Guide to GmbH law: The duties and liability risks of the managing director of a GmbH

June 26, 2023/in Compliance, Liability law

LEGAL+ NEWS

Guide to GmbH law: Managing director activities in the GmbH – On the duties and liability risks of the managing director of a GmbH

From years of advising medium-sized companies, the author of this article has come to realize that their managing directors are usually legally inexperienced and are not sufficiently aware of the obligations associated with their activities and thus the liability risks if these are not observed.

A. Introduction

The central legal standard that provides information on the duties of the managing director of a GmbH is § 43 Aba. 1 GmbHG:

“The managing directors shall exercise the diligence of a prudent businessman in the affairs of the company.”

Accordingly, the managing directors must act “in the affairs of the company” with the diligence of a prudent businessman.

In principle, the company’s creditors are liable for every contractual and non-contractual obligation.

fault of its managing directors (Sections 31, 278 BGB) only the GmbH. As a rule, the managing director must also only be liable to the company for the breach of duties incumbent upon him.

are responsible. They are liable to pay damages to the GmbH if the company suffers damage due to a breach of duty. This is regulated by § 43 Para. 2 GmbHG. In the case of intent, criminal liability, e.g. for breach of trust (§ 266 StGB), may even be considered.

In the external relationship, i.e. towards third parties, only the GmbH is liable, which can indemnify its managing directors as described above. However, this does not mean that external liability of the managing directors is excluded.

In addition to personal liability in the area of tax and social security law, the managing director may also be liable on the basis of his own contractual obligations, on the basis of an induced legal appearance, on the basis of (personal) culpability when concluding the contract and in tort.

For the aforementioned reasons, every managing director of a GmbH is urgently recommended to be as familiar as possible with the requirements for proper managing director activity and the impending consequences both internally and externally. The following article is intended to provide information on this.

B. The duties of the managing director

The prerequisite for any liability is a breach of duty by the managing director.

The duties of the managing director arise from the law, the articles of association and – if applicable – from his or her employment contract. In the case of several managing directors, the rules of procedure often result in binding, liability-relevant allocations of responsibilities.

The obligations resulting from the law are presented below.

I. Starting point: Business Judgement Rule

First and foremost, it is of considerable importance that the managing director is granted a wide scope of action in managing the business of the GmbH.

A possible liability for damages only comes into consideration if the limits
of this scope of action granted to him are exceeded.

As a rule of thumb, a lawful discretionary decision is deemed to have been made if the managing director concerned “could reasonably assume when making a business decision that he was acting in the best interests of the company on the basis of appropriate information” (so-called business judgment rule). Liability for a breach of duty is then generally excluded.

The background to this broad scope for action is that acting in the interests of the company can necessarily involve consciously taking business risks. The danger of misjudgement and miscalculation is inherent in this.

In short, entrepreneurial action is always associated with risks. Only actions that can be classified as completely irresponsible go beyond this scope of action.

II Duty to manage the company diligently and properly

The task of the managing directors is to manage the company. The managing directors have a duty to ensure that the company behaves lawfully in relation to third parties. In detail:

1. promotion of the purpose of the company

The management must actively pursue the purpose of the company as set out in the Articles of Association.

Accordingly, the Management Board is responsible in particular for managing the day-to-day business, developing the long-term corporate policy and, if necessary, implementing the corporate policy adopted by the shareholders.

According to
Section 43 (1) GmbHG, the benchmark for the proper fulfillment of these management duties is the “diligence of a prudent businessman”. This is substantiated by the duty to carefully determine the basis for decisions, to focus exclusively on the company’s best interests and not to take excessive risks (business judgement rule!).

If the above is observed by the managing director, taking a risk that later materializes or another wrong business decision is not in breach of duty and therefore does not give rise to liability.

2. binding to the law (so-called legality obligation)

When fulfilling legal obligations, a breach almost inevitably leads to a breach of duty in the internal relationship as well. Legal obligations must therefore be observed at all costs. The managing directors cannot assume that the shareholders do not wish to fulfill these obligations. This applies regardless of whether the duties are based on public law (e.g. tax law, social security law) or private law (e.g. the duty to ensure road safety).

3. no binding commitment to contracts

However, the situation is different when it comes to fulfilling obligations under private law arising from contracts.

It may well make business sense not to fulfill such obligations
and instead to wait for claims for damages and, if necessary, to fulfill them
(so-called “useful” breach of duty).

If the managing director comes to this conclusion after due consideration, there is no breach of duty on his part in relation to the company in this case.

III Duty of loyalty

The managing director has a special fiduciary duty to the company as an executive body, which means that in all matters affecting the interests of the company, he must pursue the company’s interests alone and not his own advantage or the advantage of third parties.

The fiduciary duty is important as a special duty compared to the general duty to manage the company because there is no entrepreneurial room for maneuver if the fiduciary duty is fulfilled. The above-mentioned duty to act in accordance with the law is a particular consequence of this duty of loyalty.

One of the consequences of the duty of loyalty is that

Every managing director must make their full working capacity available to the company; overtime may also be owed.
A managing director may not resign from office without consideration for the GmbH (no “resignation at an inopportune time”).
Every managing director is subject to a comprehensive non-competition clause.
Important: The managing director may not exploit his position for his own benefit. In particular, he may not exploit business opportunities of the GmbH for himself or enrich himself in any way to the detriment of the GmbH.
Every managing director is subject to a comprehensive duty of confidentiality.

IV. Exemption from and reduction of liability

To a certain extent, it is an exemption from liability if the managing director has breached a duty without fault. This is because there is generally no liability without fault.

If there is a breach of duty, the managing director is presumed to be at fault. He would therefore have to prove that he is not liable in the individual case due to a lack of fault.

It is possible, for example, for the managing director to exonerate himself by claiming that he did not know and did not need to know that he was breaching a duty. This would have to be examined and assessed on a case-by-case basis.

In addition, the following cases may possibly exonerate the individual managing director:

1. allocation of responsibilities if there are several managing directors

Unless the articles of association or shareholder resolutions
provide otherwise, several managing directors are jointly authorized and obliged to manage the company.

Any delimitation of tasks may result from corresponding shareholder resolutions. In the absence of such resolutions, the managing directors themselves can allocate and delimit areas of responsibility among themselves. This requires that this division is made visible to the outside world, preferably in writing. In addition, the allocation in question must be in line with qualifications. It should also be noted that not every task can be assigned to the management.

The consequence of an effective division is that the individual managing director only has supervisory duties with regard to his co-managing directors. In principle, he is no longer responsible for the individual decisions made by the co-managing director.

2. delegation of duties

In principle, the GmbH managing director may delegate duties incumbent upon him without restriction. It goes without saying that such a permissible delegation of duties does not automatically lead to a release from liability. Rather, the managing director has a comprehensive duty of control and supervision as a result of the delegation. Read my separate article.

3. instructions from the shareholders

The shareholders of the GmbH can issue instructions to the managing directors at any time. The shareholders’ meeting is normally authorized to issue instructions, but not the individual
shareholders.

The managing directors’ duty to comply with instructions follows from the shareholders’ right to issue instructions. Failure to do so is a breach of duty and can lead to the managing director’s liability
. Conversely, managing directors are exempt from any liability if they act on the basis of a permissible instruction from the shareholders’ meeting.

The shareholder resolution therefore shifts the responsibility for the relevant action from the management to the shareholders. This even applies in principle if the company is deliberately harmed as a result!

This shift in responsibility is limited where the law sets limits for the shareholders and refuses to allow the corresponding shareholder resolution to take effect, i.e. declares it null and void. These are the cases of § 241 AktG, which also apply accordingly to the GmbH.

4. finally: liability relief in the employment contract

According to the prevailing opinion, the liability of the managing director can be limited via his employment contract. However, this appears questionable for reasons of creditor protection. This is because the creditors of the GmbH are dependent on the GmbH being managed with the necessary care. However, the law ultimately permits a restriction. In particular, the following limitations of liability are recognized as permissible:

Exclusion of liability for negligent breaches of duty,
Limitation of liability to a maximum amount,
Shortening of the limitation period.

C. Cases of internal liability of the managing director

The standard liability standard is Section 43 (2) GmbhG, which applies if

– a managing director has breached a duty incumbent on him (see above),
– he is at fault,
– no other exemption from liability applies, and
– the company has suffered a loss as a result.

In addition, there are the following, more specific cases of liability:

I. Increased liability for damages in cases of § 43 para. 3 GmbhG

§ Section 43 (3) of the German Limited Liability Companies Act (GmbHG) provides for more stringent and mandatory liability for managing directors in two specific circumstances.

These circumstances relate to the capital maintenance requirement and serve to protect creditors. The increased liability applies if, contrary to

§ 30 GmbHG payments are made from the company’s assets required to maintain the share capital, § 43 Para. 3 Sentence 1 Alt. 1 GmbHG, or
own shares in the company are acquired in accordance with the provisions of § 33 GmbHG, § 43 Para. 3 Sentence 1 Alt. 2 GmbH.

The facts are also fulfilled if equity-replacing loans within the meaning of Section 30 GmbHG are repaid to the shareholders. This follows directly from the fact that these are treated in the same way as share capital and therefore may not be repaid in the same way as share capital. However, the situation is different for equity-replacing loans in accordance with §§ 32a, b GmbHG. Repayment is permitted here, but the company may be entitled to reimbursement. Accordingly, the managing directors are not acting in breach of duty in the event of repayment in accordance with § 43 Para. 3 GmbHG. Whether the repayment is nevertheless in breach of duty in the specific situation must be assessed independently of this. In any case, it is permissible following corresponding instructions from the shareholders’ meeting.

The liability of the managing directors is mandatory in the aforementioned cases, whereby, as in all other cases, fault on the part of the managing director is a prerequisite for liability. If necessary, liability can also be reduced, i.e. limited to gross negligence, intent or a limitation of the amount. Acting on the instructions of the shareholders’ meeting only exonerates the managing director in accordance with § 43 para. 3 sentence 3 GmbHG as long as the claim is not asserted to satisfy the creditors.

II Compensation obligations in the event of a breach of the duty to file for insolvency, section 15a (1) InsO

The GmbH managing director’s obligation to file for insolvency, which was previously regulated in Section 64 GmbHG (old version), is now regulated centrally for all legal entities in Section 15a InsO.

If there is a reason for insolvency – insolvency or over-indebtedness – every managing director is obliged to file for insolvency and thus bring the company into proceedings in which the creditors’ claims are satisfied as far as possible.

According to Section 15b (1) InsO, managing directors may no longer make payments on behalf of a company once it becomes insolvent or overindebted. Payments are therefore generally prohibited from the time the obligation to file for insolvency arises. This is because the managing director may not favor individual creditors by making payments that reduce the available funds at the expense of the creditors as a whole.

An exception applies to payments that are compatible with the diligence of a prudent and conscientious manager, section 15b (1) sentence 2 InsO. In these cases, the payment may not be in breach of duty from the outset. The criterion for assessing the duty of care to be observed is the objective interest of the creditor.

The question of when a payment is deemed to be “consistent with the due care and diligence of a prudent and conscientious manager” is specified in Section 15b (2) and (3) InsO – a novelty compared to the previous legal situation:

According to Section 15b (2), payments that are made “in the ordinary course of business”, in particular those payments that are “necessary to maintain business operations”, are deemed to be consistent with the diligence of a prudent and conscientious manager.

