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Case:
BGH NJW 1985, 2420 VI. Civil Senate (VI ZR 168/83) = VersR 1985, 837
Date:
14 May 1985
Judges:
Professor B.S. Markesinis
Copyright:
J.A. Weir

In April 1980 the plaintiff bought a compressor from the defendant manufacturer. In March 1982 its diesel motor suffered considerable damage, because it had run for a time without lubricant. This was because oil had leaked out owing to the fracture of the oil-conduit at the point where it joined the sump. The plaintiff maintains that it was a fault in design that the oil-conduit was fixed at only one point, namely where it entered the motor—or compressor—housing, and that it would not have broken under the vibrations set up by the prolonged running of the motor if it had been affixed to the chassis as well.
The plaintiff claimed damages of DM 5730.28 for damage to property (cost of substitute motor, expenses of experts, and rental of replacement).

Reasons

1. The Court of Appeal was of the opinion that, accepting the plaintiff’s allegations as true, the damage to the compressor’s motor was not damage to the plaintiff’s interest in the integrity of his property such that the defendant was under a tort duty to take care to avoid it. If, as he alleged, the compressor was unfit for prolonged use as envisaged, he must bring a claim in respect of his interest in the usability and value of a merchantable compressor.

II. The judgment of the Court of Appeal is unsound in law.

1. The first points made by the Court of Appeal are correct enough.

(a) The Court of Appeal followed decisions of this Division to the effect that the manufacturer of a product can be liable under § 823 I BGB for harm to a consumer’s property if the damage to or destruction of the property represents damage which it is the duty of the manufacturer to take care to avoid in the interest of the acquirer in the integrity of his property [references].

(b) The Court of Appeal correctly distinguished those cases where the damage consisted simply of the fact that the defect in the thing made it less valuable and constituted an infringement of the acquirer’s interest in usability and value for money, since it is not the function of duties imposed by the law of tort to protect a purchaser’s interest in having a thing to use which is free from defects.

(c) As to whether or not the damage represented an invasion of the plaintiff’s interest in the integrity of his property the Court of Appeal was right to adopt the test whether the damage was identical with the loss of value of the compressor due to its initial defect, i.e. whether it was ‘substantially similar’ to the loss in value quoad usability and value for money represented by the defect.

2. The Court of Appeal was nevertheless wrong to infer from the fact that the initial defect in the compressor only manifested itself in the loss of its value the conclusion that in this case there was no invasion of the plaintiff’s interest in the integrity of his property.

(a) The Court of Appeal was wrong to suppose that the primary test as to whether the harm which later manifests itself is identical with the loss of value due to an initial defect, that is, whether they are ‘substantially similar’, is whether the thing was fit for prolonged use. What really counts is the comparison between the damage which is in issue and the disvalue of the product at the time of transfer, namely the amount by which the defect renders it less valuable. The diminution in value due to the defect and consequently the harm to the interest in value for money can be tested by the principles applied when abatement of the price is sought for breach of warranty (§ 472 I BGB) [references]. While it is true that in making this assessment the fact that the defect will reduce the useful life of the product can materially increase the initial shortfall in value, it is only if the entire thing or component for which compensation is sought is affected from the economic point of view by the non-durability that the short life expectancy will be fully expressed in the diminution of value and thus establish complete ‘substantial similarity’ between loss of value and damage to the thing. Where the initial defect which carries the risk of premature breakdown affects only part of the product and is quite curable, and only later destroys the product or damages other parts of it, the undefective part of the product has a value sufficiently distinct from the shortened life due to the defect that there is no complete identity between the damage and the shortfall in value.

That was the case here. Taking the material facts as found below, the component parts of the compressor which the plaintiff bought from the defendant manufacturer were individually faultless and it was initially quite functional. The only trouble was the inadequate anchorage of the oil-pipe which rendered it likely to break under the stress of operation and let the oil escape. This could have been avoided by the simple welding job of making an additional fixing to the chassis. Only the oil-pipe was non-durable, not the compressor as a whole or even the motor. As the defect, viz. the inadequate and easily curable fixing of the oil-pipe, could only damage the motor if its fracture and the consequent loss of oil remained unnoticed, the loss of value due to the defect at the critical moment, namely the transfer of ownership, was limited to the cost of occasional replacement of the pipe during the normal life of the compressor, or alternatively the cost of installing an additional fixing.

