particular claimant, but to add a normative element to the difference method will not lead to unacceptable extension if it is realised that the aim is to produce just compensation by equating personal with profitable uses of property, when economically comparable.

Recent practice as regards loss of use of motor vehicles shows that this need not led to a huge increase in the damages payable, but in any case to deny damages in cases of loss of use of a thing privately used just because there are residual problems of evaluation is inconsistent with the principle of just and full compensation.

4. The extension of the law in this manner must naturally be limited to items of property which people typically need to have constantly available in their daily lives. This is as much as can be justified by the need to correlate the law of damages as to the use of property for private and for profitable purposes, and to go further would risk infringing § 253 BGB by awarding damages for non-economic loss in conflict with the need for legal certainty and calculability of damages.

a) The reason § 253 BGB restricts money damages to economic losses is so that only such damage is covered as can be measured by objective standards. The judge must determine the damages not on the basis of the victim’s subjective value-judgements, which cannot be checked, but on the basis of the value placed on it by the public generally, using the money measure of the market. The legislator was also concerned that “ideal” interests and values not be treated as commodities in the law of damages (Prot. I 622.623; Mugdan 517). There is always some disruption of life when a thing one is using stops functioning, but to award damages for such disruption runs the risk of compensating for harm which is indissolubly linked to the person of the claimant and must in principle remain uncompensated under § 253 BGB. This restriction is mandatory as to extracontractual, delictal liability, with which alone we are concerned. It may be different for liability in contract, for the parties can dispense with 253 BGB just as, to a large extent, they can further restrict their liability for economic harm.

There is no danger of allowing damages to trespass into the area of immaterial interests if the property is such that its use is generally of major importance in daily life, for such use appertains to the material economic sphere (reference); furthermore, because the uses made of such property are relatively similar, there are now objective standards of valuation, at least of its core economic functions, so that there is no risk of being affected by subjective value-judgements arising from idiosyncratic uses not prized by the general public. The impairment of such uses should be fully compensated in damages notwithstanding the fact they do not figure in the difference method of accounting proper to the acquisitive economy.

b) On the other hand, the absence of a firm mechanism of control such as is contained in § 252 BGB means that there must be strict proof that the property was of economic importance for the claimant’s way of life, and that his estate has really been affected by the loss of an objectively valuable facility. This strict requirement is also necessary in order, so far as possible, to avoid extremes in budgeting so that the compensation in cases of a particular type remains calculable despite all the variables in the individual case. Hence damages for loss of private use must in principle be reserved for certain types or groups of case in which the functional impairment typically has a significant effect on the material conditions of the claimant’s living conditions. At this point public opinion may come in. One can agree with the Fifth Civil Senate that public opinion cannot decide when § 253 BGB applies and when it does not, but even so, just as the measurement of the loss must be geared to the standards of the market, so the test to be applied in law can properly relate to what people generally regard as economically important to acceptable life-styles.

c) The tests laid down in the caselaw of the Bundesgerichtshof for the compensation of loss of use of motor cars are quite restrictive; this is in part because when a kind of harm is suffered by the million, one needs a rule which ignores variations in the importance accorded to the use of the thing in question by individual claimants.

On the facts of the case giving rise to the question laid before us, we need not decide finally what kinds of property other than motor cars should give rise, in accordance with what has been said above, to a claim for damages for temporary loss of use, but where the use of an owner-occupied house is temporarily lost as a result of a tort, as in the case at hand, there can be no doubt that this constitutes a compensable economic harm. We need not dilate on the fact that an individual’s economic life centres on his residence and that the continuous availability of the home is a major feature of a person’s whole estate. This very point shows how disproportionately one would be privileging the acquisitive economy over the personal deployment of resources if one were to say that damages are available only for losses of profitable use and to treat impairment of personal use as a mere source of harm which must remain uncompensated unless a substitute is rented. It may be acceptable to deny damages for short-term deprivations of use which the victim could allay by making different arrangements which are economically reasonable, but it would be contrary to the principle of full compensation for economic harm to do so when a home is completely unusable, even for a short time, and the owner would have stayed in it but for the invasion.

It must really be left to the practice of the courts to determine which types of property should attract compensation for loss of use and what regulatory mechanisms are appropriate. The only legal constraints are that the measurement of loss must be in line with the purpose of damages law, especially the requirement of § 253 BGB that the criteria be objective and that the rules as to damages be regularly applied.

In principle it would be wrong to award as damages what it would have cost the owner to hire a substitute, for the aim is compensation not reparation. What is to be measured is not the cost which the owner has avoided by meeting his need otherwise but the value in money of the use of the thing for the owner’s own purposes. Nor can the owner claim damages on the basis of what he would have charged the tortfeasor for the use of the thing: such a method of calculating the loss may be justified in special circumstances where there is a specific conflict of interest, but it is not conformable to general principles of damages law, for what is to be met is the loss of use of the property for the purposes intended by the owner, not what he would have collected by letting it to a third party, which he never intended to do.

Nevertheless the normal cost of hire, once properly purged of the profit element, may serve as a basis for the measurement of the harm. Other relevant factors may be a proportion of the basic costs of the use prevented (appropriate interest on the capital invested, running costs for the availability of the property, depreciation in value over the time it was out of use). Nor, contrary to the view of the Fifth Civil Senate, does it seem wrong in this connection to apply a markup on what is generally considered as the minimum cost of use, for the loss of use of such economic goods may well have had the ulterior effects on the whole estate of the claimant which it is impossible to identify precisely.

Other methods of valuation in addition to these which we have indicated may also be appropriate.

NOTE to BGHZ 40, 345, BGHZ 89, 60 and BGHZ 98, 212

The problem in these cases is one which has been the subject of much dispute in Germany and it has exercised the Bundesgerichtshof in a whole series of decisions. The victim of property damage can of course claim, in addition to the cost of repair, the costs involved in the loss of its use such as, in the case of a motor car, the hire of a substitute or the cost of using other means of transport. In the case of a house, the claim would be for the cost of renting a substitute or the cost of staying in an hotel. But can the victim claim damages for loss of use when he has made the loss good costlessly, e.g. by using his bicycle while the car was being repaired or staying in a caravan in the garden when the house was uninhabitable and so on? That is the issue in dispute. The decisions given here form part of a long line of cases which have allowed the plaintiff to claim for loss of use in abstracto, despite the lack of any provable money loss. The question has occasionally divided the different Senates of the Bundesgerichtshof, but the decision of the Great Senate for Civil Matters in BGHZ 98, 212 has, for the time being at any rate, put an end to the discussion.

©1998 University of Oxford. Since 2002: © Translation The University of Oxford and Professor Markesinis 1998. HTML edition © 1998 Gerhard Dannemann.

Bundesgerichtshof (Sixth Civil Senate) 15 November 1983, BGHZ 89, 60, with case note.

This case is first published in the German Law Archive courtesy of:

Translated German Cases and Materials under the direction of Professors P. Schlechtriem, B. Markesinis and S. Lorenz

Translated by Mr. Tony Weir, Trinity College, Cambridge

On 6 July 1979 while the plaintiff was driving to the Baltic for a sailing holiday there was an accident in which the speedboat he was towing was seriously damaged. The necessary repairs took so long that he was unable to use it during his fortnight’s summer holiday or on subsequent weekends.

The parties are agreed that the defendant, as the tortfeasor’s liability insurer, is liable for the harm suffered by the plaintiff as a result of the accident.

The plaintiff’s claim includes damages for the loss of use of his boat by reason of the accident at the rate of DM 154 per day (as against the daily hire charge for a similar boat of DM 280) for the forty days he would have used it during his summer holidays and on subsequent weekends until the end of October.

The Landgericht granted the plaintiff DM 100 per day for forty days’ loss of use, on the basis that now boats are offered for hire as well as cars, the use of a boat has become as “commercial” as the use of a car.

When the defendant appealed and the plaintiff cross-appealed, the court below dismissed the plaintiff’s claim for damages for loss of use. The plaintiff’s further appeal was now dismissed.

Reasons

I. The court below held that the plaintiff had no claim in respect of the loss of use of his motor boat while it was being repaired: the temporary loss of the chance of using the boat did not constitute or cause an economic harm capable of compensation under § 249 ff. BGB. The principles developed by the courts in relation to the temporary loss of use of a motor car damaged in a traffic accident could not be generalised. Unlike a motor car a speed-boat is not virtually indispensable for people’s general and daily needs; it merely conduces to leisure activity rather than saving time and rationalising work. It followed that the cost involved in using such a boat constituted an immaterial value not compensable in money.

II. These views are based on the jurisprudence of the Bundesgerichtshof and are unobjectionable.

If in addition to the substantial damage done to the boat the accident had, by depriving the plaintiff of its use, caused him further damage which could be qualified as economic harm he would have a claim for loss of use (arg. § 253 BGB), but no such further harm occurred.

1. In cases concerning the loss of use of a motor car the Bundesgerichtshof has developed certain tests in order to decide whether a harm is economic or not. Recognising that the concept of harm is not a purely legal one but rather an economic concept embedded in the law, the Bundesgerichtshof holds that economic harm occurs only where the victim’s loss is something which economists would recognise as a detriment; whether or not this is so depends mainly on public opinion (Verkehrsauffassung) [references].

Applying these tests, this senate has decided, in agreement with other senates, that a tortfeasor must in principle pay for the loss of use of a motor car even if the victim has not procured any substitute, the critical consideration for this senate being the general view today that the temporary loss of use of a car is to be regarded as an economic loss because the availability of a car conduces both in working and leisure hours to the saving of time and energy, advantages which can be regarded as “money’s worth” (BGHZ 45, 212, 215; 55, 146, 149; 56, 215, 216). It is true that a motor car gives pleasure to the person using it, but this is not the principal point, for in the general view it is because of the economic advantages of a motor vehicle that people buy and keep one (BGHZ 40, 345, 349; 45, 212, 215).