However, pursuant to section 15b (2) sentence 2 InsO, payments made in the ordinary course of business within the meaning of section 15b (2) sentence 1 InsO are only privileged as long as the managing directors – which they must demonstrate and prove – “take measures to permanently eliminate insolvency maturity or to prepare an insolvency application with the diligence of a prudent and conscientious manager”.

§ Section 15b (3) InsO stipulates that payments made after the expiry of the insolvency application period pursuant to section 15a (1) InsO are not compatible with the diligence of a conscientious manager. This means that the manager who files the insolvency application late and has made payments that reduce the assets during the delay is regularly liable in accordance with section 15b (1) InsO.

The consequence of a prohibited payment is then a corresponding reimbursement obligation on the part of the managing director; section 15b (4) sentence 1 InsO.

D. The external liability of the managing director

Liability of the managing director towards third parties (external liability) is the exception, because the legislator has made a fundamental decision in § 43 Para. 2 GmbHG in favor of internal liability of the managing director towards the company.

The following cases of nonetheless existing external liability are significant:

I. External liability under civil law

External liability of the managing director may arise from civil law as follows:

1. quasi-contractual liability due to so-called culpa in contrahendo (c.i.c.), §§ 280 para. 1, 311 para. 3 BGB

An external liability of the managing director may arise on a contractual level from Section 311 (3) BGB.

According to Section 241 (2) of the German Civil Code (BGB), legal duties to protect can also exist for a third party who “claims a particular degree of trust and thereby significantly influences the contract negotiations or the conclusion of the contract”.

Liability is discussed in the following cases:

Economic self-interest

Personal liability of the managing director towards third parties is initially considered if he has such a close (economic) relationship with the subject of the contract negotiations that he is ultimately acting as a representative on his own behalf.

The managing director is then liable under the aspect of culpa in contrahendo pursuant to Sections 280 (1), 311 (3) BGB due to direct economic self-interest. The standards to be applied for this self-interest are strict. It is not sufficient, for example, that the negotiating managing director is also the sole or majority shareholder of the GmbH or that he acquires a commission claim by concluding the contract. The BGH has affirmed liability in the event that the managing director’s activity is aimed at remedying damage for which he could otherwise be held liable by the company itself or in cases in which the managing director did not want to pass on the contractual performance to the company from the outset but wanted to use it for his own specific purposes.

Utilization of special personal trust

A further group of cases is the use of special personal trust by the managing director. This refers to cases in which the managing director generates additional, particularly personal trust in the completeness and correctness of his declarations that goes beyond normal negotiating loyalty and on which the other party’s decision is based. It is required that the managing director has made a declaration similar to a guarantee to the contractual partner.

2. liability in tort, Section 823 (1) and (2) BGB

A managing director’s liability towards third parties may also arise from tort law.

The prerequisite is that the managing director damages a third party in direct connection with his activities as managing director and in doing so culpably violates either a protected good within the meaning of Section 823 (1) BGB or a protective law within the meaning of Section 823 (2) BGB.

The company itself may be jointly and severally liable with the managing director.

A distinction must be made between active action and omission:

Liability for active actions

If a managing director’s own actions violate a legal interest specified in Section 823 (1) BGB, in particular the life, limb or property of a third party, the managing director is personally liable alongside the company. This is largely undisputed.

The vicarious liability pursuant to Section 823 para. 2 BGB extends the external liability limited to only a few named legal interests pursuant to Section 823 para. 1 BGB by an additional
liability under protective law.

While § 34 GmbHG is not a protective law, the following can be considered protective laws whose violation by the managing director can trigger liability: § 35a GmbHG, § 58 Para. 1 No. 2 GmbHG, § 82 GmbHG, § 85 GmbHG and § 15a Para. 1 InsO.

Various other protective laws can be found in criminal law, such as § 266 StGB (breach of trust), § 263 StGB (fraud), §§ 266a para. 1 StGB, 14 para. 1 no. 1 StGB (obligation to pass on employee contributions to social security) and §§ 283 para. 2 sentence 1 no. 5, 7, 283b para. 1 no. 1, 3 in conjunction with § 14 para. 1 no. 1 StGB (bankruptcy offenses). § Section 14 para. 1 no. 1 StGB (bankruptcy offenses).

If the managing director violates such a protective law through his own negligent or willful, unlawful and culpable actions
, he shall be held directly and personally liable to the injured third party under civil law in addition to any criminal liability.

Liability for omission (guarantor liability)

Liability for injunctive relief under civil law presupposes that the managing director
is under an obligation to intervene in the sense of a duty to avert success.

This is particularly relevant in the area of traffic safety and organizational duties towards third parties. As already explained, a breach of the duties resulting from the managing director’s position as an executive body generally only leads to liability towards the company.

From this, the BGH deduces that the managing director is not liable to third parties even if he was aware, for example, of competition law infringements, copyright or trademark infringements and failed to prevent them.

Something else only applies if the managing director assumes a “guarantor position” to protect third parties from endangering or infringing their legal interests. This does not result from the mere position as managing director of a GmbH. Rather, the managing director must have breached his own duty of conduct or organization over and above his position as an executive body, which requires special justification in the form of a tort-specific duty to intervene.

It is recognized that GmbH managing directors have a guarantor position that gives rise to liability, particularly in the following cases:

as a so-called protective guarantor for the assumption of warranty for third-party goods entrusted to the GmbH in the broader sense
as a so-called supervisor guarantor from “traffic safety obligation” by virtue of taking over the safeguarding of “GmbH’s own” sources of material hazards such as: hazardous operating goods, vehicles, equipment, etc.

In the case of breaches of competition law by the GmbH, mere knowledge and the possibility of preventing the breach of competition law alone is not sufficient – contrary to what was previously assumed. Rather, the infringement of competition must be based on conduct attributable to the managing director, e.g. in the case of a measure that is typically decided at management level. Liability for injunctive relief may also be considered if the managing director has created a source of danger for competition law infringements, for example by staying abroad permanently, and in this way avoids the possibility of taking note of any competition law infringements and initiating appropriate countermeasures.

3. damages due to delay in filing for insolvency

The external liability of the managing director under tort law for delay in filing for insolvency deserves special mention.

§ Section 15a (1) sentence 1 InsO obliges the managing directors of a GmbH to file for insolvency within three weeks (insolvency) or six weeks (over-indebtedness) of the occurrence of a reason for insolvency. This obligation exists in the interests of all legal transactions, which are to be protected from insolvent companies. Accordingly, Section 15a (1) sentence 1 InsO is a protective law in favor of all creditors of the GmbH.

By breaching the duty to file an application, the managing director may therefore be personally liable for damages in accordance with section 823 (2) BGB in conjunction with section 15a (1) sentence 1 InsO.

The only prerequisite for liability is that the managing director is in breach of duty and
culpably fails to file for insolvency in good time. Please refer to the above explanations under C. II.

New creditors whose liabilities were established after the existence of a reason for insolvency are entitled to compensation for their full loss, not just the so-called quota loss. They can claim this themselves, but not the insolvency administrator. The managing director is liable for the so-called negative interest. He must therefore place the injured creditor in the same position as if the damaging event had not occurred.

Existing creditors, on the other hand, can only demand compensation for the so-called quota deterioration. For existing creditors, i.e. creditors who were already creditors of the GmbH before the reason for insolvency occurred, the damage consists in the fact that their claims became even more worthless than they already were. If the application had been filed in good time, the insolvency quota would have been correspondingly higher. Their loss therefore consists of the deterioration in the quota.

II External liability in tort for breaches of duties under public law

A GmbH is subject to a large number of obligations under public law.

These include obligations in the areas of occupational safety, social security, tax law, environmental protection law and, of course, product-related obligations such as food law or pharmaceutical law. As usual, the addressee of these obligations is primarily the GmbH itself. However, the managing director as an executive body is often also regarded as a “disruptor” within the meaning of the law on averting danger, meaning that the managing director can also be held liable under police and regulatory law. As the disruptive party can be required to eliminate the disruption, this can lead to personal liability of the managing director for the impairment of the legal interests of the general public or other third parties by the GmbH.

In addition, the liability of managing directors generally arises from Section 9 (1) OWiG and Section 14 (1) StGB. According to these provisions, corporate bodies are liable under criminal law and administrative offense law for the fulfillment of the company’s obligations, as the characteristics of the company are attributed to them personally. This also leads to civil liability of the managing directors under Section 823 (2) of the German Civil Code (BGB), insofar as these are duties that protect third parties.

The obligations arising from tax law and social security law deserve special attention:

1. tax liability

According to Section 34 (1) AO, the managing director must fulfill the company’s tax obligations at
.

He must keep the books, submit the tax returns and pay the taxes from the assets of the GmbH. Liability for breach of these duties is stipulated in § 69 AO. According to this, the managing director is liable if he breaches his tax obligations intentionally or through gross negligence.

The tax obligations are defined so broadly by case law that the
managing director is de facto responsible for ensuring that taxes are paid when due.

If this is not done, the managing director is liable.

However, the prerequisite is that funds are available from which the taxes can be paid. In this case, previous breaches of duty – e.g. failure to submit a tax return – no longer lead to liability, as they were not causal for the tax shortfall. The available funds also include credit funds that are available to the company or that can be procured. In principle, the due date of the taxes is decisive for availability.

2. liability for the payment of social security contributions

In the case of employee social security contributions, a distinction must be made between the employer’s share and the employee’s share. The former is a separate debt of the GmbH and must be paid by the GmbH from its own funds. It is a normal liability of the GmbH; no special rules apply to its payment. Therefore, the managing director is not personally liable in this respect.

However, the situation is different for employee contributions. The withholding of
employee contributions is punishable under Section 266a StGB. This obligation applies to the employer, i.e. the GmbH. However, the managing director is also criminally liable for the fulfillment of this obligation under Section 14 (1) StGB.

As Section 266a StGB is a protective law, the managing director is also liable under civil law in accordance with Section 823 (2) BGB if he does not pay the employee contributions. Particularly in a financial crisis, the managing director can no longer rely on the employees to whom he has assigned this task to carry it out as before. In this situation, the managing director’s duty of supervision comes into play; as a result, the managing director must personally ensure that the contributions are paid. If there are several managing directors, those managing directors who are not responsible for this according to the internal allocation of tasks also have an increased duty of supervision in the event of a company crisis.

As a result, the liability of the managing director for the employee’s social security contribution is similarly strict as the tax liability. This is the result of the criminal liability for non-payment of contributions under Section 266a StGB and the extension of employer status to the managing director under Section 14 para. 1 no. 1 StGB

III Finally: Liability for fines arising from breaches of supervisory duties

The possible liability under Section 130 OWIG for breaches of supervisory duties is also significant and should not be neglected. § Section 130 (1) OWiG reads:

“Any person who, as the owner of a business or enterprise, intentionally or negligently fails to take the supervisory measures necessary to prevent infringements of obligations in the business or enterprise which affect the owner and the violation of which is punishable by a penalty or fine, shall be deemed to have committed an offense if such an infringement is committed which would have been prevented or made considerably more difficult by proper supervision. The necessary supervisory measures also include the appointment, careful selection and monitoring of supervisors.”

The actual infringement is therefore committed by an employee who, however, cannot be held liable himself due to his lack of ownership. Therefore, the supervisor is liable under the law on fines for or in place of the GmbH, which is actually obliged but unable to perform, for incorrect supervision and organization of the company.

If such a “proxy offense” is committed, the GmbH is also liable for its own fine in accordance with § 30 OWiG.