(b) Contrary to the view of the Court of Appeal, the plaintiff’s claim is not simply for an invasion of his interest in the usability and value for money of a functioning compressor. This case differs from the ‘hydraulic jack’ case, cited below, in which this Division dismissed a damages claim for damage to property where the jack was not usable (NJW 1983, 812 = VersR 1983, 346). A point sometimes overlooked by critics is that the defendant in that case had restored the jack to its original condition after the collapse of one of the supports, so that the plaintiff was in possession of a jack with just the original defect and no more, namely the design or construction fault in its undercarriage. It is true that as this defect was not remedied by the manufacturer the plaintiff did not use the jack for a long time for fear that a support might again give way under the weight of the vehicle. In such a case the purchaser suffers no harm over and above the original defect in the product, whereas in our case, as explained above, the damage is significantly greater. This demonstrates that the plaintiff here is not complaining simply of an invasion of his interest in having a functional compressor to use.

(c) This case differs in two respects (neither of which affects the outcome) from previous decisions of this Court where it was held that there had been an invasion of the plaintiff’s interest in the integrity of his property (BGHZ 67, 359 = NJW 1977, 379 (thermostat); BGHZ 86, 256 = NJW 1983, 810 (accelerator pedal); NJW 1978, 2241 = BB 1978, 1491 (rear tyres)).

(aa) In the accelerator pedal case ‘a risk of accident arose through a combination of unfortunate circumstances’. As the court below correctly held, that was not the case here.

It cannot be a precondition of a damages claim that further special circumstances be required before any damage occurs [reference]. Even in the absence of further special circumstances defect and harm lack ‘substantial identity’ if, as explained above, a curable defect initially affects only a particular part of this product.

Furthermore, it must be irrelevant to the question of the congruence of initial defect and subsequent harm whether or not the harm occurs by means of an accident or results from a ‘violent’ occurrence. This senate in BGHZ 86, 256 (273) = NJW 1983, 810 left it open whether it was only in such circumstances that the manufacturer’s liability arose. But just as tort liability cannot depend on whether the defect in part of a product endangers other interests of the consumer or third party, that is, poses a risk to the environment and not just to the product itself (BGHZ 86, 256 (258) = NJW 1983, 810, criticized by Hager, AcP 184, 417), so it cannot be relevant to liability that the harm occurs by means of an ‘accident’ or by ‘violent’ damage to or destruction of other parts of the product. That would introduce into the law of tort a criterion foreign to its general principles.

The principle is that the acquirer’s interest in the thing not being damaged or destroyed by reason of a fault of design or manufacture deserves as much protection as his interest that such fault not damage other property acquired elsewhere, and the manufacturer’s liability cannot sensibly depend on whether the defect in manufacture damages other property of the consumer or only the product itself [references]. Likewise, the victim’s interest in the integrity of his property and its protection by the law of tort cannot depend on whether the thing is damaged or destroyed ‘violently’ or gradually over a period of time. After all, the manufacturer’s liability for damage to other property of the consumer does not depend on whether the damage is sudden or gradual; nor does it where the damage is to the product itself. For damage to the product the manufacturer is liable in tort as well as in warranty unless the plaintiff never had an undamaged product and so cannot complain of any impairment in his interest in the product remaining undamaged, that is, unless the subsequent damage was so inherent in the original undervalue of the product that any damages awarded must be for his failure to acquire an undamaged thing rather than for invasion of his interest in the thing not being damaged.

(bb) Finally it is immaterial that in this case the damage to the compressor’s motor occurred through the absence of an additional fixing for the oil-pipe, rather than through the presence of a defective or unsuitable component which threatened the whole. Here the damage was as much an invasion of the plaintiff’s interest in the integrity of his property, which the manufacturer was under a duty to respect, as in cases where an original defect in a component affects the whole or other parts of the thing. The case is like those in which a thing is badly constructed because one of its parts is too weak to work or otherwise unsuitable (BGHZ 67, 359 (362) = NJW 1977, 379). This distinction can have no effect on tort liability.

Reversed and remanded for further findings of fact.

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