2. On the question whether the temporary loss of use of property other than motor cars is to be regarded as economic harm, a strict test must be applied. This is required by the legislative policy underlying § 253 BGB. The strict test has led the Bundesgerichtshof on several occasions to deny compensation for loss of use of property other than motor cars (BGHZ 63, 393 – fur coat; 76, 179 – private swimming pool; 86, 128 – caravan). The critical reason for rejecting the claim in these cases was that the loss of use would not generally be regarded as harm which is economic in nature.

3. The application of the test in this case leads to the conclusion that in being deprived of the use of a speed boat designed for leisure activities the plaintiff did not suffer an economic loss.

a) It cannot be shown that the general public views the loss of use of such a boat as constituting economic harm. Unlike a motor car, the property here was not principally designed or apt to provide the user with an economic advantage: the boat was to afford the pleasure of taking part in water sports. Temporary loss of the chance of using the boat involved a diminution of the personal pleasure of the individual, not what the law considers an economic loss. [references]

b) The appellant’s case is not advanced by his argument that since a speed-boat such as the plaintiff’s can be let out on hire, its use is “commercialised”. Now that most pleasures can be had in exchange for money the idea of “commercialisation” has largely lost its validity as a test for distinguishing material from immaterial harm (BGHZ 66, 277, 279f., 86, 128, 131). The Fifth and Eighth Senates of the Bundesgerichtshof have already indicated as much, and this senate agrees with them.

©1998 University of Oxford. Since 2002: © Translation The University of Oxford and Professor Markesinis 1998. HTML edition © 1998 Gerhard Dannemann.

Bundesgerichtshof (Seventh Civil Senate) 31 January 1990, BGHZ 111, 308 = NJW 1990, 2524

The plaintiff raises against the defendant an assigned claim for remaining payments under a works contract amounting to DM 20,505 plus interest. In 1985 and 1986, S, the plaintiff’s husband, carried out works for the defendant, without having been entered in the crafts registry, and without having his trade registered. Both facts were known to the defendant. The defendant paid at least DM 4,500 to S for his work. S failed to pay either tax or social insurance contributions on this amount. S then assigned the remainder of his alleged claim for payment under a works contract to the plaintiff.

The Landgericht ordered the defendant to pay DM 11,880 plus interest, and dismissed the remainder of the claim. The Oberlandesgericht (NJW-RR 1990, 251) dismissed the action in its entirety. On appeal, this judgment was quashed and the case referred back.

Reasons

1. The Appeal Court assumes that not only the defendant, but also S as his contractual partner have violated the Gesetz zur Bekämpfung der Schwarzarbeit(Act to Combat Illicit Work, SchwArbG).

In the Appeal Court’s view, S did exercise a craft profession without being registered in the crafts registry (§ 11 Nr. 3 SchwArbG). S did this in order to gain considerable economic advantages. His endeavour was therefore covered by the aforementioned provision. In consequence, S had neither contractual nor non-contractual claims which he could have assigned to the plaintiff.

2. The first part of these considerations are correct.

…

3. The contracts concluded between S and the defendant were therefore void under § 134 BGB. As has been set forth in more detail by the present Senate (reference omitted), by imposing fines on both the contractor and the client, the Act to Combat Illicit Labour intends to prohibit illicit labour jobs as such, and to prevent any exchange of performances between the “parties to the contract”. This already strongly indicates that the legal order wants to deprive of any effect a contract which contravenes the prohibition on illicit labour jobs. In particular, as has been said elsewhere by this Senate (reference omitted) – the purpose of the Act to Combat Illicit Labour can be achieved only if such contracts are considered to have no legal effect. This is at least the case if – as presently – both parties have violated the provisions of the Act to Combat Illicit Labour. Even so, in individual cases it may nevertheless offend good faith if one party relies on a contract being void for violation of a statutory provision (reference omitted).

4. The contracts under consideration being void, the plaintiff can at best raise claims for the return of performances made. According to the jurisdiction of the present Senate, §§ 677 et seq. [negotiorum gestio] do, in principle, apply to such cases (BGHZ 37, 258 (263), remainder of reference omitted). However, in the present case, the “expenditure” incurred by S consisted in an activity which was prohibited by law. Therefore, S could not consider this “expenditure” to be “necessary according to the circumstances”; for this reason alone, claims for remuneration under §§ 683, 670 cannot succeed.

5. However, contrary to the opinion of the Appeal Court, the plaintiff can rely on the provisions on unjustified enrichment. Such a claim under § 812 I 1 BGB is, ultimately, not excluded by the provision of § 817 2 BGB. It is true that this provision does, in principle, apply to situations such as the present. This defence can also be raised against somebody who succeeds the original creditor as a new claimant (reference omitted).

Through his exercise of a craft, S, the assignor, has violated the Act to Combat Illicit Labour. According to the findings by the Appeal Court, both parties wanted their contracts to be carried out precisely as illicit labour jobs. Therefore, there can be no doubt that S was conscious of the violation, and nevertheless decided to carry on.

6. Enrichment claims, however, form part of the law which is governed by equity, and are therefore particularly influenced by the principle of good faith (reference omitted). It would be irreconcilable with this principle if the defendant were not to pay for the value of what he obtained without legal ground, but were rather entitled to keep it for free.

In a case which involved the sale of a brothel, and where the vendor had already performed, the Reichsgericht ruled that it amounted to deceitful conduct if the buyer refused to pay, and at the same time refused to return the house in reliance on § 817 2 BGB. Such conduct was not protected by the legal order (RGZ 71, 432). The present case is similar. § 817 2 BGB, which prevents the creditor from reclaiming the enrichment, comes as a severe blow to that party (reference omitted). Whenever this rule is applied, one must not lose sight of the purpose which the prohibitory norm intends to serve (reference omitted). In individual cases, it can be necessary to opt for a restrictive interpretation of § 817 2 BGB, a provision which is problematic as a matter of legal policy, and disputed as concerns its scope of application. The Act to Combat Illicit Labour does not primarily intend to protect one or both parties to the contract; above all, it serves public interests. When the Act was passed, concerns for the labour market were to the fore. According to the Official Reasons for the draft legislation, illicit labour leads to increased unemployment in many professions, causes loss of tax revenue, and damages the social insurance bodies; it also threatens self-employed business owners, who cannot work as cheaply as those engaged in illicit labour. It is only second to these concerns that the the client should also be protected against his loss of remedies for defective works (BT-Drucksache 2/1111 and 9/192). The Act was designed as a protective norm within the meaning of § 134 BGB, because the purposes which it intended could only be achieved by rendering the prohibited transactions void (reference omitted). Given the fact that the Act pursues mainly political aims of a general nature, these aims are, on the other hand, mostly served by excluding all contractual claims. In order to fulfil the aims of the Act, it is not absolutely necessary that a client who orders an illicit labour job be allowed to keep the advance performance for free and at the expense of the contractor. For the general deterrent effect, which the legislator was aiming for, is already achieved by the exclusion of contractual claims, combined with the threat of criminal prosecution and liability for outstanding tax and social insurance contributions once the illicit labour job becomes known. This Senate does not believe that this general deterrent effect would be undermined by allowing an enrichment claim (which, as will be shown infra, must at any rate be subject to certain restrictions). The client, who is normally in a stronger economic position, should, in the legislator’s view, on no account be treated more favourably than the contractor, who is economically in the weaker position (BT-Drucksache 2/1111, p. 10). Under these circumstances, a viewpoint based on good faith will gain the upper hand, namely that it would be inequitable if the client, who has benefitted from an advance performance, is allowed to keep this benefit for free (references omitted).

According to § 818 II BGB, the enrichment claim should compensate for the value which has accrued to the defendant without legal ground. When assessing what has been obtained by an illicit labour job, one must first consider that the contractor, by way of an enrichment claim, is on no account allowed to recover for amounts in excess of those stipulated by his void agreement with the client (reference omitted). As a rule, very considerable deductions will have to be made from this amount to cover the risks which are connected with illicit labour jobs. In particular, the value is much reduced by the fact that the client can have no contractual claims for defective works from the outset, since the contract is void. If any defects have emerged, these must be additionally considered when calculating the balance of the enrichment.

©1997 Gerhard Dannemann. HTML edition © 1998 Gerhard Dannemann. This translation first appeared in The German Law of Obligations, Vol. I: The Law of Contracts and Restitution, by B.S. Markesinis, W. Lorenz and G. Dannemann, Oxford University Press 1997, as case no. 136 on pp. 799 et seq. Reproduced by permission of Oxford University Press.The contents of this page may be downloaded and printed out in single copies for individual use only. Making multiple copies without permission is prohibited.

Bundesgerichtshof (Seventh Civil Senate) 19 January 1984, BGHZ 89, 376

In 1978, the defendants (a community of heirs) entered into a lease agreement for a public house with the H brewery. The plantiff, a bank, transferred rent payments amounting to DM 1,000 per month to the defendants under a standing order issued by the H brewery. By letter of 22 February 1980, the H brewery informed the defendants that it would discontinue the lease payments due to alleged defects in the premises of the public house. At the same time, the brewery cancelled the standing order by a letter to the plaintiff dated 3 March 1980.

The plaintiff inadvertently continued to pay under the standing order for another thirteen months, and now claims from the defendant return of those DM 13,000 plus interest. Landgericht and Oberlandesgericht have disallowed the action. The appeal was admitted, but without success.

Reasons

The Appeal Court takes the view that the plantiff has no direct enrichment claim against the defendants. In the Appeal Court’s view, in cases involving payment orders, the payor always has a direct claim against the payee if a valid payment order has been lacking ab initio. However, if a standing order has been carried out in the past, but has meanwhile been cancelled, the recipient of the payment must be protected against an enrichment claim by the bank. By issuing the standing order, the debtor has created a situation on which the recipient of the payment is entitled to rely, following a legal policy expressed in §§ 170, 171 II, 172 II, 173 BGB. Such a reliance situation exists in the present case. From the view of the defendants, payments by the plaintiff were to be seen as continued performance by those who instructed the bank. In spite of the communication by the H brewery that they were to cancel payments due to defects in the leased object, the defendants were entitled to presume from the continuous receipt of payment that the lessee had refrained from acting upon its announcement to terminate payments, and had not cancelled the standing order. The mistake by which the bank ignored the [cancellation of the] standing order is rooted in the relationship between the bank and its customer, and for that reason the general rules for return of enrichment in triangular relationships are to apply.