The basic prerequisite for liability is the objective breach by an employee of the owner GmbH’s operating obligations. This breach is the reason for the (omitted) necessary supervision or monitoring on the part of the management, which depends on the type, sector, size, organization and risk areas of the company: Approximately the entire spectrum of the traffic duties of the negligence offenses as well as the guarantor duties of the omission offenses – in simple terms, “virtually everything”. In practice, omissions completely dominate.

As a minimum standard, proper business organization includes a proper division of tasks and organization, careful selection and supervision of employees, instruction and education of employees, monitoring and control of internal execution, reporting obligations of the supervisory and management bodies, intervention and, if necessary, sanctions in the event of violations as well as special supervision in the event of irregularities.

Please also read my separate article on the requirements for a delegation of duties

From a subjective point of view, the violation must have been conscious or at least foreseeable and avoidable by internal precautions with proper supervision and control of the supervisory body.

E. Conclusion

The aim of the above article is to show managing directors and those who want to become managing directors that the range of duties of the managing director as an executive body of the GmbH is very extensive and that personal liability, including external liability, is by no means rare.

The managing director is responsible for everything as the legal organ of the GmbH, which is incapable of acting on its own. Restrictions on his liability are possible to a limited extent – e.g. by delimiting responsibilities in the case of several managing directors – provided they have been implemented in an effective manner.

Many managing directors find it difficult to determine in individual cases which actions constitute the proper fulfillment of duties. As shown above, the managing director is obliged to act in the best interests of his GmbH on the one hand and to comply with the law on the other. As shown above, in individual cases, proper conduct may also include breaching a contract with a business partner.

In view of the numerous circumstances that can result in personal liability for the managing director, legal advice is strongly recommended, especially in unclear constellations.

Do you have any questions?

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Corona and contract law: Disruption of contracts

LEGAL+ NEWS

Corona and contract law: Disruption of contracts due to the coronavirus

The coronavirus is forcing countries around the world to take drastic measures to counter the spread of the virus. This is having a serious impact on contract law. Many of these measures mean that contracts can no longer be fulfilled by at least one party. The cases affected are countless. Some examples are

the supply contract that cannot be serviced,
the commercial tenancy agreement, which can no longer be fulfilled by the tenant due to a lack of turnover,
the vacation trip that has to be canceled by the organizer or service provider,
the court settlement, which has lost its basis due to the economic consequences of the coronavirus crisis and can no longer be (reasonably) fulfilled,
etc.

The list of examples could be continued almost endlessly. In each case, the question arises as to how the respective situation can be resolved under contract law. The buzzword on everyone’s lips these days is “force majeure”, although this in itself is of little help. For example, it seems questionable whether the emergence of the coronavirus can even be classified as a force majeure event.

The following article is not intended to and cannot offer a solution for individual cases. Rather, it presents legal approaches that can provide a solution in individual cases. The discussion is limited to cases where the respective contract contains no or only inadequate provisions.

Consequences of the coronavirus for current contracts – case groups

Various scenarios can be considered as a result of the coronavirus. The three main cases are as follows:

The contract cannot be definitively fulfilled by one of the parties (examples: flight cancellation, concert cancellation, cancellation of trade fairs, etc.).
The fulfillment of the contract is temporarily impeded (prominent example: Tenant can temporarily no longer pay commercial rent due to lack of turnover).
A contract can still be fulfilled, but its execution no longer appears reasonable for at least one party due to the effects of the coronavirus.

Corona and contract law: Relevant basic legal principles

When evaluating each individual case, it is helpful to first consider the following basic legal principles.

“pacta sunt servanda” – principle of contractual fidelity

The highest and most general basic principle is contractual compliance. Contracts must always be complied with (“pacta sunt servanda”).

Difficulties in the provision of services that arise after the conclusion of the contract and have not been considered or taken into account do not change the obligation to perform. Exceptions to this therefore require special justification.

“do ut des” principle for mutual contracts – Section 326 BGB

In the case of reciprocal contracts, the impossibility of performance by one party generally results in that party being released from its obligation to perform. At the same time, however, it also loses its claim to consideration. This occurs in § Section 326 (1) sentence 1 BGB expressed:

“If the debtor is not required to perform pursuant to section 275 (1) to (3), the claim to consideration shall lapse (…)”

Supplementary interpretation of the contract and disruption of the basis of the transaction

If the contract in question contains a loophole regarding the circumstance in question, which can be closed by (supplementary) interpretation of the contract in accordance with the principles of determining the hypothetical will of the parties (Sections 133, 157, 242 BGB), this solution approach always takes precedence over any “emergency instruments” such as, in particular, interference with the basis of the contract in accordance with Section 313 BGB.

In case law, it is rightly emphasized time and again that a clear distinction between supplementary contract interpretation and the institute of interference with the basis of the contract is hardly possible.

In any case, the legal provision made must always be given priority. In the legal literature (see Flume, BGB AT II, Das Rechtsgeschäft, 4th edition, 1992, page 326 f.), it is correctly pointed out that the interpretation of a contract cannot have the purpose of deriving a legal effect from a legal transaction.

“unfair” contract into a “fair” one,
or
“… to correct the forgetfulness or carelessness of a contracting party in the formulation of a legal transaction by subsequently introducing into the contract, for the benefit of that contracting party, provisions which, if he had been well advised, he would have made the subject of the contract, but which he did not make the subject of the contract.”

It follows from this correct insight alone that a hypothetical will of the parties to be determined must take precedence over a “general weighing of interests” on the basis of a preliminary understanding of the judge, which determines an adjustment of the contract according to the principles of the basis of the transaction.

Corona and contract law – Possible solutions for the above-mentioned case groups

Taking into account the principles and legal instruments summarized above, the following solutions are possible.

Corona and contract law – Case 1: A contract cannot be definitively fulfilled by one party

In the absence of a contractual provision to the contrary, the solution in case constellation 1 should usually be clear:

The contractual partner who is ultimately unable to perform due to force majeure is released from its obligation to perform, Section 275 (1) BGB. As a result, he loses the right to the agreed consideration (= as a rule: remuneration), Section 326 (1) sentence 1 BGB. In the absence of fault, claims for damages on the part of the creditor are generally out of the question.

Corona and contract law – Case 2: A contract cannot be fulfilled temporarily

The situation is more complex if there is no so-called firm deal and the service affected by the force majeure can probably be made up for later:

The advantage of agreeing force majeure clauses, in which it is regularly agreed how situations are to be dealt with, is particularly evident in this frequently encountered constellation.

Primary solution approach: Supplementary contract interpretation

If this is not the case, the supplementary interpretation of the contract comes into play as described above. Contracts often contain general agreements from which special duties of loyalty and/or cooperation can be derived. This detour often leads to results that are expressly provided for in force majeure clauses.

The obligation to make joint efforts to limit damage on both sides should be mentioned in particular. Mutual claims for damages are likely to be regularly excluded in the absence of fault, even without a corresponding contractual provision.

If necessary: recourse to the principles of frustration of contract

It is more difficult to assess the question of when the debtor’s obligation to perform finally ceases, with the result that the other party is also finally not required to perform. In § Section 313 (1) BGB it says:

“If circumstances that have become the basis of the contract have changed significantly after the contract was concluded and
the parties would not have concluded the contract or would have concluded it with different content if they had foreseen this change,
an adjustment to the contract may be demanded if one party cannot reasonably be expected to adhere to the unchanged contract, taking into account all circumstances of the individual case, in particular the contractual or statutory distribution of risk.”

In addition, the right to refuse performance under Section 275 (2) BGB also offers help in finding a solution:

“The debtor may refuse performance if this requires an effort that is grossly disproportionate to the creditor’s interest in performance, taking into account the content of the obligation and the requirements of good faith. When determining the efforts to be expected of the debtor, it must also be taken into account whether the debtor is responsible for the impediment to performance.”

In the interplay of the above statutory provisions, the debtor concerned is likely to have a claim to amicable termination of the contract if it is not foreseeable that the impediment to performance will cease to exist. this is based on the fact that the debtor cannot reasonably be expected to adhere to the originally agreed performance obligations.

Liability for damages in the event of non-performance?

However, this does not answer the question of whether the creditor is entitled to compensation for the “release” of the debtor from his obligation to perform. The fact that the debtor is not at fault speaks against this. The fact that the service can still be provided in principle and the lack of a contractual provision tends to indicate that the debtor bears the risk in question (pandemic) speaks in favor of this. It should not be forgotten that the risk in question is not beyond all probability. It is not without reason that force majeure clauses are the rule rather than the exception in contract law.

After all, the respective circumstances of the individual case are likely to be decisive.

Corona and contract law – Case 3: A contract can still be fulfilled, but its execution no longer seems reasonable for one party.

The case constellation according to which

a contract can still be fulfilled at a later date despite coronavirus restrictions,
its (later) implementation no longer appears reasonable for at least one party,

shows in particular how important contractual clauses that take contingencies such as “Corona” into account can be. If this is lacking, Section 275 (2) BGB, which is based on the principle of good faith and also on whether there would be a “gross disproportion to the creditor’s interest in performance” in the event of performance, helps again.

In the specific case, it would therefore have to be examined whether the debtor concerned, for whom the provision of services would be possible but significantly more difficult as a result of the corona effects, can successfully invoke the aforementioned right to refuse performance under Section 275 (2) BGB.

Conclusion on coronavirus in contract law: Disruptions to contracts as a result of the coronavirus usually require a case-by-case assessment

The possible factual constellations are almost endless. The law does not provide any model solutions, and even in the case of force majeure clauses, a specific solution is unlikely to be “obvious”. In most cases, a solution can only be found by carefully examining all the circumstances of the individual case. This has now also been confirmed by the Federal Court of Justice in the first Corona rulings, see this article.

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The limitation period for freight claims – the exception is the rule for freight compensation claims!

January 22, 2020/in Commercial law, Liability law, Nicht kategorisiert, Transportation law

LEGAL+ NEWS

1, 2 or 3? On the limitation period for freight claims - the exception is the rule for freight compensation claims!

The freight business is mass business. The industry is therefore reliant on being able to “shelve” individual freight orders promptly. For this reason, international freight law, which aims to protect the freight industry, provides for a much shorter limitation period for transport law claims than the standard limitation period. It is not easy to answer the question of which limitation period for freight claims actually applies in a specific case. 1, 2 or 3?

Statute of limitations for air freight

In the case of air transportation, the question is still relatively easy to answer. In general, a so-called limitation period of 2 years applies here (see Art. 35 of the Convention). However, it should be noted that this period only applies to claims for damages against the carrier. In addition, this period also applies in the case of so-called qualified fault, for which land freight law (see below) provides a special regulation. The relevant general statute of limitations rules apply to all other claims in the area of air freight.

Statute of limitations for land transportation

Land freight law is more complicated:

In principle, a short period of only one year applies to all claims “arising from transportation”. This begins with the delivery of the freight or from the day on which it should have been delivered. This legal situation applies – in relation to land transportation – essentially equally in the national (439 HGB) and international area (Art. 32 CMR).

3-year limitation period for freight claims in the event of qualified fault – the rule for freight compensation claims

By way of derogation – again nationally and internationally – a 3-year period applies if the defendant is at fault.

