German products liability law relies on three concepts: traditional contractual liability, traditional tort liability, and strict liability based on specific statutes, such as the Products Liability Act of 1990,1 which implements the European Products Liability Directive,2 and the Pharmaceutical Products Act of 1976, amended last time by the Pharmaceutical Products Act of February 25, 1998.3 These three competing concepts supplement each other in a complex way. Rather than replace German autonomous4 products liability law, the new Products Liability Act adds a strict liability claim which is not available under the traditional German Civil Code doctrine.5 In general, a German plaintiff will bring his or her products liability claim under theories of both negligence and strict liability. As the buyer of a product, he might also seek to hold the seller liable on a contractual basis for any injuries caused by the product.6 This article, therefore, describes a variety of alternative claims that a plaintiff may file under German law.
II. PRODUCTS LIABILITY BASED ON CONTRACT
In German contract law, compensation for damages resulting from a defective product is granted under narrowly defined conditions. A buyer may only claim damages if the seller fraudulently concealed a defect, or if the good did not conform to a statement regarding its quality-ie., a breach of an express or implied warranty.
Codified German contract law, however, does not provide sufficient protection for the consumer for the following reasons:
fraudulently concealed defects are difficult to prove;8
not all product information can be considered a warranty;9
the claim for damages based on a breach of warranty is subject to an extremely short statute of limitations of six or twelve months after delivery of the good;10
only the seller, and not the manufacturer, can be held liable;11 and
only the buyer may recover damages.12
German courts have filled some, but not all, of the gaps in contract law. In some instances, the courts have construed an independent consultancy agreement to avoid the statute of limitations under sales contract law.13 Further, courts have developed a new concept called the Positive Vertragsverletzung (positive violation of a contractual duty).14 This judge-made concept allows a buyer to recover damages not covered by Section 463 of the Civil Code-especially those resulting from personal injury and property loss (excluding the loss of the product itself).15 Furthermore, the courts have extended the contractual protection to relatives and employees of the buyer who foreseeably come in contact with the product. 16
However, German judges, by denying claims against the manufacturer under contract law, have refused to go as far as their colleagues in France and Austria. Thus, the German system of contractual products liability has remained incomplete, particularly because it does not protect all product users, especially innocent bystanders. Instead, the Federal Supreme Court in its 1968 landmark decision, the Fowl Pest Case, decided to enhance the consumer's protection from defective products under the principles of traditional tort law.17
III. GERMAN CIVIL CODE TORT LIABILITY UNDER THE NEGLIGENCE THEORY A. Liability Under Section 823, Paragraph 1 of the Civil Code
1. Introductory Remarks
Section 823, Paragraph 1, of the Civil Code18 provides a catch-all provision for tort claims that is the leading tort provision in and outside of the products liability field. A person who willfully, or negligently, and unlawfully injures the life, person, health, freedom, property, or other right of another is liable to compensate him for any damages arising therefrom.19 German products liability law developed under this rule before the Products Liability Act was promulgated.
Because the structure of Section 823, Paragraph I of the Civil Code was not designed to cope with the specific difficulties which arise in the area of products liability, the German courts had the challenging task of applying the provision to various product liability issues. …