The appeal does not succeed in its objections against these considerations.

1. The Appeal Court is right to assume that payments which a bank makes towards a third party under a standing order issued by a customer are a case of performance by order (Leistung kraft Anweisung). By its standing order, the H brewery instructed its bank (the plaintiff) to pay in monthly installments to the defendants the rent which it owed. By this, a cover relationship (Deckungsverhältnis) was created between the H brewery and the plaintiff, according to which the plaintiff rendered its own performance toward the H brewery, i.e. by transferring the rent to the defendants, at the expense of the H brewery. In addition, a value relationship (Valutaverhältnis) existed between the H brewery and the defendants, within which the H brewery effectuated its own performance towards the defendants (i.e., by having the plaintiff transfer the rent).

2. The Appeal Court is furthermore right to state that, in cases involving performance by order, return of the enrichment must, as a principle, occur within each relationship of performance. Therefore, if the cover relationship between the party which issues the order and the party which receives it is deficient, return of the enrichment must occur within this relationship. If, on the other hand, the value relationship between the party which issues the order and the party which receives the ordered performance is deficient, return of the enrichment must be carried out within that relationship (cf. BGHZ 40, 272 [= Markesinis, Lorenz and Dannemann, The German Law of Obligations, Vol. I: The Law of Contracts and Restitution, case no. 134; BGHZ 87, 393; other references omitted).

On the other hand, this Senate has, on several occasions, expressed the view that mechanical solutions must not be applied when sorting out unjustified enrichment in situations which involve more than two parties. Attention must be given to the specific circumstances of the individual case, which must be taken into account in order to find an adequate way of undoing the enrichment (BGHZ 87, 393; other references omitted).

One case before this Senate concerned an order which initially had been validly issued and made known to the recipient by handing over a cheque. Subsequently, the order was cancelled without knowledge of the recipient, before the recipient’s account had been credited or the sum paid out. In this case, the Senate decided that the bank, which nevertheless honoured the cheque, had no direct enrichment claim against the holder of the cheque, and must turn towards its client for any enrichment claim (BGHZ 61, 289). Likewise, the Second Civil Senate has held that a bank, which has inadvertently credited the account of a recipient with a certain transfer amount after cancellation of the transfer order, has no direct enrichment claim against the recipient, whereas the transfer was based on a claim which the recipient had against the person who ordered the transfer, this person had given advance notice of the transfer to the recipient, and the recipient was unaware of the cancellation (BGHZ 87, 246).

On the other hand, this Senate has decided that a bank, which mistakely effectuates payment under a cancelled order, does have a direct enrichment claim against the recipient of the payment, if this person knew of the cancellation of the order when receiving the payment (BGHZ 87, 393).

Finally, this Senate has left open what the legal situation would be if a valid order is lacking from the outset (BGHZ 61, 289, 292; BGHZ 88, 232).

This jurisdiction has gained approval by academic writing, at least as far as the results are concerned (references omitted). This Senate adheres to this jurisdiction. Accordingly, the plaintiff has no direct enrichment claim against the defendants, since the defendants had no knowledge that the H brewery had cancelled its standing order to the plaintiff. Additionally, where a standing order is cancelled, one cannot assume that a valid order had been lacking from the outset.

(a) The Appeal Court rightly assumes that the defendants were unaware that the H brewery had notified the plaintiff of its cancellation of the standing order. It is true that the H brewery had notified the defendants by letter of 22 February 1980 that it hoped the defendants could understand that “due to those defects, for which we are not accountable, we will terminate payment of the rent, because we in turn cannot obtain any rental payments”. However – as the Appeal Court is right to point out – this letter was only to be understood as announcing a future termination of payment. As the rent continued to be transferred to the defendants’ account regularly and for a year, the defendants were allowed to believe that the H brewery – for whatever reasons – would continue to make montly payments to them, and would find another way of clarifying the differences in opinion which had arisen. While the defendants’ knowledge of cancellation of a standing order could have given rise to a direct enrichment claim of the plaintiff against the defendants, no such knowledge can be imputed from the 22 February 1980 letter by the H brewery.

(b) Furthermore, it can still be left open whether a bank has a direct enrichment claim against the recipient of a payment if, from the outset, there was no valid order by the bank’s client upon which the bank could have acted. For the legal situation which arises if a standing order is cancelled corresponds to the situation which exists if an order has initially been validly issued and notified to the recipient by handing over a cheque, but where the order has been cancelled in good time, i.e., before the amount is credited or paid out (BGHZ 61, 289).

It is true that in a situation such as the present (as well as where a cheque is cancelled) there is no valid order at the time when the third party receives payment. However, until the moment when the standing order is cancelled, such an order exists as beetween the person who has issued and the person who has received the order, and within an intact legal relationship. The relationships of performance, which are decisive for the way in which enrichment is returned, are determined by what initially were the concurrent intentions of all parties concerned. It is true that a person who has issued a standing order does express by its cancellation towards the instructed bank that he no longer wishes the bank to effectuate benefits to accrue to the recipient at his (the instructing person’s) expense. If the bank still performs, because it has overlooked the cancellation of the standing order, the bank nevertheless intends to perform only towards its customer. The recipient, whose viewpoint is decisive (BGHZ 40, 272 [= Markesinis, Lorenz and Dannemann, op. cit., case no. 134]; other references omitted]) will share this view, based on the purpose which the instructing party attributes to the issuing of the standing order. The recipient need not be concerned about whatever happens within the cover relationship, i.e. between his contractual partner and that party’s bank. The mistake which occurs when the bank ignores the cancellation of the standing order finds its roots in the legal relationship between the bank and its customer. While the bank is not allowed to act under a customer’s standing order once its cancellation has been validly declared, the reasons for this are to be found solely in the legal relationships which exist between the bank and its customer. It is, in principle, within these legal relationships that mistakes have to be sorted out (BGHZ 87, 393; other reference omitted). This Senate continues to see no reason to distinguish between a transfer from a current account and the issuing of a cheque, which is nothing but a specific case of an order (BGHZ 61, 289, 293; but see Lieb JZ1983, 960, 962). Therefore, the plaintiff has no direct enrichment claim against the defendants.

The opposite view (cf. OLG Düsseldorf WM 1975, 875) treats a transfer under a standing order after it has been cancelled in the same way as a transfer for which there was no valid order from the outset. However, this fails to take into account the performance relationship as determined by the parties concerned when the standing order was issued. In particular, this view overlooks the fact that the bank, by effectuating the transfer, only wishes to perform towards its customer, and that the recipient understands the payment which he receives in the same way. Therefore, a cancelled standing order cannot be treated in the same way as an order which was lacking from the outset.

4. This result is also appropriate and conforms with the interests involved. It is true that the customer of a bank deserves protection for his interest not to be affected by benefits which his bank confers on third parties after he has cancelled an order which he initially has issued. For this reason, this Senate has decided that the bank which overlooks the cancellation of an order must bear the risk which stems from this mistake, at least in the case where the customer has notified the third party of the cancellation, and therefore has done everything to avert the consequences of a mistaken payment (BGHZ 87, 393). However, if the customer cancels a standing order and does not afterwards notify the recipient of the cancellation – as is presently the case -, and tolerates without protest for thirteen months that deductions are made from his account, it is justified to refer the bank to its customer for the return of the amounts transferred. In contrast to the case where the recipient knows of the cancellation, in this case the recipient merits protection of his reliance. He relies on the continued existence of the standing order and does not know that the payments are based on a mistake by the bank (references omitted).

©1997 Gerhard Dannemann. HTML edition © 1998 Gerhard Dannemann. This translation first appeared in The German Law of Obligations, Vol. I: The Law of Contracts and Restitution, by B.S. Markesinis, W. Lorenz and G. Dannemann, Oxford University Press 1997, as case no. 135 on pp. 794 et seq. Reproduced by permission of Oxford University Press.The contents of this page may be downloaded and printed out in single copies for individual use only. Making multiple copies without permission is prohibited.

BGH NJW 1980, 2194
Bundesgerichtshof judgment of 10th July 1980, III ZR 58/79 (Braunschweig).

This case is first published in the German Law Archive courtesy of:

Translated German Cases and Materials under the direction of Professors P. Schlechtriem, B. Markesinis and S. Lorenz

Translated by Mr Raymond Youngs, Southampton Institute

Facts: The plaintiff demands compensation from the defendant city because of violation of the duty of protective care in relation to highways. On the 3rd June 1975 at about 9.45 in the evening the plaintiff’s wife, who was driving the plaintiff’s car, turned left at a dual carriageway (the A Ring). There was a hedge (which has been since removed) approximately 1.2 m in height on the central reservation. The plaintiff’s wife crossed the lane which led to her right, drove through a gap in the central reservation, tried to turn into the lane leading left and collided with a car approaching from the left. The plaintiff claimed that his wife edged carefully into the lane and could not see the other vehicle in time because the hedge was too high.

Grounds: I. The appeal court found no violation of the defendant’s duty of protective care and in this connection stated that the central reservation did not form part of the highway. It was true that a duty to warn about limitations on visibility which were not obvious (or to remove them) could also exist for areas outside the street. But here the restriction on visibility caused by the hedge was obvious anyway. The danger was in the end due to the conduct of the plaintiff’s wife, who turned to the left without taking sufficient precautions. A reasonably experienced driver would have been able to cope with the situation in question. Besides this, a claim under § 839 (1) sentence 2 of the BGB would not arise as the plaintiff has another option for compensation by claiming against his wife.