With regard to the main claim (primary claim) of the carrier, it is worth taking a closer look at the legal situation:

In the case of freight claims (carrier’s claim for remuneration), it is already disputed whether the limitation rules under transport law are relevant at all. Based on the statute of limitations under transport law, Section 439 (1) sentence 2 HGB and Art. 32 (1) sentence 2 CMR are of particular relevance to the freight remuneration claim. According to these regulations, claims under transport law only become time-barred after three years if the opposing party is guilty of so-called qualified fault. In the case of refusal to pay freight, this is often the case.

In detail:

BGH ruling of 23.04.2010 (Ref. I ZR 31/08) – Section 439 HGB also covers the claim for performance (freight claim)

Since the statute of limitations rules are primarily aimed at limiting the period in which the shipper can assert claims for loss, damage or delay, it is legitimate to ask whether the short limitation period under transport law also applies to the claim for compensation for the transport service. An understanding according to which only claims for damages are covered, as in the case of air freight (Art. 35 MÜ), is obvious. This question, which was once “hotly” debated, should now be considered clarified by the BGH. In its ruling of 23.04.2010, the BGH stated (Ref. I ZR 31/08):

“(…) According to § Section 439 (1) sentence 1 HGB the limitation period for claims arising from a contract subject to §§ 407 to 452 HGB subject to transportation is generally one year. (…)
The plaintiff is demanding freight compensation for the individual orders not placed in February 2004, (…) Whether the three-year limitation period pursuant to § Section 439 (1) sentence 2 HGB is applicable to primary claims for performance and contractual claims for reimbursement of expenses arising from freight contracts is controversial. (…)
The Senate agrees with the view that the application of the § Section 439 (1) sentence 2 HGB to primary benefit claims is affirmed.

The exception is the rule for freight claims – in practice, freight claims often expire within the period of § 439 para. 2 HGB or Art. 32 para. 2 CMR

The main reason why the application of the § Section 439 (1) HGB on freight claims was controversial, the exception of the § Section 439 (1) sentence 2 HGB. Accordingly, in the case of qualified fault, a 3-year limitation period also applies in transport law. In practice, this often means that freight claims only become time-barred after three years, because in many cases the refusal to pay freight is likely to constitute such qualified fault. Although the BGH may take a different view on the grounds that civil law provides for legal errors as grounds for exoneration, the actual consequence of the current BGH case law is likely to be that in many cases the freight claim only becomes time-barred after 3 years.

Refusal to pay freight regularly constitutes willful non-performance – OLG Frankfurt, judgment of April 15, 2005, Ref. 24 U 11/05

The OLG Frankfurt, which for the same reasons rejected the application of the § Section 439 (1) sentence 2 HGB on claims for performance (see OLG Frankfurt, judgment of April 15, 2005, file no. 24 U 11/05):

“(…) In practical terms, every non-fulfillment of a contractual claim for remuneration and usually also every non-fulfillment of a contractual claim for reimbursement of expenses on the part of the forwarder, the sub-forwarder and the carrier is a willful non-fulfillment. The parties to the freight or forwarding contract always know exactly what they have to pay for the contractual performance of the other party, which services are and have become necessary for the fulfillment of the contractually assumed transport or procurement tasks. From a practical point of view, “non-payment in blameless ignorance” is hardly conceivable.”

This is to be agreed with. As a rule, non-payment of a freight invoice should constitute qualified fault on the part of the client.

Example: Prohibition of offsetting

This is particularly clear if the underlying contract prohibits offsetting against disputed claims. According to the ADSP agreed in many cases, this is the rule (cf. Art. 19 ADSP). In this case, the principal is in clear and intentional breach of the contract of carriage with the consequence that he is at fault.

Conclusion on the limitation period for freight claims and practical tip

If, after all, the client does not pay the freight, although it must be obvious to him that the refusal to pay is unlawful, the assumption of qualified fault is obvious.

In the case of freight claims that are still open after one year, you should therefore always check whether the reason that the client has put forward against your claim is really valid. If not, it is worth checking more closely whether your claim could still be time-barred for the reasons described above.

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Contract law: For the drafting of contracts in construction law

May 15, 2019/in Commercial law, Contract Law, Liability law

LEGAL+ NEWS

Contract law: For the drafting of contracts in construction law - especially in plant construction

In construction law, especially in the area of plant construction, the general contractor regularly commissioned assumes very considerable risks. A charming way for them to limit these risks can be to pass on contracts or individual relevant contractual terms to their subcontractors.

In this case, the general contractor agrees with each of its subcontractors that all obligations arising from the general contractor agreement (main contract), insofar as they relate to the subcontractor’s work, will be “passed on” to the subcontractor. The general contractor thus passes on the relevant obligations 1:1 to its subcontractors.

The following article deals with the legal framework conditions of such a contract construction by means of the interposition of contracts, in particular with the question of the extent to which there could be concerns about the effectiveness of such a construction.

Fundamental permissibility of such a contractual arrangement

Contracts with subcontractors (subcontractor contracts) are generally independent construction contracts from which the rights and obligations arise independently of the main contract (Junghenn, Beck VOB-Kommentar, Part B, 3rd edition 2013, para. 24).

The transfer of the general contractor’s obligations towards the client arising from the main contract to subcontractors is, in principle, a legally possible contractual constellation that is used in practice:

This possibility arises, for example, from the VOB/B, regulated in § 4 para. 8: According to this, the contractor must provide the service in his own company, but he can also commission subcontractors without the consent of the client if the specific service does not fall within his area of expertise.

The latter is probably the rule, especially in plant construction. It is rare for a general contractor to have all of the necessary specialist skills for the construction of complex plants.

It is also a recognized option for the general contractor to outsource its work services in their entirety to subcontractors (Junghenn, Beck VOB-Kommentar, Teil B, 3rd edition 2013, para. 8). The general contractor then assumes a kind of intermediary function (Klaus Ramming: Überlegungen zur Ausgestaltung von Nachunternehmerverträgen durch AGB, BB 1994, Heft 8, 518).

Irrespective of this, the contractor and subcontractors can agree on provisions in the subcontractor contract that are identical in content and run in parallel to those found in the legally independent main contract between the contractor and its client; the contractor (often as a general contractor), which sits “between the two chairs” of client and subcontractor, inevitably has a justified interest in the parallel connection (synchronicity) of important provisions of the general contractor contract on the one hand and the subcontractor contract on the other (Junghenn, Beck VOB-Kommentar, Teil B, 3. Edition 2013, para. 24).

Finally, it is also legally possible to pass through provisions of the main contract by simple reference (Richter in Messerschmidt/Voit, Privates Baurecht, 2nd edition 2012, para. 238). This applies in any case to the synchronization of performance obligations (Kimmich/Bach VOB für Bauleiter, 6th edition 2014, para. 408).

Ineffectiveness in individual cases after GTC review

The only remaining problem in this context could be that the reference to the provisions of the main contract could lead to the application of GTC law in the respective individual case and thus to the possible invalidity of individual clauses.

If the inclusion of the provisions of the main contract in the subcontractor contract has not been negotiated, the law on general terms and conditions is likely to apply as a rule.

An ineffectiveness under GTC law can be considered, for example, when clauses on limitation periods, extraordinary termination rights and due dates are passed on (cf. compilation by Richter in Messerschmidt/Voit, Privates Baurecht, 2nd edition 2012, para. 240- 246).

Important: The provision of performance obligations is unobjectionable under GTC law!

However, with regard to the probably most important and at the same time most liable clause, namely the passing on of performance obligations, there are generally no concerns about effectiveness.

The reference to the main contract regarding the performance obligations should not constitute a GTC provision. In addition, such a reference should also be unobjectionable under GTC law.

The performance obligations regulated in the main contract do not generally constitute GTCs themselves, as these are always agreed individually between the client and the general contractor. This individual agreement also does not become GTC if it is agreed with several subcontractors by reference.

In any case, a review of the general terms and conditions with regard to the scope of services only takes place to a limited extent. It is limited to a pure transparency check, a content check does not take place.

Conclusion

Passing on contracts of the general contractor to subcontractors is permissible without any problems in the case of individual agreements.

In the case of general terms and conditions, problems may arise with the passage of individual clauses. However, this does not generally apply to the inclusion of the service description.

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Computer keyboard with a COMPLIANCE button. Concept - changing procedures to adhere to regulations

The regulatory duty of supervision

April 13, 2019/in Compliance, Liability law

Delegation of managerial duties

April 10, 2019/in Commercial law, Compliance, Liability law

LEGAL+ NEWS

Compliance guide: Delegation of directors' duties using the example of the AG management board

The following article is intended to provide an overview of the delegation of directors’ duties in AGs and GmbHs. The explanations are based on the AG management board, but are essentially transferable to GmbH management.

Principle: all tasks of the Executive Board can be delegated

In principle, the Management Board can delegate its duties as the executive body of the AG without restriction. However, there are important exceptions to this principle. The following cannot be delegated:

The so-called overall responsibility of the members of the Executive Board is “indivisible, unlimited and inalienable,
Personal obligations enshrined in law, e.g: Reporting obligations, the obligation to prepare annual financial statements, the fulfillment of certain tax obligations, etc.,
Duties relating to resolutions of the Annual General Meeting, reporting to the Supervisory Board, convening the shareholders’ meeting, submitting transactions requiring approval to the Supervisory Board (Section 111 (4) sentence 2 AktG) and certain duties in connection with the annual financial statements, management report and proposal for the appropriation of profits,
The obligations pursuant to Section 91 (2) AktG, according to which the Management Board must take suitable measures to ensure that developments that could threaten the continued existence of the company are identified as early as possible (early risk detection system),
The duty of every Management Board member to “manage the company” in accordance with Section 76 (1) AktG; it follows that basic strategic decisions (corporate planning) must remain non-transferable to the Management Board,
The task of “providing the company with an organizational framework, structuring it into functional and coordinated units and ensuring the flow of information within the company (corporate coordination)”,
Within the following limits, the control of the proper execution of delegated management tasks (corporate control),
The decision on the filling of subordinate management positions in the company (management staffing).

In the event of a company crisis or in certain exceptional situations (such as an accumulation of loss events), all members of the Executive Board (even those who are otherwise not responsible) may have joint responsibility despite the fact that the allocation of responsibilities is in principle effective.

Obligation to delegate

It goes without saying that the delegation of duties, which is permissible in principle, does not automatically lead to the Executive Board being released from liability. Rather, the managing director has a comprehensive duty of control and supervision following the delegation. This applies in detail:

In all forms of delegation (horizontal, vertical or external), care must be taken to ensure that responsibilities are clearly and unambiguously assigned so that they can be clearly localized to specific individuals.
All tasks must be defined as precisely as possible and assigned without overlap.
The situation of “one relying on the other” must be avoided; everyone must know exactly what their duties are.
Ambiguities and gaps mean that the delegation is ineffective and the duty remains with the management as a whole.
It is therefore recommended that all delegations of board duties be set out in writing, for example in organizational charts and job descriptions

Selection

The following qualifications must be checked and ensured before tasks are assigned to a person in the company:

Personal aptitude (reliability, ability to work under pressure);
Professional competence (training, qualifications, experience) to fulfill the task to be performed (the more complex the task and the greater the risk of damage in the event of poor performance, the stricter the standard of care to be applied).

Briefing

Before the person to whom tasks have been assigned begins his or her work, it must be ensured:

Instruction in the area of responsibility in the required breadth and depth,
Provision of the necessary powers and material resources to accomplish the tasks,
Clarification of the task and the reporting lines,
Identification of particular hazards in the functional area,
Warning of typical errors

Monitoring

The duty to monitor includes:

Regular information

Regular information is required in order to learn as early as possible of facts that may indicate a lack of fulfillment of duties (information and communication task).