There are fundamental legal objections to this judgment.

II. 1. The appeal court’s starting point, that a violation of the duty of protective care in relation to highways by the officers of the defendant is to be assessed in accordance with the provisions about official liability (§ 839 of the BGB, Art 34 of the GG), is certainly correct. According to § 10 para 1 of the Highways Act of Lower Saxony of the 14th December 1962 [reference omitted] the building and maintenance of public highways (inclusive of the federal trunk roads) and surveillance of their safety for traffic falls on the organs and public employees of the body dealing with them, as an official duty in exercise of state activity. This formulation contained in the public law statutes of the state (Land) of the duties of the office holder of a municipality (Gemeinde) in ensuring traffic safety on public highways is – as the Senate has explained in the judgments [references omitted] – permissible in the context of the division of legislative competence between the Federation and the states. Nor are there any other constitutional law objections to it derived from the Basic Law.

2. The Senate’s judgment [reference omitted] explains in detail that a body liable for breach of official duty cannot rely on the provisions of § 839 (1) sentence 2 of the BGB as they contradict the basic principle of the equal treatment of highway users in liability law. These principles also apply, as the Senate has explained in more detail in the judgment [reference omitted] (issued after the publication of the judgment in the appeal) for cases like this one involving surveillance of traffic safety on a public highway, if this duty falls on the office holder as a state responsibility. The official duty to ensure safety of road traffic is closely related to the duties owed by an official as a public highway user. Accordingly the defendant city cannot exonerate itself by reference to the possibility that the plaintiff’s wife is liable for the accident.

3. The appeal court’s finding that there was no violation of the duty of protective care in relation to highways cannot be endorsed either.

a) The official duty formulated in public law to ensure the safety of road traffic corresponds in its content to the general duty of protective care [references omitted]. Its scope is determined by the type and frequency of use of the highway and its importance. It includes the necessary measures for the creation and maintenance of road conditions which are sufficiently safe for road users. It is true that a road user must in principle adjust to the given road conditions and accept the highway in the form in which it appears to him. A party under a duty of protective care must in an appropriate and objectively reasonable manner remove (and if necessary warn about) all those dangers (but no others) which are not visible or not visible in time for a highway user who is exercising the necessary care and to which he cannot adjust or cannot adjust in time.

b) In applying these principles to the present case, an official duty by the public employees of the defendant must be accepted to keep the hedge at a height which prevents serious obstruction of visibility for road users on turning into the highway from an access. The appeal court interprets the concept of the highway too narrowly when it includes in it, apart from the carriageway, only those surfaces which “also serve traffic in some way or other eg for escape in case of emergency…” According to both § 2 II no 1 Lower Saxony Highways Act and §1 IV no 1 Federal Highways Act in the 1st October 1974 version [reference omitted] separation strips, verges, and marginal and safety strips are also included in public highways [references omitted]. As federal and state law agree here, it has no significance for the outcome of the case whether the A Ring was a federal, state or municipality highway. According to these statutory rules, the duty of protective care extends to the central reservation as a part of the highway. It is therefore not necessary to fall back on the case law cited by the appeal court according to which the duty of protective care extends to things not forming part of the highway insofar as they represent a danger for the use of the highway, as for instance trees and shrubs in front gardens [references omitted]. Nor is it necessary to refer to the duties which fall on the owner of the hedge as such.

c) A high hedge created special dangers in a place where there was a gap the central reservation to enable highway users to turn in and out of it. Drivers turning in could only be sure of seeing the traffic on the other side of the hedge if the hedge was at least for an appropriate distance from the entrance kept low enough for it not significantly to conceal moving vehicles behind it. Contrary to the view of the appeal court, this danger did not cease in whole or in part to arise just because the hedge could be seen, and because this was so even in darkness, with the help of street lighting and car headlights. The danger was not the hedge itself, but the hindrance to visibility which it caused, and this hindrance did not cease to exist just because the hedge was visible.

d) The defendant city claimed in their submissions that they complied with these principles. According to these submissions, hedges are cut once yearly, and twice yearly at traffic focal points, and kept in “shape”. The end sections of a hedge before and after accesses are cut back further than the middle parts of the hedge. Actually, however, the defendant has not kept to these principles in the area of the site of the accident, according to the findings of the appeal court. The shrubs situated on the central reservation had reached a height of about 1.2 m on the day of the accident. The appeal court has described the hindrance to visibility consequently occurring as “obvious” and in another place spoken of a hedge height “undoubtedly hindering visibility”. But it regarded this as insignificant for the outcome of the case, because every driver could escape the threat of danger which this caused, either by increased attention on turning in or out or by the choice of another driving route. This view is, it should be acknowledged in support of the appeal in law, affected by legal error.

aa) A driver must certainly in principle accept the highway as it presents itself to him, and therefore make his own investigations as to whether he has sufficient visibility. The hedge height of about 1.2 m could however seriously hinder the necessary visibility even for an attentive driver, and the appeal court has not paid sufficient attention to this. According to the findings of the Landgericht, the height of vision of the plaintiff’s wife in his car used in the accident…was 1.1 m, and that of an assessor of the Landgericht 1.2 m. Cars of the usual construction, as is revealed by type surveys in the press, are without exception between 1.3 and 1.5 m high. Cars of this type protruded at the most only marginally above the hedge. The extent to which they were visible depended to a large degree on their type of construction. The defendant city could in any case not act on the basis that drivers would on turning at the site of the accident see cars approaching behind the hedge in time in every case. This possible danger, which, as the appeal court has pertinently explained, could not be removed by a warning sign, resulted in the hindrance to visibility caused by the 1.2 m high hedge at the site of the accident being dangerous even for an attentive driver. A careful tentative entry – which the appeal court did not even consider to be necessary – into the lane situated on the other side of the hedge could not remove these dangers. This is because a sufficient view could not be obtained of this lane before turning into it. That follows from the finding of the appeal court about the effect which the hedge had in restricting visibility.

bb) The duty of ensuring traffic safety did not cease to apply, as the appeal court thought it did, just because no driver had to turn in at the place in question. It cannot in principle be held against highway users by a party under a duty of protective care that they should have avoided dangerous places. This would enable the party to shift its responsibility to the driver in an impermissible manner. It is the task of the party under the duty of protective care either to remove or at least to defuse danger spots which it can recognise as such so far as is reasonable and as soon as possible.

cc) The party under the duty of protective care must further protect traffic from the mistakes which according to experience are exactly what has to be reckoned with in heavy traffic in large cities: here, underestimating of the dangers caused by restriction of visibility and possible violations of the right of way. The principle of trust, which applies to the mutual relationship of highway users has no application in the relationship between the party under a duty of protective care and highway users. On the contrary the duty of protective care can include in individual cases those measures which have the purpose of protecting the traffic from the consequences of inappropriate conduct of individual highway users [reference omitted].

These prerequisites are present here. In the heavy traffic in inner cities, violations of rules of priority are not rare. If visibility of the road having priority is substantially impaired, and a particularly careful driving style indicated (taking up more time than usual), one must reckon with more frequent violations of these duties. The defendant city could also have recognised this. Regular cutting of the hedge down to 70 to 80 centimetres in height was therefore obviously required. This relatively simple and cheap measure was to be expected of the defendant – and pertinently the appeal court accepted this.

4. The disputed judgment also cannot be based on different reasoning. It is not possible to proceed on the basis that the violation by the defendant city of the duty of protective care is completely superseded by the contribution of the plaintiff’s wife to the accident. According to her statement as witness, the plaintiff’s wife – in contrast to the case decided by the Kammergericht which was otherwise similar [reference omitted] – did not turn into the space behind the hedge without any regard to the restriction on visibility. Instead, she claims at first to have stopped briefly and only after starting off again to have collided with the other car which had approached in the meantime. It may be that as a result of carelessness she did not pay attention or sufficient attention to the distance and speed of this vehicle, because it approached on the left lane of the carriageway (its driver wanting to turn to the left further on). Nevertheless it cannot be assumed that there would have been a collision even without the restriction of visibility by the hedge, especially as it has to be borne in mind that the driver of the other car also was also unable to see in sufficient time the car driven by the plaintiff’s wife turning in because of the hedge.

5. The matter must be referred back to the appeal court, because the weighing up in accordance with § 254 of the BGB of the extent of the contributions to the accident from both sides is not possible according to the findings which have been made, and must remain an issue for the judge of fact.

©1999 University of Oxford. Since 2002: © Translation The University of Oxford and Professor Markesinis 1999. HTML edition by Lawrence Schäfer. © 1999 Gerhard Dannemann.

Bundesgerichtshof (Seventh Civil Senate) 7 January 1971, NJW 1971, 609

On 27 August 1968, the defendant, who was born on 5 September 1950, took a scheduled flight operated by the plaintiff from Munich to Hamburg, after having purchased a ticket for this flight. At Hamburg, he managed to join the transit passengers and to re-enter the plane for a flight to New York, without being in possession of a valid ticket for this part of the journey. He was refused entry to the United States, because he did not have a visa. The plaintiff thereupon made the defendant sign a document according to which the defendant owed the plaintiff the sum of US$ 256, issued the defendant with a ticket for the return journey and, on the same day, took the defendant back to Munich on a scheduled flight operated by the plaintiff. The defendant’s mother as his statutory agent refused to grant consent to legal transactions concluded between the defendant and the plaintiff.

By the present proceedings, the plaintiff requires the defendant to pay the fixed flight rates for the journeys from Hamburg to New York = DM 1,188, and from New York to Munich = DM 1,024, basing these claims alternatively on contract, tort, unjustified enrichment and negotiorum gestio.

The Landgericht disallowed the action, while the Oberlandesgericht ruled in favour of the plaintiff. The appeal by the defendant – leave to which having been granted by the Oberlandesgericht – was without success.