Establishment of a reporting system

It is advisable to set up a reporting system, the specific design of which is subject to broad discretion. However, it must ensure that at least serious deviations, such as regularly recurring serious misconduct or even criminal offenses, are detected.

Monitoring the delegation persons

The persons to whom delegation is made must be monitored and controlled on an ongoing basis in order to be able to intervene immediately if necessary. The monitoring of the persons to whom the Board of Directors has delegated responsibility can be delegated in turn – in particular to specialists. If these have been carefully selected and instructed and are equipped with the necessary human and material resources, structures and powers, the company director can “limit himself to monitoring the monitors” (meta-monitoring).

The so-called principle of trust applies: If the company manager has no concrete reason to doubt that the supervisors appointed by him are fulfilling their duties correctly, and if he has also ensured that he learns as reliably and early as possible of possible irregularities in the otherwise properly set up monitoring organization, he can trust in the functioning of this organization.

Ongoing control

Ongoing monitoring is required that is not limited to sporadic measures, but ensures that irregularities do not occur even without permanent close monitoring. This includes random checks that make it clear to employees that misconduct can be detected and sanctioned. The Management Board must appoint suitable and reliable persons and either check these themselves from time to time or have them checked by others, such as an auditing department. Random, surprise checks are necessary and regularly sufficient to prevent deliberate violations of legal regulations and instructions from the management. They make employees aware that violations can be detected and, if necessary, punished.

Increased monitoring in the event of grievances or exceptional situations

All monitoring measures must be intensified in the event of deficits, objective irregularities, crises or exceptional situations. However, if it is foreseeable that random checks will not be sufficient to achieve the aforementioned effect, e.g. because the review of only individual processes could not uncover any infringements, the entrepreneur is obliged to take other suitable supervisory measures. In such cases, it may be necessary to carry out surprisingly comprehensive business audits. The extent to which audits must be carried out in a specific case depends on the overall circumstances of the individual case. Increased supervisory measures are required in any case if irregularities have already occurred in the business or if this is to be expected due to special circumstances and also if important regulations or difficult legal issues are in question.

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Karlsruhe Regional Court considers unpaid posts in the Pamela Reif case to be subject to labeling – ruling fundamentally contradicts the ruling of KG Berlin from 8.1.2019 (Ref. 5 U 83/18)

March 21, 2019/in Commercial law, Liability law, Nicht kategorisiert

LEGAL+ NEWS

The Regional Court of Karlsruhe (judgment of 21.3.2019, Ref. 13 O 38/18 KfH) considers unpaid posts in the Pamela Reif case to be subject to labeling - judgment fundamentally contradicts the judgment of the KG Berlin of 8.1.2019 (Ref. 5 U 83/18)

The chaos surrounding the influencer scene initiated by the Association of Social Competition (VSW) continues. In the Pamela Reif case, the Karslruhe Regional Court also considers unpaid posts to be subject to mandatory labeling. In doing so, the Regional Court of Karslruhe has fundamentally contradicted the ruling of the KG Berlin in the Vreni Frost case, which was only issued in January and fortunately takes a differentiated view.

The judgment of the Regional Court of Karlsruhe (Ref. 13 O 38/18 KfH)

In its ruling of March 21, 2019, the Regional Court of Karlsruhe (Ref. 13 O 38/18 KfH) decided (see Karlsruhe Regional Court press release) that influencers – here: Pamela Reif – must also label unpaid posts as advertising if these posts are also intended to promote their own business activities as an influencer.

The press release states:

“The court considers the defendant’s actions to be an infringement of competition law. The defendant’s posts arouse interest in the items of clothing worn etc.. By enabling users to access the manufacturer’s website with just two clicks, the image and sales of the respective manufacturer are promoted. The fact that the defendant primarily wants to avoid questions from followers (“Where did you get your dress?”) by tagging does not contradict the business purpose pursued at the same time.
(…)
It is the nature of influencer advertising that the influencer always simultaneously works on his image and authenticity, for which he promotes the appropriate brands and articles, and “cultivates” the circle of his followers, who value his credibility and want to be part of “their” influencer’s community. In this respect, the defendant always promotes its own business activities through its posts. This is because companies are interested in the most credible advertising media possible for their advertising.
Labeling as advertising is also not dispensable. Under no circumstances do all followers know how to assess the advertising character of influencers’ appearances; this applies in particular to the defendant’s subscribers, some of whom are very young.”

Contradiction to the appeal judgment of the KG Berlin (“Vreni Frost”, Ref. 5 U 83/18)

The Regional Court of Karlsruhe is thus clearly contradicting the ruling of the Berlin Court of Appeal of 9 January 2019 (Vreni Frost ruling), which fortunately set the record straight in favor of influencers:

In the point of interest here, the Court of Appeal overturned the first-instance judgment against Vreni Frost and – in my opinion correctly – found that posts showing items of clothing, shoes and accessories etc. do not generally have to be labeled as advertising. The KG Berlin stated (judgment of January 8, 2019, Ref. 5 U 83/18; emphasis added by the author):

“It can be assumed that websites such as the account operated by the defendant under “…” are visited because users are also interested in the clothes, shoes and accessories selected and combined by the blogger. The interest of the visitors is not limited to viewing pictures. Naturally, they are at least also interested in copying selections and combinations or finding inspiration for their own outfits. The information about the brand under which the presented products are offered and where they can be purchased answers an existing need for information.
The defendant’s explanation that she tags the depicted items of clothing, shoes and accessories in order to anticipate inquiries from visitors to her Instagram page therefore appears plausible. The defendant has also submitted examples of such requests (see Annex AG 21 to the defendant’s statement of May 23, 2018).
In this respect, the same applies as for fashion magazines, which contain corresponding information on manufacturers and sources of supply for the same reason. This is clearly illustrated by the information provided by the defendant in Exhibit BK 7 to its written submission of December 27, 2018. In addition to the products depicted, not only the manufacturer of the products is named there, but also internet addresses from which the products can be obtained.”

Furthermore, the KG Berlin correctly stated (emphasis added by the author):

“The ambition of an influencer to generate advertising revenue does not justify obliging him to provide every statement with a reference with which the public associates a subordinate or inferior value of the contribution. In this respect, nothing else can apply to an influencer than to other media companies, which are consistently financed at least by advertising revenue and are particularly attractive to clients if they reach a large number of people, regardless of whether they are referred to as readers, viewers or followers.
A differentiation according to the subject matter of the editorial reporting or the expression of opinion is not compatible with freedom of expression and media freedom. Reports on fashion trends are no less worthy of protection than reports on socio-political and daily political topics.”

Rating

While the KG Berlin had fortunately finally clarified in court that influencers such as Vreni Frost, Pamela Reif and others do nothing different from conventional fashion magazines despite the different environment, the LG Karlsruhe – like other courts before it – misjudged precisely this crucial point. The Regional Court of Karlsruhe denies influencers who report on fashion via platforms such as YouTube or Instagram rights that have always been granted to conventional publishers who report primarily on fashion in magazines with the same content as the influencers in question here. The Karlsruhe Regional Court’s view is all the more incomprehensible when you consider that influencers have always existed as ambassadors for brands and have been used by traditional print media for a long time. One example is the magazine “Barbara”, which is based on the influencer Barbara Schöneberger. Ms. Schöneberger ultimately does nothing different in “Barbara” than Pamela Reif on Instagram.

Conclusion/Outlook

It is to be hoped that the BGH will continue the case law of the KG Berlin in its ruling, which is expected soon.

In my view, it is almost speechless that a large number of German courts are clearly unable to correctly classify the types of media that have become possible via the internet (cf. the article in the Handelsblatt of 15/16/17 March 2019). The result of this inability is currently legal discrimination against so-called influencers.

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Conditions of carriage for letters: Liability of Swiss Post for the loss of a registered letter

January 14, 2019/in Commercial law, Liability law, Nicht kategorisiert, Transportation law

LEGAL+ NEWS

Conditions of carriage for letters: Liability of Swiss Post for the loss of a registered letter

The question of liability for registered mail sent by Deutsche Post is becoming more and more important, as in the real world of amazon, ebay & Co. goods are increasingly being sent as e.g. registered maxi letters. This is when the question of whether and, if so, to what extent liability on the part of the postal service can be considered comes into play. This is the subject of the following article.

The problem

Ordinary letters generally only contain declarations of intent with no material value. The question of liability in the event of loss is therefore of no practical significance. The situation is different with registered letters, which in today’s economic reality are increasingly being used to send consignments of goods. Considering that an additional fee is charged for registered mail and that acceptance and delivery – as with parcels – take place in person, the question arises as to whether the principles of liability that also apply to other consignments of goods (e.g. parcels) should at least apply accordingly. In 2006, the Bonn District Court on March 29, 2006 and the Federal Court of Justice on June 14, 2006 had to deal with this issue in quick succession. Of particular practical relevance is whether the postal service has a so-called duty of admission in the case of registered letters, i.e. the duty to explain the circumstances of the loss. In the aforementioned judgment, the BGH took a “post-friendly” and at the same time dubious position. The Bonn Local Court took a different approach – and rightly so, as the author will explain below.

What does the law say?

The legislator has privileged the postal service with regard to the transportation of “letters and letter-like items” under liability law. This is expressed in Section 449 HGB and is explained in the explanatory memorandum to the law:

449 HGB:
(1) Insofar as the contract of carriage does not relate to the carriage of letters or consignments similar to letters, the liability provisions in section 413 paragraph 2, sections 414, 418 paragraph 6, section 422 paragraph 3, sections 425 to 438, 445 paragraph 3 and section 446 paragraph 2 may be deviated from only by agreement, which shall be negotiated in detail, even if it is made for a number of similar contracts between the same contracting parties. However, the carrier may not invoke a provision in the consignment bill which deviates from the provisions mentioned in sentence 1 to the detriment of the party entitled under the consignment bill against a consignee named in the consignment bill to whom the consignment bill has been issued or against a third party to whom the consignment bill has been transferred.
(2) By way of derogation from paragraph 1, the compensation payable by the carrier for loss of or damage to the goods may also be limited by pre-formulated contractual terms to an amount other than that provided for in section 431 paragraphs 1 and 2 if this amount is
1.is between 2 and 40 units of account and the user of the pre-formulated contractual terms points out to his contractual partner in an appropriate manner that they provide for an amount other than the amount provided for by law, or
2.is less favorable to the user of the pre-formulated contractual terms than the amount provided for in Section 431 (1) and (2).
Furthermore, by way of derogation from paragraph 1, the amount of compensation to be paid by the sender under section 414 may be limited by pre-formulated contractual terms.
(3) If the sender is a consumer, no derogation from the provisions set out in paragraph 1 sentence 1 may be made to his detriment, unless the contract of carriage relates to the carriage of letters or similar items.
(4) If the contract of carriage is governed by foreign law, paragraphs 1 to 3 shall nevertheless apply if, according to the contract, both the place of taking over and the place of delivery of the goods are in Germany.

Excerpt from the explanatory memorandum (BT-Drucksache 13/8445):

“In many cases, the liability rules provided for in the present draft do not do justice to the special features of mass postal traffic: the majority of letters to be transported and some of the letter-like items (such as small parcels) are delivered via letterboxes without direct customer contact. The sender is often unknown. The value of the goods and the liability risk for these products can hardly be estimated. The carrier must be able to modify the liability – and not just the amount of liability – through general terms and conditions.”

The question

Does the liability privilege under Section 449 HGB for “letters and letter-like items” also apply to registered mail?

The answer must be “no” if you read the explanatory memorandum to the government draft of the TRG (BT-Drucksache 13/8445, see above). This is because the legislator has made it clear in the explanatory memorandum that the decisive criterion for distinguishing letters and letter-like items from other transport goods is the complete lack of customer contact (anonymity). This anonymity means that the value of the goods and the liability risk simply cannot be assessed by Swiss Post.

In my opinion, the aforementioned legislative intention only allows the conclusion that a registered letter is not a letter or a letter-like consignment within the meaning of § 449 HGB (also e.g.: Koller, Kommentar zum Transportrecht, 5th edition, § 449, para. 30; Grimme in Transportrecht 2004, 161).

The latter is less important because the Post would otherwise be able to exclude or at least limit its liability for registered mail even in cases of qualified fault via its general terms and conditions via Section 449 (2) HGB. This is because Swiss Post has – no doubt surprisingly for some – expressly assumed liability for qualified fault in its General Terms and Conditions. Section 6 (1) of the General Terms and Conditions “Letter National” reads as follows:

“Deutsche Post shall be liable for damages that are attributable to an act or omission that it, one of its employees or another vicarious agent (§ 428 HGB) has committed intentionally or recklessly and in the knowledge that damage will probably occur, regardless of the following limitations of liability.”

The rather interesting question, which the Federal Court of Justice and the Bonn District Court also had to ask themselves in their decisions explained below, is therefore whether the postal service can be subject to a so-called duty of disclosure in the case of registered mail.
I n general freight law, it is recognized that in cases in which the presumed area of the occurrence of damage is beyond the sender’s control, the carrier has a procedural duty to provide information, especially if the course of the damage is completely in the dark (see Koller, Transportrechtskommentar, 5th edition, § 435, para. 21).

If this obligation to comply is not fulfilled, the carrier is presumed to be at fault with the consequence of unlimited liability.

BGH judgment of June 14, 2006 (Ref. I ZR 136/03), NJW-RR 2007, 96-98

The BGH has now expressly denied such an obligation to comply, which indisputably cannot apply to ordinary letters, for registered letters as well. In justifying its decision, the court took up the legislator’s intention to give privileged treatment to the transportation of letters. The BGH stated:

“When transporting letters, the focus is on the transmission of the individual declaration of ideas contained in the letter. When sending parcels, the focus is on the transportation of the packaged valuable items. The sender of a letter generally suffers no material damage from its loss (see BGHZ 149, 337, 349). Accordingly, there is generally no incentive for third parties to appropriate the contents of letters in order to enrich themselves.
The fact that the due diligence and organizational requirements for the dispatch of letters and letter-like items are lower than for the transport of parcels is in line with the system of the law, which in Section 449 (2) sentence 1 HGB allows for more extensive limitations of liability for letters and letter-like items than for other items.”

The Federal Court of Justice has now applied the above finding, which can in any case be described as undisputed for ordinary letters, to registered letters. It stated the reasons for this:

“The registered letter differs from an ordinary item only to the extent that the posting and receipt of the item are documented. It is also subject to the rules of mass mail transport at favorable prices, which are based on what is economically justifiable. Registered letters are not intended for sending valuable goods. The special features of mass postal traffic – fast and inexpensive transmission to every household in Germany – apply to a registered letter in the same way as to ordinary letters and letter-like items.”

The weaknesses of the BGH ruling

The BGH’s reasoning is not convincing.

In line with the legislative intent, the Federal Court of Justice correctly stated that registered mail does not conceptually constitute “letters or letter-like items”. However, its reasoning as to why they should be treated as such does not hold water.

The BGH ignores the fact that the legislator has based the liability privilege for letters very decisively on the anonymity of sending letters (cf. the explanatory memorandum to the law, II. 2. above). However, this anonymity is lacking in the case of registered mail.

Furthermore, his argument that “the special features of mass postal traffic – fast and inexpensive transmission to every household in Germany” apply to registered mail just as much as to ordinary letters is not convincing.

First of all, registered mail accounts for only a fraction of the volume of letters sent by Swiss Post. Moreover, the fee that Swiss Post charges for registered mail is often many times higher than the postage of a normal letter. Against this background, registered mail cannot be regarded as part of the “bulk business”, the management of which is – allegedly – only possible by completely dispensing with interface controls.

Incidentally, the economic reality is that “the special features of postal mass transport” also apply to mass parcel services (DHL, UPS, etc.) today. It is not uncommon for the parcel rates charged by bulk parcel service providers to be barely higher than the postal rates for registered large letters. Nevertheless, the bulk parcel service providers must also live with their liability; especially in the event of loss, they must be able to admit to the circumstances of the loss if they want to avoid liability.

Finally, the BGH closes its eyes to the economic reality when it states: “Registered mail is not intended for the dispatch of valuable goods.”

Even in the case of normal letter mail, it is extremely questionable whether it can be assumed that the sender generally has no interest in the value of the item, with the result that in the event of loss he will also have no interest in recovering his item. With “maxi letters” in particular, the opposite is more likely to be the rule. Hardly any maxi letters will only contain “declarations of intent”. It should also be borne in mind that these days, declarations of intent are increasingly reaching their recipients electronically (especially by email), so it is questionable whether even normal letters (up to 20 g) always contain declarations of intent.

However, in the case of registered mail, it cannot be assumed that the recipient has no interest in the value of the item sent by registered mail. The case where the sender is only interested in a confirmation of receipt for a registered letter is likely to account for only a fraction of all registered letters. However, it is much more common for registered mail to be used as a “small parcel”, i.e. to send small consignments of goods.

Contra BGH: Judgment of the Bonn Local Court of 29.03.2006 (Ref. 9 C 549/05), n.v.)

In view of the above, the Bonn Local Court quite rightly assumed that there was an obligation to comply with a lost registered letter – or more precisely, its contents. Since Swiss Post was unable to exonerate itself, it was liable without limitation. Regrettably, Swiss Post was able to prevent the local court from providing reasons for its decision by recognizing the claim in dispute in good time. However, this is no obstacle for the author, who was involved in the proceedings on the side of the claimant, to present the correct reasons of the Local Court in the following:

The facts of the decision can be summarized as follows:

A car key was sent to the post office by registered mail, but never reached the recipient. A damage report resulted in Swiss Post returning the empty, torn envelope of the registered letter to the sender, but otherwise refusing any liability in excess of EUR 20 on the grounds that a higher liability was not provided for under its General Terms and Conditions, which were in accordance with the statutory provisions of the German Commercial Code.

During the trial, Swiss Post did not or could not explain how it was possible that the contents of the shipment were lost. As a result, the district court had to decide whether or not to subject the shipment in dispute to the liability privilege of Section 449 HGB.

In line with the view expressed by the BGH, the main argument of the Post against a duty to comply was as follows:
The transport of letters is a bulk business whose legal requirements according to the Postal Universal Service Ordinance (PUDLV), in particular the duration of transport, could not be fulfilled by the Post if it were obliged to carry out interface controls. However, if Swiss Post is not required to carry out interface checks, it cannot necessarily be required to explain the circumstances of the loss in the event of a loss.

Fortunately, the Bonn District Court has resisted the powerful postal-friendly case law of the Federal Court of Justice, which has rejected the arguments in favor of the Post (see V. above), and in the case described above required the Post to explain the circumstances of the loss:
The envelope of the registered letter was found torn open in an envelope center. The local court has now rightly demanded that the post office must explain itself and has thus imposed the described duty of disclosure on the post office. Swiss Post did not comply. Sensing the consequences, the Post then acknowledged the claim.

Conclusion

Swiss Post is free to expressly agree to exclude the carriage of goods items in its conditions of carriage for registered mail. However, as long as Swiss Post has not done so, the argumentation of the BGH is not convincing in view of the economic reality. The case law of the BGH cannot escape the impression that it was overly favorable to the interests of the Post as a former state-owned company. In contrast, the courts of first instance (such as the Bonn Local Court) appear to have acted with more impunity.

It should be noted that nowadays it is hardly justifiable to treat registered mail and ordinary mail in the same way in terms of liability. In particular, it is not valid to refer to the special features of mass postal traffic. The latter have long since also applied to bulk parcel shipments, which are handled on terms similar to those for large letters within one day and are nevertheless not subject to any liability privileges.

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CONTACT

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+49 (170) 1203 74 0

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kontakt@legal-plus.eu

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Are You Covered Healthcare Insurance Protection Concept

The obligation of private health insurance (PKV) to pay benefits – when and for what does PKV have to pay?

January 4, 2019/in Liability law

LEGAL+ NEWS

The obligation of private health insurance (PKV) to pay benefits - when and for what does PKV have to pay?

The benefit obligations of private health insurers are essentially determined by the tariff selected in the individual case and the associated tariff conditions attached to the respective contract. A wide variety of benefits can be agreed in the individual contract. However, the usual benefits provided by private health insurers are based on § 192 VVG in conjunction with the 2009 model conditions for medical expenses and daily hospital benefits insurance (MB/KK). It should be noted that the MB/KK must have become the subject matter of the contract. As a rule, however, there is a reference to the MB/KK in the contracts, as these have been drawn up by the private health insurers themselves.

According to § 192 Para. 1 VVG in conjunction with the MB/KK, expenses for medically necessary treatment due to illness or the consequences of an accident are reimbursed. Pregnancy and childbirth are not illnesses, but a state of health. For this reason, the obligation of the health insurer to cover the costs of preventive medical check-ups, childbirth, etc. is specified separately in § 192 Para. 1 VVG and § 1 Para. 2 Sentence 4a MB/KK.

The prerequisites for the insurer’s obligation to pay benefits are in accordance with § 192 Para. 1 VVG in conjunction with § 1 Para. 1 and 2 MB/KK:

Expenses incurred
the existence of an illness or the consequences of an accident
the provision of medical treatment
the medical necessity of the measure.

The existence of these prerequisites must be determined on the basis of objective criteria. It does not depend on the subjective perception of the policyholder (BGH VersR 1987, 278, 279; OLG Hamm VersR 1997, 1342).

From the outset, costs that are conspicuously disproportionate to the service provided are not to be reimbursed (excess compensation, Section 192 (2) VVG). To determine a disproportion, the values of the service and consideration must be compared using objective criteria.

Expenses

The claim for benefits against the insurer presupposes that the policyholder has incurred expenses. There must be an effective and due claim for remuneration by the practitioner or other service provider against the insured person (BGH NJW 2003, 1596). An effective claim for remuneration and thus a corresponding obligation to pay benefits only arises if the fee regulations of the GOÄ and GOZ are observed. In principle, the insurer is only liable to pay subsequent benefits. This does not apply if the policyholder is demonstrably unable to bear the treatment costs incurred and therefore could not have a treatment urgently recommended by a doctor carried out (OLG Hamm VersR 2006, 826).

Illness or consequences of an accident

The purpose of the health insurance contract is basically only to cover the costs for the medically necessary treatment of an illness, the occurrence of an uncertain event. This makes it necessary to distinguish the concept of illness from merely subjectively perceived impairments.

Case law defines the term illness within the meaning of § 1 Para. 2 MB/KK as an abnormal physical or mental condition which entails a not insignificant disturbance of physical or mental functions (BGH VersR 1987, 278 f.; OLG Karlsruhe NJW 1986, 1552).