Reasons

I. … (No claim in contract.)

II. 1. … (No claim in tort.)

2. On the other hand, the Appeal Court believes that the plaintiff has a claim in unjustified enrichment against the defendant as regards the price for the journey from Hamburg to New York.

The Appeal Court argues that the defendant was enriched by the plaintiff’s performance, which was effectuated without a legal cause, and that the defendant is to pay to the planitiff the value of this performance in accordance with §§ 812, 818 II BGB. The defendant is enriched by the fact that he actually took advantage of a performance of monetary value, and thereby acquired an economic value, even if this value has not materialized in his overall assets. Since it is impossible to undo the actual use, any subsequent change of position under § 818 III BGB is excluded by definition. The value of the enrichment is to be measured according to the usual remuneration paid for the performance received. It is without consequence that the defendant was a minor; in the Appeal Court’s view, the provisions on unjustified enrichment apply to minors without any limitations.

3. The appeal attacks these considerations, but ultilmately without success.

The appeal, however, is right in stating that the Appeal Court cannot rely on the jurisprudence of this present Senate for its view that the defendant is liable as the recipient of a performance which by its nature cannot be returned in kind, regardless of whether or not this performance has increased the defendant’s assets or has saved him expenses. It is true that in the decisions mentioned by the Appeal Court (BGH, JZ 60, 603; BGHZ 36, 321, 323; BGHZ 37, 258, 264) the present Court did refer to the value of the services which had been conferred in each of those cases when determining the amount of the enrichment in question. Such value is to be measured according to the usual or reasonable remuneration for the service in question. However, by stating this, the present Senate did not express the view that it was without any importance in these cases whether or not the debtor of the restitution claim had saved any corresponding expenses. On the contrary, those cases concerned the provision of legal services and the rationalization of works, and thereby services which the debtor of the restitution claim was in need of. It could therefore be assumed that the debtor would have obtained these services at any event from elsewhere and at the usual or at a reasonable rate, in particular since remunerated contracts for the provision of such services had already been entered into. It appears that these decisions by this Senate have generally not been interpreted in the way in which the Appeal Court understands them.

On the contrary, the courts have always taken the view that there is an enrichment within the meaning of §§ 812 et seq. BGB only if, and to the extent that, the enriched party has experienced a true increase of assets, be it only by having saved expenses. …

One must adhere to this established court practice. It would otherwise become doubtful whether the generally recognized and supreme principle of the law of unjustified enrichment could remain recognized for all situations, namely that the enriched party’s obligation to give up the enrichment must never lead to a diminuition of this party’s assets in excess of the amount by which this party is truly enriched (BGHZ 1, 75, 81; other references omitted).

4. However, cases such as the present demonstrate that there can be a need for a modified and more differentiated view. For the peculiarities of this dispute consist in the circumstance that, on the one hand, the defendant argues that his assets were not at all increased by flying on the plaintiff’s aircraft. The defendant argues that this journey was for him a luxury which he would never have obtained if he had had to pay for it. Besides, he would at any event have been unable to do so because he lacked the necessary financial means. Therefore, he had not saved anything, and the plaintiff’s performance was used up at the moment when he received it. On the other hand, the defendant was aware from the beginning that he received the plaintiff’s performance without a legal ground. (The fact that the plaintiff was a minor will be disregarded at this stage).

(a) Thus, several principal questions of the law of unjustified enrichment are entangled with each other. In the first instance, under § 818 III BGB, extraordinary expenditure which otherwise would not have been incurred can make an enrichment disappear which initially has accrued (reference omitted). Therefore, if such expenditure immediately coincides with the receipt of the performance, this expenditure should be apt to prevent that there is even an initial enrichment. On the other hand, the recipient can generally not rely on change of position as a bar to, or as a measure of, enrichment if he knows on receipt or learns later that there is no legal cause for the performance (references omitted). However, a party which from the outset is not enriched by receiving performance is, in principle, not liable at all under §§ 812 et seq. BGB, even if this party, on receipt of performance, is aware of the lack of a legal cause (reference omitted).

In the present case, this would lead to the following consequences. If the defendant had received a ticket, or the money for the flight, from a third party without legal cause, he would be liable to this party to compensate for that value under § 818 II BGB. Under the same subjective circumstances, the mere fact that he obtained the performances which he desired directly from the plaintiff seems to imply that the defendant is not liable at all. These two results cannot be reconciled with each other. Therefore, the question as to what the defendant “received” must rather be answered in the same way for both of these situations.

(b) The same inconsistency cannot be avoided – as the Appeal Court seems to have in mind – by applying separate and fundamentally different standards to the receipt of services which by their nature cannot be returned in kind, i.e. by considering the mere use of such services as an enrichment and entirely ignoring whether or not expenses have been saved which otherwise would have become necessary. Neither can it be considered an adequate solution if one continues to calculate the enrichment according to the expenses saved, but desists from measuring these savings according to the particular circumstances associated with the enriched party, and rather measures these according to what one generally would have paid for the performance received if matters had taken their proper course (cf. BGHZ 20, 345, 355; other references omitted). For both options would disadvantage a person who bona fide receives a performance and has every reason to trust that he may keep it, thereby receiving something which he would not otherwise have obtained, and without acquiring any other lasting financial advantages from the same act.

(c) What is instead required, in order to remove the inconsistency which has thus occured, is to co-ordinate, in a sensible fashion, the separate provisions which are contained in §§ 818 et seq. BGB. It is with justification that some of the academic writing (von Caemmerer, Festschrift für Rabel, Vol. I, p. 368; other references omitted) pay special attention to the circumstance that claims for unjustified enrichment in civil law are primarly geared towards “what has been obtained” or its corresponding value. And indeed, apart from the heading, §§ 812 et seq. BGB from the outset and up to § 818 I and II, invariably speak of “what has been performed” or “what has been obtained”. It is for the first time in § 818 III (and then again in §§ 820 II, 822) BGB that the concept of “enrichment” is used as a measure for limiting liability in accordance to the preceding provisions, to which this limitation is therefore quintessential. It is ultimately this concept on which the normal application of the so-called Saldotheorie (doctrine of the balance) is based.

The basic idea of the law of unjustified enrichment, i.e. that the duty of a bona fide enriched party to give up [an enrichment] must under no circumstances result in a reduction of the assets of this party in excess of the amount of the true enrichment, therefore finds its manifestation precisely in the provision of § 818 III BGB from which it has expressly been deduced by the jurisprudence (BGHZ 1, 75, 81; RGZ 118, 185, 187).

On this basis, however, it seems entirely appropriate, and even necessary, to transfer those principles which decide whether or not the enrichment has survived, and apply them to the question whether or not there has been an initial enrichment, provided the interests involved are the same. This is at least necessary if such a transfer can solve inconsistencies within the law of unjustified enrichment, which would arise if one were to apply different requirements to the survival of an enrichment on the one hand, and to the existence of an initial enrichment on the other, even if no convincing reasons can be found for such different treatment. In these situations, considerations of equity alone – which have a particularly strong influence on the law of unjustified enrichment (cf. BGHZ 36, 232, 235) – require that the necessary adjustments be made.

It has been set out above that an enriched party who is aware of the lack of a legal cause when receiving the enrichment, is generally not allowed to rely on a subsequent disappearance of this initial enrichment. In this situation, there seems to be no reason why the same person, under the same conditions, should be allowed to deny the very accrual of an enrichment. This should at least not be permitted if the enrichment in question – as in this case – consists in the saving of expenses for extraordinary matters, which the enriched party would or even could not otherwise have afforded. If the enriched person is aware of the lack of a legal cause, it cannot make any difference whether he first incorporates into his assets what he initially has received and spends it later, or whether it is the received performance which itself satisfies the extravagance. What is decisive is that the party in question, while knowing the legal cause is lacking, has actually received something for which this party, if this something is no longer present, must principally compensate in value according to § 818 II BGB.

It is with justification that von Caemmerer (ibid, further reference omitted) underlines that the regular measure of an unjustified enrichment claim is governed by §§ 818 I, II and IV, 891, 820 BGB, whereas the exceptional limitation to the changing amount of surviving enrichment under § 818 III BGB is intended to protect only a bona fide recipient. The same must already apply to the accrual of an enrichment if, as has been stated, there is no reason to treat the disappearance and the accrual of an enrichment in a different way. In such a case a mala fide recipient must accept being treated as if he had saved something and had in this way increased his assets (reference omitted). The compensation for the value of the received performance, which he owes under §§ 818 II, 819 BGB is – as in other cases (cf. BGHZ 37, 258, 264; BGHZ 36, 321, 323) – to be measured by the amount of the usual or reasonable remuneration.

5. (Defendant is to be considered mala fide.)

III. 1 The claim for payment of the fixed flight price for the defendant’s return journey from New York to Munich is allowed by the Appeal Court under the provisions on negotiorum gestio. The Appeal Court argues that, by transporting the defendant to Germany, the plaintiff conducted a business which was objectively in his interest. The application of §§ 677 et seq. BGB would not be precluded if the plaintiff believed it was acting under a valid transport contract concluded with the defendant. Nor would this application be prevented if the plaintiff, according to the legislation of the country of entry, was under a legal obligation to carry back the defendant. It was equally within the presumed will of his mother – her intention being decisive because she was the defendant’s statutory agent – that the defendant be transported back. Again, the plaintiff could require as compensation for expenditure the usual remuneration for its business performance.

2. The appeal fails again to succeed in its attacks against these considerations.

(a) In principle, it was up to the defendant to make arrangements for his return to Germany after his unsuccessful attempt to enter the USA, so that in transporting the defendant back to Germany, the plaintiff conducted a business which objectively was not its own. By this, it is presumed that it was at least also for the defendant that the plaintiff intended to carry out this business (BGHZ 40, 28, 31 [supra in translation]). The defendant has not been able to rebut this presumption. If the plaintiff mistakenly believed it was obliged to the defendant to carry him back, this does not stand in the way of negotiorum gestio (BGHZ 39, 87, 90; BGHZ 37, 258, 263). Equally, the circumstance that the plaintiff acted in its own interests, or in fulfilment of its own duties under public law, or of other duties under private law, does not prevent the conclusion that the plaintiff also carried out the defendant’s business (BGHZ 54, 157, 160; BGHZ 40, 28, 30 [supra in translation] with further references). The appeal has not argued against this.