Case law has affirmed an illness in the following cases, although only a small excerpt is presented here:

-Alcoholism (OLG Hamm VersR 1986, 865)
-ectopic pregnancy (OLG Stuttgart VersR 1991, 646)
-Fatty liver and increased urea concentration (LG and OLG Hamburg VersR 1981, 1049).

However, no illness was assumed in the following cases:

Simple, age-related defective vision. This corresponds to the natural ageing process (LG Mannheim VersR 2008, 1200 f.)
Bag-like skin folds in the eye area (LG Cologne VersR 1983, 388)
Minor growth in a 5- or 6-year-old boy (OLG Hamm VersR 1986, 865)

Instead of illness, the insured event can also be based on an accident as a risk event. In this respect, private health insurance includes accident insurance (BGH VersR 1976, 851 f.). The insured event – just like the insured event due to illness – does not begin with the occurrence of the accident, but only with the medical treatment. The insured event presupposes that an accident has occurred and that the medically necessary treatment extends to consequences that are causally attributable to the accident.

The definition of an accident is derived from the legal definition in § 178 Para. 2 VVG. According to this, an accident occurs if the insured person suffers involuntary damage to their health as a result of a sudden external event affecting their body.

The scope of the PKV’s obligation to pay benefits in the event of accidents is limited to the medically necessary treatment of the consequences of the accident in accordance with § 1 Para. 2 Sentence 1 MB/KK.

Medical treatment

According to the recurring formula of the BGH, medical treatment is any medical activity that has been caused by the illness in question and is aimed at curing or alleviating an illness (BGH VersR 1996, 1224 ff.; VersR 1978, 271, 272).

Alleviation does not only mean the immediate improvement of a pathological condition. Rather, the alleviation of an illness through medical activity is also to be spoken of if it aims to attenuate, partially or completely prevent or eliminate the consequences of the illness (BGH VersR 1996, 1224 ff.; OLG Cologne VersR 1990, 612, 613).

There is no cure or alleviation if the treatment serves exclusively other purposes. Examples of this are sterilization for the purpose of limiting family planning or cosmetic surgery.

Services that are not directly related to the medical activity are also not part of the insured costs of medical treatment. In this sense, case law has, for example, denied a claim for reimbursement of travel and hotel costs incurred during treatment in an external clinic (LG Freiburg VersR 1986, 570, 571).

According to § 1 Para. 2 Sentence 1 MB/KK, the object of the insurance cover is the medical treatment of an illness of the insured person. In a few exceptional cases, this may also include measures carried out on other persons. This is the case if the treatment of the insured person inevitably requires the intervention of a third party, such as in the case of a transplantation (LG Oldenburg r+s 1990, 317).

Medical necessity

In practice, medical necessity in accordance with § 1 Para. 2 Sentence 1 MB/KK is the most relevant prerequisite for the assumption of costs by private health insurance. For decades, case law has developed the following assessment formula, which can now be regarded as established, for assessing whether medical necessity exists:

Treatment is medically necessary if it was justifiable to consider it medically necessary according to the objective medical findings and scientific knowledge at the time of treatment. The medical necessity of a medical treatment is justifiable if it sufficiently diagnoses the underlying ailment in a justified and comprehensible as well as well-founded procedure and applies an adequate, suitable therapy (BGH VersR 2003, 581, 584; 1979, 221 ff.; OLG Cologne VersR 1995, 1177).

If this suitability is established according to medical findings, the insurer’s duty to indemnify also exists in principle (BGH NJW 1996, 3074, 3075). Inpatient treatment is only medically necessary if the desired treatment success in the prognosis cannot be achieved to the same extent by outpatient measures (OLG Zweibrücken VersR 2007, 1505; OLG Koblenz VersR 2008, 339).

The reference to “scientific findings” does not mean that only findings that have been validated in medical science – i.e. in the field of research and teaching at scientific colleges and universities – may be taken into account when assessing the necessity of medical treatment. Rather, medical findings that have emerged in the field of so-called alternative medicine or are the result of the application of so-called “outsider methods” can also be taken into account (BGH NJW 1996, 3074, 3075; § 4 VI MB/KK). What is required here, however, is a mode of action based on medical knowledge and a successful proving of the method in practice (BGH NJW 1996, 3074; NJW 2003, 294; OLG Cologne VersR 2004, 631).

An objective standard, independent of the contract between doctor and patient, is applied to determine the insured event (BGH NJW 1996, 3074, 3075; NJW 2005, 3783, 3784). It therefore depends neither on the opinion of the policyholder nor solely on that of the attending physician (BGH NJW 1996, 3074, 3075). The fact that the therapy appears sensible, useful or justifiable to the doctor is therefore not sufficient (OLG Cologne r + s 1993, 314; LG Berlin r+s 1994, 71). In the event of a dispute, the medical necessity of a treatment measure can generally only be assessed by means of an expert opinion (BGH NJW 1979, 1250; OLG Koblenz VersR 2010, 204).

It is noteworthy that the obligation to pay benefits is not limited to the most cost-effective of several medically equivalent treatments (BGH NJW 2003, 1596, 1599 f., against the previously prevailing opinion)!

Burden of proof

The general principle also applies in private insurance law, according to which the party claiming a benefit from its contractual partner must prove the conditions of the alleged claim. As the medical necessity of the treatment is a central prerequisite for benefits in accordance with § 1 Para. 2 Sentence MB/KK, it must be proven by the policyholder in accordance with established case law. Any doubts shall be borne by the policyholder (BGH VersR 1996, 1224 ff.; 1991, 987; OLG Frankfurt/M. VersR 1981, 451 f.). Prima facie evidence is ruled out (KG r+s 2000, 120, 122).

If the insurer has examined the medical necessity of a specific measure and partially acknowledged its obligation to pay benefits, the occurrence of the insured event is undisputed on the merits. In this case, however, § 5 para. 2 sentence 1 MB/KK expressly grants the insurer the right to reduce its benefits to a reasonable amount if the treatment exceeds what is medically necessary.

As this is a regulation from which the insurer derives a legal consequence favorable to it, the insurer must now prove that the extent of the measure is no longer medically necessary (BGH VersR 1991, 987; OLG Düsseldorf r+s 2000, 429 f.).

BGH update: Correction of defective vision through LASIK surgery may be necessary (BGH ruling of 29. 3. 2017 – IV ZR 533/15)

In a ruling of 29 March 2017 (case no. V ZR 533/15), which is of great practical relevance, the Federal Court of Justice (BGH) rightly determined that the PKV cannot simply refer to the possibility of wearing glasses or contact lenses in the event of an operation to correct a visual defect. This is because (as the BGH correctly stated):

Wearing a visual aid does not constitute curative treatment with regard to the plaintiff’s defective vision!

Below are a few key excerpts from the judgment:

“(…) The obligation to pay benefits (…) therefore depends on whether the operation performed constituted medically necessary treatment. The BG – consistently from its point of view – did not make sufficient findings in this regard.
Medical treatment – in this case the outpatient operation on both eyes – is any medical activity caused by the illness in question, provided that the nature of the doctor’s service is aimed at curing, improving or alleviating the illness. Whether the implementation of this therapy was suitable for achieving these goals is not relevant to the existence of medical treatment within the meaning of the clause. Rather, this question is only relevant when examining whether the treatment is to be regarded as medically necessary within the meaning of § 1 para. 2 sentence 1 AVB; an objective standard is to be applied (Senatsurt. v. 10. 7. 1996 – IV ZR 133/95, BGHZ 133, 208 = r+s 1996, 457 under II 2).
Contrary to the opinion of the appellant, the medical necessity of the operation cannot be denied with reference to the customary wearing of glasses or contact lenses.
Wearing a visual aid does not constitute curative treatment with regard to the plaintiff’s defective vision . Glasses and contact lenses are merely aids that are used to compensate for physical defects over a longer period of time. Accordingly, the visual aid – which is characteristic of the use of aids – directly performs a substitute function for a diseased organ without restoring its functionality (see Senatsurt. v. 17. 12. 1986 – BGH file number IVAZR7885 IVa ZR 78/85, BGHZ 99, BGHZ volume 99 page 228 = r+s 1987, RUNDS year 1987 page 80 under II 5 and v. 19. 5. 2004 – BGH file number IVZR17603 IV ZR 176/03, NJW-RR 2005, NJW-RR year 2005 page 260 juris Rn. 21).
The average policyholder cannot see from § 1 para. 2 sentence 1 AVB that the eligibility for reimbursement of the costs of medically necessary treatment should in principle depend on whether he can (permanently) fall back on an aid that is suitable for compensating for or alleviating his existing abnormal physical condition without changing the actual ailment. There is nothing in the insurance terms and conditions to support such a general subsidiarity of the medical treatment compared to the medical aid. Nor can it be inferred from them that (financial) aspects other than medical necessity should play a role in assessing the eligibility for reimbursement of the costs of medical treatment. This is because § 1 para. 2 sentence 1 AVB expressly refers to “medically necessary” treatment, whereby “medically” refers precisely to “necessary”. This linguistic context makes it clear on a reasonable reading that the necessity of the treatment is to be assessed solely from a (purely) medical point of view and that other aspects do not play a role. (…)
The medical necessity of treatment within the meaning of the above statements is therefore to be assumed if a treatment method is available and has been applied that is suitable for curing, alleviating or counteracting the worsening of the illness (…).”

Scope of the insurance cover

Pursuant to § 1 Para. 3 MB/KK, the specific promise of benefits results from the insurance policy, the written agreements contained therein or subsequent written agreements and the General Terms and Conditions of Insurance. The latter include the MB/KK of the association, the company’s own tariff conditions and the tariff itself.

The tariff conditions can also deviate from the MB/KK – which are not binding – in terms of content. Examples of the agreement of additional benefits are the reimbursement of costs for a stay in a hospice or the possibility of using psychotherapists.

The scope of the insurance cover can also be further limited in individual contracts. As the private health insurer is generally not obliged to accept an insurance application, it is free to conclude the contract under special conditions such as the agreement of an exclusion of benefits or a risk surcharge. § Section 203 (1) sentence 2 VVG expressly grants the insurer this right with reference to any increased risk at the time the contract is concluded.

If a higher premium has been agreed due to the increased risk, the policyholder can demand that the premium be reduced appropriately in accordance with § 41 VVG if the risk-increasing circumstance no longer applies after the application has been submitted or after the contract has been concluded.

The scope of the insurance cover is also set out in detail in § 4 MB/KK.