(b) But the appeal argues, although without justification, that it was objectively not in the defendant’s interest that the plaintiff took care of his immediate return to Germany in one of the plaintiff’s planes. The Appeal Court has rightly stated that this saved the defendant from trouble which would otherwise have been unavoidable because of his attempted illegal entry into the USA, and from a possible enforced expulsion by the American immigration authorities. This shows sufficiently the objective interest which the defendant had in returning on a plane operated by the plaintiff.

(c) The Appeal Court was also right in ruling that it could be presumed that the defendant’s mother would consent to the plaintiff providing his return. This is in accordance with the jurisdiction of the present Senate, which, short of any evidence to the contrary, considers that the intention one must presume is the one which serves best the well-understood interests of the defendant (BGHZ 47, 370, 374).

On this point, the appeal argues that the plaintiff could not have presumed that the defendant’s mother had a particular interest in having her son return on a scheduled flight. He could equally have returned by boat, which would have been cheaper.

This argument cannot be followed. The plaintiff was allowed to presume that the defendant’s mother would intend to do what would be the best for her son in any given circumstances. The defendant was by no means in a position to embark at his pleasure on a return voyage to Germany by boat, but would have been exposed to all the dangers connected with him first being interned, if the plaintiff had not taken him instantly back to Germany. The latter was the solution which, under the given circumstances, served best his rightly understood well-being, even if the costs for the flight were relatively high, albeit not intolerable.

(d) It does therefore not matter whether the immediate return of the defendant was also within the public interest (§ 679 BGB).

(e) Rather, the defendant must compensate the plaintiff for its expenditure on his return flight under § 683 I BGB. Because the carrying out of this business constitutes an activity which the plaintiff undertakes within the framework of its business, the plaintiff is entitled to require that the usual remuneration be paid for the performance which it has made. This is the overwhelming majority opinion in jurisdiction and academic writing, to which this Senate acceeds (references omitted).

©1997 Gerhard Dannemann. HTML edition © 1998 Gerhard Dannemann. This translation first appeared in The German Law of Obligations, Vol. I: The Law of Contracts and Restitution, by B.S. Markesinis, W. Lorenz and G. Dannemann, Oxford University Press 1997, as case no. 130 on pp. 771 et seq. Reproduced by permission of Oxford University Press.The contents of this page may be downloaded and printed out in single copies for individual use only. Making multiple copies without permission is prohibited.

Bundesgerichtshof (Eight Civil Senate) 11 January 1971, BGHZ 55, 176

A thief stole two young bulls from the plaintiff, a farmer, and sold them to the bona fide defendant for DM 1,701. The defendant processed the animals in his meat product factory. Both of the previous court instances allowed the plaintiff’s action that the defendant should pay him compensation for value to the amount of DM 1,701. The defendant’s appeal, while admitted, was without success.

Reasons

1. The defendant could not acquire title in the animals from the thief in accordance with § 935 I BGB. The plaintiff therefore remained owner of the animals when the defendant took possession of them. It was only after the animals had been slaughtered and when the meat was processed in the defendant’s factory that the defendant acquired title in accordance with § 950 BGB. This is not disputed between the parties.

The plaintiff therefore lost property in the animals “as a consequence of the provision” of § 950 BGB. According to § 951 I 1 BGB, he can therefore require “compensation in money in accordance with the provisions on the return of an unjustified enrichment”. It has been well settled by the courts (BGHZ 17, 236; BGHZ 35, 356, 359s; BGHZ 40, 272, 276) that this reference to the provisions on unjustified enrichment not only relates to the measure, but also to the grounds of liability for unjustified enrichment (so-called Rechtsgrundverweisung, reference to the grounds of a claim). Therefore, the plaintiff can claim against the defendant under this provision only if the general requirements for a claim in unjustified enrichment are met, in particular if the defendant acquired property in the meat without legal cause vis-à-vis the plaintiff. This is presently the case.

2. In particular, the contract between the defendant and the thief cannot serve as a justifying cause, i.e. as a ground which could justify that the defendant should be allowed to keep the property, which he acquired through § 950 BGB, without paying compensation to the plaintiff. §§ 932 et seq. BGB provide a final solution for the conflict of interests which arises when an unauthorized person disposes of somebody else’s property to a third party. Such a third party, if it is not mala fide, is protected if the owner did not involuntarily lose possession in the chattels. In this situation, the third party acquires title under §§ 932ss BGB and may keep the property without having to compensate the previous owner. In this situation, the contract between the unauthorized person and the third party is the cause which justifies this shift of wealth. However, in all other cases – including the present case, where the owner involuntarily lost possession in the chattels – the law solves this conflict of interest by favouring the owner. He keeps the property and therefore the claim for surrender under § 985 against the third party as possessor. If this third party later becomes owner as a consequence of §§ 946-948, 950 BGB, such acquisition of title is not justified by the previous contract for acquisition which the unauthorized party entered into with the third party. The third party’s acquisition of title is not based on this contractual disposition. On the contrary, under § 935 BGB this contractual disposition is without any effect, and the third party acquires property only under §§ 946 et seq. BGB. However, these provisions do not in themselves contain a justifying cause for this shift of wealth, as can be taken from § 951 I 1 BGB.

3. The claim under § 951 I 1 BGB is not excluded by the specific regulations in §§ 987-993 BGB (cf. § 993 I 2nd alt. BGB). It is true that the plaintiff remained owner and the defendant unauthorized possessor of the animals until the moment when they were processed by the defendant. As a consequence of the processing by the defendant, the latter was no longer in a position to surrender the animals to the plaintiff. The defendant  is liable  in damages for such impossibility only under the requirements set out in §§ 989, 990 BGB (action pending, mala fide), which, however, have not been met in this case, as has not been disputed. However, this does not stand in the way of a claim under § 951 I 1 BGB, because this is not a claim for damages, but a claim for restitution.

This Court has repeatedly ruled that other restitutionary claims are not excluded by the specific regulations in §§ 987-993. In BGHZ 14, 7 et seq., a previous owner was allowed a claim for restitution in a case where a bona fide possessor used up the goods (in this case: fuel) for his own purpose and thereby saved expenses. Courts have also constantly ruled that a previous owner can claim restitution in the case where a possessor sells property which is not his own and inb this way acquires the value of this property. Under § 816 I 1, the possessor is bound to give up what he acquired by way of the disposition (reference omitted). The same also applies to the disposition of chattels in which the owner involuntarily had lost possession, once the owner ratifies the disposition, in particular when he claims against the person who made the unauthorized disposition under § 816 I 1 BGB. In none of these cases is the previous owner’s claim in restitution against the previous possessor barred by §§ 987-993 BGB. The reason for this is the same in all these cases. While a bona fide possessor should be proteced by §§ 987-993 BGB – within certain limits – against what appears to be unreasonable claims for damages by the owner, the same possessor should not be allowed to keep the value of the object to the extent that he has acquired this value by what objectively is a wrongful interference with the owner’s property rights. However, to this effect, all cases of Eingriffskondiktion (restitution for interference with another’s right) must be treated in the same way. In particular, this also applies to the present case, where the possessor, within the meaning of § 950 BGB, processes chattels of which the owner involuntarily lost possession and in this way strips the owner of his title in the chattels. The restitutionary claim under § 951 I 1 BGB which then arises will no more be excluded by §§ 987-993 BGB than the other aforementioned restitutionary claims (this is also the view taken by academic writing: [references omitted]).
4. As regards the measure of the restitutionary claim, the same principles must apply to this case as to restitutionary claims against the possessor for unauthorized consumption or unauthorized disposition. It has been well settled (BGHZ 9, 333; BGHZ 14, 7) that the previous possessor who faces a claim under § 812 or § 816 BGB cannot under § 818 BGB deduct from this claim the performance which he made towards a third party in order to acquire the object in question. This is because the claim for restitution replaces the previous claim for surrender of the object under § 985 BGB. The possessor could not rely on performance made to a third party as a defence against this claim for surrender. No more can the possessor do the same against a claim for restitution (BGHZ 47, 128, 130 et seq.). Rather, the possessor must rely on that third party to which he performed for claiming back his performance. The same applies to the situation governed by § 951 I 1 BGB (in the same sense already RGZ 106, 1021). It is therefore only from the thief that the defendant can claim back the DM 1,701 which he paid to that person. This payment does not amount to a defence under § 818 BGB against the plaintiff’s restitutionary claim.

©1997 Gerhard Dannemann. HTML edition © 1998 Gerhard Dannemann. This translation first appeared in The German Law of Obligations, Vol. I: The Law of Contracts and Restitution, by B.S. Markesinis, W. Lorenz and G. Dannemann, Oxford University Press 1997, as case no. 134 on pp. 786 et seq. Reproduced by permission of Oxford University Press.The contents of this page may be downloaded and printed out in single copies for individual use only. Making multiple copies without permission is prohibited.

Bundesgerichtshof (Third Civil Senate) 30 September 1963, BGHZ 40, 345

This case is first published in the German Law Archive courtesy of:

Translated German Cases and Materials under the direction of Professors P. Schlechtriem, B. Markesinis and S. Lorenz

Translated by Mr. Tony Weir, Trinity College, Cambridge

The plaintiff claims damages from the defendant /state on the ground that his car was damaged in an accident negligently caused by one of its traffic wardens in breach of his duty as such. The Landgericht granted the plaintiff’s claim in full, and the defendant’s appeal was dismissed. Only one issue remains in this further appeal, namely the amount of DM 37.20 plus interest for the plaintiff’s loss of use of the car for the three days it took to repair it. It is agreed that the plaintiff, a building contractor’s employee, would have used his car for private or business purposes had it not been for the accident, but that he hired no substitute vehicle and suffered no loss of wages or other income by reason of its absence. The parties have further stipulated that the sum in issue is claimed simply as damages for the loss of the possibility of using the car, and not for a proportion of taxes, insurance, garaging or other running costs.

The plaintiff argues that the loss of use for three days constitutes an economic loss compensable in money. The state does not contest the quantum of the claim, but denies liability altogether on the ground that this loss was not an economic one.
The defendant’s appeal was unsuccessful.

Reasons

I. The state’s liability for the consequences of the traffic accident arises under § 839 BGB in conjunction with art. 34 of the Basic Law.

II.

III. The objections raised by the appellant are without substance. The plaintiff may claim monetary compensation for the loss of the facility of using his car even though he did not obtain a substitute for the period during which his own vehicle was unusable owing to the official’s breach of duty.

1. Where, as here, compensation is claimed for damage to a motor vehicle, the nature and extent of the liability depend on § 249 ff. BGB, where ‘damage’ is basically the difference between the economic position of the victim after the damaging event and the economic position he would have enjoyed (leaving any claim for damages out of account) had the event not occurred (BGHZ 27, 181, 183-4 with further references).

Damages are awarded to meet this difference. The two alternatives offered by § 249 BGB (restitution in kind and payment of the sum necessary to reinstate the previous position) are both designed to place the victim who has suffered economic loss back in the same economic position he would have been in had the event calling for compensation not occurred. The aim is not to reproduce the pre-existing situation exactly as it was, but to produce the economic situation which the victim would otherwise have enjoyed. The basic idea of the law of damages is that the award should make the victim neither worse nor better off than before, and this is done by comparing the economic situations before and after the damaging event.
The idea of damage is thus not a purely legal concept, but rather an economic concept embedded in the law. The person liable in damages must restore the victim to the economic position which would have obtained but for the occurrence of the event generating his liability: he must place the victim in the same economic position he would have had but for the accident (BGHZ 30, 29; 32, 280-83; 35, 396, 398).

2. Once the idea of economic harm and the duty of compensation under § 249 ff. BGB are understood in this sense, the considerations which follow show that temporary inability to use a motor vehicle does indeed constitute economic harm even if no substitute is procured during the period when the car is unusable.

When we compare the economic situations before and after the damaging event, here the damage to the motor car, we see the following. Experience shows that temporary unavailability can affect the price of a car: one generally pays less for a car if delivery is to be deferred for some reason, such as having to wait for parts, than for a car which is ready to go. Again, when a car is not available for use, it cannot be let out on hire, as is generally possible even for a private person. Someone whose car has been damaged must normally pay to obtain a substitute or make use of trams, trains or other methods of transport. In such cases it is agreed that the loss is a material one because the difference between the economic position of the victim before and after the harmful event can be measured in money terms: one can render in figures the shortfall in economic value which is to be made good (BGHZ 11, 16, 26; 27, 181; 30, 29).

Economic analysis must also take account of the fact that the reason one incurs the significant costs of procurement, garaging, protection, insurance, motor taxes and so on is precisely in order to have a car constantly available for immediate use, especially to drive. The person who invests in a car today, whether he is in business as a commercial traveller or otherwise, or is an official, manager or workman, does so at least in part for economic reasons: he wants to utilise his time more rationally and in particular to make better, more effective, more productive and less wasteful use of his energies, and a car helps him to get to and from work more quickly and engage in leisure pursuits without being dependent on public transport. It is generally regarded as an economic advantage to have a car immediately available, standing in front of the house or in the garage, and this is so however often or rarely use is actually made of it.

For these reasons the economist sees the owner as suffering a detriment when an accident renders his car unusable for a time. From the economic point of view this is so not just in cases in which the car can only be resold at a lower price by reason of its temporary unavailability or cannot be let out on hire or money has to be spent on procuring a substitute or using other means of transport: the harm consists in the mere fact of its unavailability for use, and temporary loss of use is per se an economic harm which generates a claim for damages.

The principle in the “cruise” case decided by this Senate on 7 May 1956 (NJW 1956, 1234) applies here a fortiori. The convenience of having a car to use generally has to be “bought” by appropriate expenditure. This automatically “commercialises” it, so that the deprivation of that convenience constitutes the loss of the economic equivalent, which that expenditure was designed to procure.

On this view of the concept of damage the victim who does not spend money on either a substitute or other means of transportation must have a claim for damages no less than the person who by reason of the temporary unavailability of the car must accept a lower price for it or is unable to let it out on hire or has to spend money on alternative means of transport. This is in accord with the decision of this Senate of 11 July 1963 (NJW  1963, 2020) to the effect that the owner of a villa whose value was diminished by serious nuisances which could not be enjoined could claim a sum by way of compensation notwithstanding that he continued to live in the villa and neither sold it nor let it at a lower figure.

Of course the victim will often resent the lack of the car or feel angry or upset that it is no longer at his disposal while it is being repaired, but while such harmful feelings may well seem to be immaterial, they do not exclude the concurrent existence of the material loss consisting of its unavailability for use.

It is no objection to compensation that at the time of judgment this economic loss is over and done with. The harm is not neutralised by the fact that once the repairs were effected the car became fully usable again right up to the time of the court decision, for the loss of use was suffered in the past when the car was being repaired, and the economic loss suffered during that period is for the tortfeasor to make good by the payment of damages. There is nothing unusual in this. Where a vehicle is damaged and the victim buys another car, the courts have held that his claim for the diminution of the value of the old one is not to be reduced in favour of the tortfeasor by the consideration that he decided to keep it (BGHZ 35, 396). Again, an injured victim has been allowed the cost of tonics prescribed by a doctor which he could not afford to pay for himself (NJW 1958, 627). The claim for compensation for the harm consisting of an increased need is a claim which arises directly from the harmful act and is not a claim for reimbursement whose existence and extent depend on the amount of money paid out to meet those greater needs (RGZ 148, 68, 70; 151, 298, 300, 303f.).

It follows from all this that the loss here is an economic one.

3. Although § 249 sent. 1 BGB starts out from the principle of restoration in kind, the plaintiff here is entitled to claim damages right away. The claim before us is not to have the damage to the car itself made good, but for compensation for the distinct harm consisting of the loss of use of the car while that damage was being made good. Such a claim may arise even when there is no physical damage at all, as where an official in breach of his duty temporarily withholds the necessary documents. We need not decide whether the present claim for damages can be based on § 249 sent. 2 BGB, whereunder the creditor may as an alternative to reinstatement claim the money needed to procure a substitute for the damaged thing, or whether this provision is to be narrowly construed as referring only to the sum necessary to cure the immediate physical harm. The claim for money damages can be inferred from § 250 BGB. It is true that under this provision it is a precondition of a monetary claim to cure the harm that the victim have given formal notice to the tortfeasor that unless within a specified period restoration is effected (here by providing a substitute vehicle), it will be refused. But in accordance with the general principle applied in cases of delay, no such notice need be given if it would be fruitless, as where the tortfeasor has made it clear that in no case can he or will he make compensation. This is normally the case in motor accidents, where it is obvious that the substitute is wanted right away and the other party needs time to investigate the legal and factual situation before he can properly respond. The driver covered by a liability policy is forbidden by its very terms to give such an assurance himself and the insurer can only give it after the time needed for further inquiries. In practice it is virtually unknown for a substitute vehicle to be made available during the period when a damaged car is being repaired; it is normally left to the victim to decide how to deal with the loss of use of the car during the repairs, and the requisite sums of money are forthcoming only thereafter. It would fly in the face of the known facts to require notice to be given, for any such notice would be a waste of time and an empty formality. The victim should be treated as if he had sought and been refused a substitute vehicle. This is especially so when the person causing the harm has made a blanket denial of liability, as the defendant has done even in this appeal. Since the defendant would certainly have rejected any demand that it provide a substitute car for the period of repairs, it would have been pointless for the plaintiff to make such a demand.

Accordingly the victim who has lost the use of his vehicle during the period of repairs is entitled to claim damages from the party responsible even if he has not hired a substitute or used other means of transport, and even if he did not put the defendant on notice to provide one.

Another possible reason for denying the need to give notice under § 251 BGB is that it is impossible to restore the original situation since the unusable car cannot be rendered usable ex post facto. But this need not be decided now.

4. There will certainly be cases in which the temporary loss of possession or use of a vehicle is so imperceptible to the victim that the economist would see no harm at all. This might be the case where the owner of the damaged car was away on holiday and would not have used the vehicle or even have allowed anyone else to use it. The same may be true of a person with no driving licence who inherits a vehicle and takes it off the road with the intention of selling it right away or of a person prevented by an administrative error from using the car even if undamaged. This is not one of those cases.

While it is true that liability can be reduced or extinguished under § 254 par. 2 BGB if the victim fails to avoid or lessen the harm, we need not now ask precisely what the victim must do in this regard. A person who could claim the cost if he had hired a car cannot possibly be said to be failing to mitigate the damage just by claiming damages without having hired one. That applies here, for it is uncontested that in the three days it took to repair the car the plaintiff would have used it for business or private purposes and so would have a claim for compensation for the cost of a substitute, had he hired one. We reject the appellant’s argument that in the light of common experience the very fact of failure to hire a substitute shows that the plaintiff could without difficulty or disadvantage so organise his activities as to overcome the lack of a usable car; experience shows no such thing. The defendant has not suggested or proved any way in which the plaintiff could reasonably have contributed to diminishing the damage.

5. There should be no difficulty in determining the amount of harm resulting from general expenses, such as the running costs of the car (insurance, taxes, garaging, interest on and amortisation of the capital cost), but the matter need not be investigated now since the parties are agreed on the sums payable and they form no part of the sum under appeal.