The details are presented below:

§ 4 para. 2 MB/KK.
4 Para. 2 MB/KK grants the insured person the right to a free choice of doctor, i.e. to use any registered and licensed doctor and dentist and – if not excluded by the tariff – any alternative practitioner in accordance with the Heilpraktikergesetz. § Section 4 (2) MB/KK relates exclusively to outpatient treatment.
The tariff conditions typically provide for special features, such as the requirement of prior approval, for the use of psychotherapeutic treatment. This takes account of the fact that it is often not easy to distinguish between a disorder requiring treatment with disease value and mere life support.
§ 4 para. 3 MB/KK.
Medicines, dressings, remedies and aids must be prescribed by a practitioner within the meaning of § 4 Para. 2 MB/KK. Medicinal products must be obtained from a pharmacy, including mail-order pharmacies, provided they meet the usual German quality standards. Medicinal products are all substances or combinations of substances that can be used in or on the human body or administered to a human being in order to either restore, correct or influence human physiological functions through a pharmacological, immunological or metabolic effect or to make a medical diagnosis (BGH NJW 2006, 2630, 2634). Remedies are typically physical-medical services performed by a masseur or medical bath attendant as well as voice and speech training treatments performed by a speech therapist. Auxiliary aids are bandages, spectacles, crutches, hearing aids, etc.
§ 4 para. 4 MB/KK.
For inpatient treatment, the insured person can choose between public and private hospitals, including private clinics. The necessary medical management refers to the treatment area of the hospital and requires management, guidance and supervision by doctors who are not subject to medical directives. Furthermore, a sufficient material and personnel infrastructure is required. The demarcation must therefore be normative: If the treatment prevents the insured person from developing his usual lifestyle in a manner comparable to full inpatient admission, it is a partial inpatient treatment falling under § 4 para. 4 MB/KK (LG Köln VersR 2002, 1137).
§ 4 para. 5 MB/KK.
Pure spa and sanatorium treatments are generally excluded from the obligation to provide benefits (§ 5 I lit. d) MB/KK, for the other exclusions from the obligation to provide benefits in accordance with § 5 MB/KK, see below). However, the boundaries between sanatorium and hospital are becoming increasingly blurred if both clinical (§ 4 Para. 4 MB/KK) and spa and sanatorium treatments can take place in one establishment. In practice, the term “mixed institution” has become established for this. In addition to meeting the requirements of § 4 Para. 4 MB/KK, eligibility for reimbursement requires the insurer’s prior confirmation of benefits (§ 4 Para. 5 MB/KK). The clause is unobjectionable under general terms and conditions law (BGH NJW 2003, 598, 599).
§ 4 para. 6 MB/KK.
While methods predominantly recognized by conventional medicine are reimbursable without further ado, the obligation to pay benefits for methods of alternative medicine presupposes that these have proven to be equally promising in practice or that no conventional medical therapy is available (§ 1 para. 6 sentence 2 half-sentence 1 MB/KK). In this case, the insurer can reduce the amount to be reimbursed to the level of a conventional medical method (half-sentence 2). In this respect, the comparative therapy to be used is unclear if – as in variant 2 – no such therapy is available. For example, the following should not be reimbursable the costs of bioelectrical functional diagnostics, decoder dermography and Eichotherm therapy (OLG Saarbrücken VersR 2002, 1015), electro-acupuncture according to Voll (OLG Frankfurt NJW-RR 2003, 245) and bioresonance therapy (OLG Koblenz VersR 2002, 1367; OLG Saarbrücken VersR 2002, 1015), but reimbursable for hematogenous oxidation therapy (OLG Saarbrücken VersR 2002, 1015), acupuncture and treatment with thymus and ney preparations (OLG Stuttgart NVersZ 2007, 974).

Exclusion of the obligation to perform

The obligation to pay benefits described above may be excluded in some cases in accordance with § 5 MB/KK. For example, injuries caused by acts of war (§ 5 Para. 1 lit. a)) and intentionally caused insured events (§ 5 Para. 1 lit. b)) are excluded from the obligation to pay benefits. The service provider, usually the doctor, can also be excluded from reimbursement if his misconduct in the invoicing of services has repeatedly given rise to justified complaints by the insurer (§ 5 para. 1 lit. c); OLG Munich NJW-RR 1999, 1706; OLG Cologne VersR 1996, 490). In particular, cases of billing fraud are conceivable here.

However, withdrawal cures that aim to free the patient from an attachment to drugs, alcohol, nicotine or other addictive substances are also excluded from the reimbursement obligation (§ 5 Para. 1 lit d); BGH VersR 1988, 573, OLG Hamm r+s 1999, 84). This exclusion does not cover illnesses resulting from dependence on addictive substances, such as liver damage. In practice, this exclusion is particularly important in connection with alcohol abuse. Some tariff conditions of individual health insurers therefore include an obligation to pay benefits for withdrawal cures. This exclusion does not cover illnesses resulting from dependence on addictive substances, such as liver damage. See above for the exclusion of spa and sanatorium treatment.

Treatment by close relatives is also not reimbursable (§ 5 para. 1 lit. g)). This clause is based on the practical experience that the closer the relationship is, the greater the probability of treatment that is in reality free of charge but billed to the insurer (OLG Munich VersR 2000, 1406 ff.; LG Stuttgart r+s 1997, 169).

Finally, benefits for accommodation caused by a need for care are excluded. This can be assumed if the permanent helplessness of the person concerned for everyday activities is in the foreground, i.e. the improvement or cure of the underlying illness is not (no longer) the goal (OLG Hamm NJW-RR 1995, 1498; KG r+s 2003, 292). In this case, long-term care insurance is liable.

Subsidiarity clause

5 Para. 3 MB/KK provides for a limitation of benefits in the event that the policyholder is also entitled to benefits from the statutory accident insurance (SGB VII) or pension insurance (SGB VI) or statutory military welfare (in particular for soldiers, police officers, members of the professional fire department) outside of the medical expenses insurance.

In this case, the health insurer’s obligation to pay benefits is limited to the reimbursement of expenses that remain necessary despite the statutory benefits mentioned.

The benefit obligations of private health insurers are essentially determined by the tariff selected in the individual case and the associated tariff conditions attached to the respective contract. A wide variety of benefits can be agreed in the individual contract. However, the usual benefits provided by private health insurers are based on § 192 VVG in conjunction with the 2009 model conditions for medical expenses and daily hospital benefits insurance (MB/KK). It should be noted that the MB/KK must have become the subject matter of the contract. As a rule, however, there is a reference to the MB/KK in the contracts, as these have been drawn up by the private health insurers themselves.

According to § 192 Para. 1 VVG in conjunction with the MB/KK, expenses for medically necessary treatment due to illness or the consequences of an accident are reimbursed. Pregnancy and childbirth are not illnesses, but a state of health. For this reason, the obligation of the health insurer to cover the costs of preventive medical check-ups, childbirth, etc. is specified separately in § 192 Para. 1 VVG and § 1 Para. 2 Sentence 4a MB/KK.

The prerequisites for the insurer’s obligation to pay benefits are set out in § 192 Para. 1 VVG in conjunction with § 1 Para. 1 and 2 MB/KK:

Expenses incurred
the existence of an illness or the consequences of an accident
the provision of medical treatment
the medical necessity of the measure.

The existence of these prerequisites must be determined on the basis of objective criteria. It does not depend on the subjective idea of the policyholder (BGH VersR 1987, 278, 279OLG Hamm VersR 1997, 1342).

From the outset, costs that are conspicuously disproportionate to the service provided are not to be reimbursed (excess compensation, Section 192 (2) VVG). To determine a disproportion, the values of the service and consideration must be compared using objective criteria.

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Tax advisor liability – statute of limitations in the case of basic rulings

January 3, 2019/in Liability law, Nicht kategorisiert

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Tax advisor liability - statute of limitations in the case of basic rulings

If tax consultants make mistakes and clients suffer losses as a result, the question of whether and to what extent a limitation period has already expired is not easy to answer in legal terms. This applies in particular in the case of so-called basic assessments:

Claims of the client arising from a tax consultancy agreement are time-barred in accordance with §§ 194 ff. BGB. The principles developed for Section 68 StBerG, which applied until December 15, 2004, regarding when the claim arose, continue to apply.

Principles for the start of the limitation period

According to supreme court case law, the limitation period begins when the claim arises. The claim arises as soon as the financial situation of the person concerned deteriorates objectively due to the breach of duty by the consultant (BGH WM 2007, 801). This start of the limitation period was also decisive for Section 68 StBerG (BGH WM 2009, 1376, 1379). In particular, damage has not yet occurred as long as there is only the risk of a financial disadvantage (BGH WM 2008, 611, 612, para. 10 a). The possibility of also bringing an action to establish an obligation to pay future damages does not determine the time at which the damage arises (BGH WM 2009, 1376, 1379). However, ignorance of the damage and thus of the claim for compensation does not prevent the commencement of the limitation period (BGH WM 1992, 1738).

The relevant point in time is generally the time at which a negative tax assessment notice is issued. The financial situation of the person concerned only deteriorates as a result of incorrect tax advice when the tax authority concludes its decision-making process by issuing the tax assessment notice and in this way substantiates the tax claim under public law (BGH judgement of 05.03.2009, case reference: IX ZR 172/05, BeckRS 2009, 10225).

Legal situation in the case of the so-called basic decision

In the case of negative tax assessment notices, there is usually no negative tax assessment notice to begin with. For this reason, in my opinion, material damage only occurs if a negative tax assessment is issued at some point on the basis of the basic assessment. The BGH case law is differentiated here and has gaps:

According to the case law of the Federal Court of Justice, the limitation period for claims for damages by the client against his tax advisor begins, as described, with the notification of the tax assessment notice. This principle initially applies to tax assessment notices that request the payment of a tax or order the absence or discontinuation of a tax benefit.

However, according to the BGH, the limitation period also begins with the notification of the tax assessment notice if this does not yet contain a tax assessment, but merely independently determines a basis for taxation, which is binding for the subsequent tax assessment in accordance with Section 182 AO (BGH NJW-RR 2008, 1508, 1509; BGH NJW 1993, 2799; in this respect also OLG Frankfurt am Main, Urt. v. 21.02.2006, Ref.: 8 U 90/04, BeckRS 2011, 25589).

Special case: Determination of the existence of a so-called tax contribution account

The question raised in the case of determining the existence of a so-called tax contribution account is unclear and has not yet been answered by the BGH.

In my opinion, the aforementioned principles do not apply here, as the decisions tend to deal with tax assessment notices and profit assessment notices (see, for example, OLG Frankfurt am Main, Urt. v. 21.02.2006, Ref.: 8 U 90/04, BeckRS 2011, 25589). Based on such a tax assessment amount, the tax is set and levied at a rate to be determined by the municipalities entitled to levy the tax. The tax assessment notice therefore has a binding effect on the trade tax assessment notice. Objections to the assessment can therefore only be asserted against the assessment notice and not against the trade tax assessment notice (BGH NJW-RR 2008, 1508, 1509). The damage occurs because the tax authority concludes its main decision-making process to the detriment of the taxpayer by issuing the tax assessment notice and substantiates the tax claim under public law by creating the basis for the realization of the claim in accordance with Section 218 AO (BGH NJW-RR 2008, 1508, 1509; BGH NJW 1995, 2108). The decisive factor is when the taxpayer’s determination and assessment risk first materialized into a loss as a result of an administrative act by the tax authority. However, separate determinations pursuant to § 182 AO are binding. The determination of a tax deposit account constitutes a separate determination within the meaning of Section 179 (1) AO (Frotscher in Schwarz AO, before Section 179, para. 17; Brandis in Tipke/Kunze AO/FGO, Section 179, para. 2). Therefore, the binding effect of § 182 para. 1 AO also applies in principle to this type of assessment notices.

It therefore does not seem completely absurd that the BGH would consider the determination of the existence of the tax deposit account as the occurrence of damage.

Conclusion

The question of the limitation period for liability claims against tax advisors is always complex and requires detailed examination, and not only in the case of the existence of so-called basic notices described above.

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CONTACT

+49 (40) 57199 74 80

+49 (170) 1203 74 0

Neuer Wall 61 D-20354 Hamburg

kontakt@legal-plus.eu

Benefit from my active network!

I look forward to our networking.