The only surviving claim is for the harm resulting from the loss of use of the car over and above the waste of those running costs. A starting point is suggested by the cost of hiring a comparable vehicle. It is true that the loss of a victim who does not hire a car may generally be less than such cost, given that it includes an element of profit for the hire firm, but we need not so hold today, nor lay down in detail the principles for evaluating the harm when no car is hired and other means of transport are not used, since the parties are not in dispute over the amount: it is accepted by the defendant, no doubt in the interests of simplicity in view of the low amount in issue, that quite apart from its liability for a proportion of the so-called general costs, the loss to the plaintiff through not having his car to use for three days was at least the DM 37.50 which he claims.

©1998 University of Oxford. Since 2002: © Translation The University of Oxford and Professor Markesinis 1998. HTML edition © 1998 Gerhard Dannemann.

Bundesgerichtshof (Sixth Civil Division) 19 September 1961
BGHZ35,363 = NJW i96i,2059
(with approving notes by W. Rötelmann NJW 1962, 736 and H. Hubmann = VersR 1962, 350, 562).

This case is first published in the German Law Archive courtesy of:

Translated German Cases and Materials under the direction of Professors P. Schlechtriem, B. Markesinis and S. Lorenz

Translated by F H Lawson and B S Markesinis

Copyright: Professor B S Markesinis

The plaintiff is a professor in the law faculty of the University of G at which he holds a chair of international and ecclesiastical law. From a stay in Korea he had brought with him a ginseng root, which he placed at the disposal of his friend Professor H, a pharmacologist, for research. The latter mentioned in a scientific article on ginseng roots that he had come into possession of genuine Korean ginseng roots ‘through the kind assistance’ of the plaintiff. This led to the plaintiff being described in a popular scientific article, which appeared in the year 1957 in the H and W journal, along with Professor H and other scientists, as one of the best-known ginseng researchers of Europe.

The defendant company dealt in a tonic containing ginseng. In its advertisement for this tonic the plaintiff was referred to as an important scientist expressing an opinion on its value, and in an editorial note, printed in immediate connection with an advertisement in another journal, allusion was made to its use as an aphrodisiac. Both the advertisement and the journal were very widely distributed.

The plaintiff claimed that he had suffered an unauthorised attack on his personality right; and that the advertisement gave rise to the impression that he had, for payment, issued an opinion on a controversial topic in a department of knowledge not his own, and unprofessionally lent his name to advertising a doubtful product. He had suffered damage to his reputation as a learned man and been made an object of ridicule to the public and above all to his students. In reliance on BGHZ 26, 349 (Herrenreiter) he claimed DM 10,000 as satisfaction for the harm done to him.

The Landgericht awarded him DM 8000 as damages for pain and suffering. The appeals to both the Court of Appeal and the Bundesgerichtshof were unsuccessful for these

Reasons

1. By invoking the plaintiff’s scientific authority in its advertising to encourage belief in the effectiveness of its preparation for the mentioned purposes, the defendant company unlawfully disparaged his personality right (§ 823 I BGB). The reference to researches by the plaintiff, which lacked any objective foundation, was in the circumstances calculated to make him an object of ridicule in society and lessen his scholarly reputation. Moreover, he was bound to feel outraged by the way his name was used in advertising a preparation recommended as a sexual stimulant. The defendant company’s conduct was also blameworthy. Before using the plaintiffs name for its advertisement it ought to have sought his agreement or at least to have ascertained whether and where he had stated what was asserted in its advertisement. The information in a popular article in the H and W journal ought in no way to have been adopted unseen; it was moreover substantially altered. The Court of Appeal rightly characterised the defendant’s conduct as irresponsible. Likewise approval must also be given to the Court of Appeal’s finding that the defendant company was also responsible for the note in the M journal which adopted in somewhat modified form the contents of the-advertisement. Even if it was the advertising agency employed by the defendant company that caused the note to appear, the information contained in it depended on material supplied by the defendant company. At the very least, the defendant company had not supervised the advertising agency as was necessary.

2. The senate also agrees with the Court of Appeal’s view that the plaintiff has a claim to compensation for immaterial damage. The case is, in its main lines, very similar to those decided by the Bundesgerichtshof and reported in BGHZ 26, 349 (Herrenreiter) and 30, 7. In both cases the way a product was advertised attacked the protected sphere of the personality right of persons who claimed compensation for the unlawful injury. In both the conditions for compensation for material damage were absent or at any rate not proved. If, in the circumstances, no permission to use a name or portrait for advertising purposes is in question, it is not possible to estimate pecuniary compensation on the lines of a licence fee according to the principles governing so-called unilateral acquisition without permission. The First Civil Senate awarded damages for pain and suffering to the plaintiff in the case decided by it and reported in BGHZ 26, 349 and also regarded an award of -called ‘immaterial damages’, with its function of satisfaction as the adequate compensation that the law must afford to a plaintiff for the violation of his personality right. From the decision reported in BGHZ 30, 7 it must be taken that the standpoint of the Fourth Civil Senate is at least not at variance with that of the First Civil Senate.

This Senate agrees with the First Civil Senate that satisfaction may be awarded to a person affected by the blameworthy infringement of his personality right. It is indeed stated in § 253 BGB that money compensation can be claimed for non-pecuniary damage only in cases expressly designated by the law. When the BGB established that enumeration principle, the high value of the protection of human personality and its special sphere had not received the recognition that it enjoys according to Arts. I and 2 I of the Constitution. From the standpoint of the BGB, the protection of property interests always stood in the foreground, whereas the personal worth of a human being received only insufficient and fragmentary protection. In recognising a general personality right of mankind and granting it the protection of § 823 I BGB, the courts drew for civil law purposes the consequences resulting from the rank the Constitution assigned to the worth of human personality and the protection of its free development. That protection, however, would be incomplete and full of loopholes if an infringement of the personality right did not give rise to a sanction adequate to the violation. Just as the restriction of protection by the law of delict to specific legal interests of a human being has proved too narrow to afford the protection of personality required by the Constitution, so a narrowing of immaterial damages, for immaterial loss to cover only injury to specifically mentioned legal interests, no longer conforms to the value-system of the Constitution. For Art. I declares it to be an urgent obligation on the public power to protect the sacred dignity of the human being. Article 2 I puts the right of a human being to free development of his personality at the head of the fundamental rights. If the law of delict, in protecting the personality right in the non-material realm, retreated completely to a position where it merely protected the particular personality interests mentioned in Art. 2 II, which are emanations from the personality right, the civil law would not be paying attention to the value-decision of the Constitution. The elimination of damages for immaterial loss from the protection of personality would mean that injury to the dignity and honour of a human being would remain without any sanction of the civil law, which deals with the disturbance of essential values and makes the doer of injury owe satisfaction to the victim for the wrong done to him. The law would then renounce the strongest and often only instrument calculated to ensure respect for the personal worth of the individual.

3. That does not mean that the legal consequences of injuries to body, health, and freedom on the one hand and the violation of the personality sphere on the other hand must be exactly the same or at least largely correspond to each other. A need for differentiation is already indicated by the fact that the factual aspect of an injury to a general personality right is much less specific than where body, health, or freedom is injured. That means that there are many marginal cases where the question is whether the case is one included in the generalised description of violation of the personality and whether, if it does, the unlawfulness is not excluded by the competing rights of the ‘offender’, among which the right to free expression of opinion deserves particular attention. It is precisely where a so-called balancing of interest must take place that the limits of what is allowed are not always easy to fix. If for every overstepping of the limits, however petty, compensation for immaterial loss were to be awarded to the person affected, there would be a danger that unimportant injuries would be used inappropriately to make a gain. The purpose of awarding satisfaction would then be stultified. It must further be observed that it is more difficult to apply the general criterion of monetary value to measure immaterial injuries to the personality right than the consequences of bodily injuries. In injuries to the general personality right the satisfaction function of damages for pain and suffering advances into the foreground as that of compensation recedes. Hence it will always be necessary to look at the kind of injury to the personality right to see if the person affected, whose injury cannot otherwise be redressed, should be granted satisfaction for the wrong he has suffered. That will in general only be the case when the doer of damage is blamed for a serious fault or when an injury to a personality right is objectively significant.

Only when such disturbances are serious may the civil law, taking seriously the protection of personality and its value as such, react against the injury by granting satisfaction to the person affected. Insignificant injuries do not call for satisfaction. Having regard to the special character of an injury to a personality right Swiss law, which has devoted greater attention than the BGB to legal protection of the personality (cf. Art. 49 I of the Swiss Code of Obligations) also restricts damages for immaterial loss to serious cases.

4. The conditions for an award of immaterial damages especially occur when – as in a present case – there is a wanton attack on the personality right of another person out of a desire to increase the force of one’s commercial publicity. Such an unfair attempt to succeed can be effectively countered only if it is burdened with the risk of an appreciable loss, and on the other hand, anyone who seeks to make money out of an unfair invasion of the sphere of another’s personality must not feel hurt if he is forced to pay a money compensation. For the plaintiff the outrage inflicted – in particular since the object was recommended for specific purposes – was not at all insignificant, the more so because he ran the risk of readers assuming that he had lent his name for a money consideration. The award of a money compensation by way of satisfaction was justified by the seriousness of the attack as well as by the seriousness of the fault.

The amount of satisfaction to be given was for the judge of fact to assess. It could be attacked on appeal only if it rested on an incorrect finding of the applicable law or if the judge of fact overlooked essential points of view. No such defects, however, are here apparent. The Court of Appeal did right in attaching importance to the spread of publicity, which extended to Austria and Switzerland. It was also an essential factor in fixing the amount of the satisfaction that the defendant company continued the advertising complained of even after being warned by the plaintiff, thus displaying an especially reckless attitude. On the other hand, the Court of Appeal observed in the defendant company’s favour that the mention of the name in the advertisement was not especially prominent, so that it might not have been noticed by the cursory reader.

©1999 Professor B S Markesinis. HTML edition by Lawrence Schäfer and © 1999 Gerhard Dannemann.