The D firminsured by the plaintiff companywere manufacturers among other things of tin covers for transformers. The defendant produces cleansing and degreasing apparatus for industrial products, in which through heating and evaporation perchlorhylene oil is washed out and separated from the parts to be cleansed. A ballcock connected to a switch, which the defendant alleges to have obtained from a foreign supplier, prevents the filaments, normally covered with fluid, from being exposed to the air.
After the D firm had, on 29 January 1969, ordered such cleansing apparatus for about DM 20,000, the defendant confirmed the order on 4 February 1969 with the addition: Warranty: according to our enclosed conditions of sale and delivery.
No. VIII of those conditions of deliveryin so far as is relevant hereruns as follows:
VIII. liability for defective delivery:
1. All those parts are to be made good or replaced without charge at our choice to be exercised fairly, which within twelve months of the delivery are proved unusable or the usefulness of which is seriously affected in consequence of circumstances existing before the passing of the riskin particular owing to defective design, inferior materials, or defective construction . . .
9. Further claims of the buyer or the party giving the order, in particular a claim for compensation for damage caused not to the delivered object itself but by the latter indirectly will in no case be accepted by us.
After the apparatus had been set up and put into operation at the beginning of June 1969 the used oil in the apparatus ignited because a switch operated by a ballcock had not switched off the filaments in time and they had become overheated. The plaintiff company, which had paid to the D firm, its insured, a sum of DM 70,971, made a claim for compensation against the defendant on the ground that the switch had failed in consequence of a defect in manufacture or construction; the D firm had had to spend that amount for the repair of the cleansing and electrical apparatus as well as the elimination of corrosion of the metal stocks. The defendant stated that the fire had happened only through an excessive supply of petroleum, and denied that it was liable for the damage caused by the fire, and in addition points to the formal exclusion of liability for all claims for compensation and in that respect invokes the operation of prescription in that the order for payment was first made on 23 June 1972.
Both courts below rejected the claim. Upon the plaintiff companys application for review, the judgment of the court was quashed and the case referred back to the Court of Appeal for the following
I. . . .
II. . . .
1. The decision of the Court of Appeal must be opposed in the result to the effect that the plaintiff companys claims in contract for damages did not exist according to its pleadings, because they were time-barred under § 477 BGB. [Details follow.]
2. On the other hand, the further considerations of the Court of Appeal that also from the delictual point of view the plaintiffs action is without foundation according to its own pleadings, does not stand up to legal examination.
(a) An objective breach of duty by the defendant causing damage resulting from a fire by delivering defective cleansing apparatus has been sufficiently established by the plaintiff company and proved by experts. [Details follow.]
(b) Since to this extent the plaintiff company claims against the defendant as the producer of the apparatus, it was for the latter, regarded from the point of view of so-called product liability, to exculpate itself by proving absence of fault, a circumstance that lay entirely within its sphere of influence and of which the plaintiff who could rely only on conjecture, could not be unaware (BGHZ 51, 91; Senate judgments of 28 September 1970VIII ZR 166/68 = WM 1970, 1418, 1420LM BGB § 433 no. 36 and of 24 November 1971ZR 81/70 = WM 1972, 106 = NJW 1972, 251). In this connection, it can be assumed in favour of the defendant that the ballcock switch, the failure of which, according to the plaintiffs account, started the fire, was obtained from a third party and only incorporated in the apparatus manufactured by it. If that switch was of itself free from defect, but its performance was too weak or otherwise unsuited for the apparatus, it is a matter of a so-called defect of the construction, characteristic product liability (see judgment of 20 September 1970). But even if there was nothing wrong with the construction and only the switch showed a defect, the defendant would be requiredwithout prejudice to the question which additional claims the plaintiff might perhaps have against the producer of the switchto exculpate himself from any fault in respect of such defect of production; for after the defendant ordered and incorporated this switch which was necessary for the operational safety of the apparatus to be sold, the responsibility for a defect-free working of the switchas between the partiesfell exclusively within the ambit of the defendant, who alone could control the workmanship and incorporation of the switch, whereas the D firm was deprived of such a possibility of examining it.
(c) The Court of Appeals view based on that of the Landgericht, that the legal institution of product liability had been developed for a disposition of goods involving several stages and could not therefore be applied ifas heredirect contractual relations existed between producer and ultimate consumer, is at variance with the law. A genuine concurrence existed between a claim for damages for breach of contract and that for a tort, with the consequence that each claim follows its own legal rules and the injured party is, as a matter of principle, free to choose the basis on which to put forward his claim. In particular he is not prevented from falling back on delictual liability, if contractual claims are no longer available either because the period of limitation has run out or because an exemption clause is restricted to contractual liability (cf. the applicability of § 852 BGB alongside of § 477 BGB dealt with in the judgment of the Senate of 24 May 1976 = BGHZ 66, 315 = WM 1976, 839). If the injured party bases his claim on a tort of the producer, the mere circumstance that direct contractual relations exist between them or in any case have existed, does not exclude the application of the principles of concurring the reversal of the burden of proof of fault developed for claims against a producer (cf. also the judgment of the Senate of 28 September 1970VIII ZR 166/68). In so far as in this connection Count von Westphalen in his criticism (BB 1976, 1097) of the judgment of the Senate of 24 May 1976 openly expresses the opinion that the Senate, on facts like the present, has retreated from the principles of evidence governing product liability, overlooks the fact that the subject of the dispute then decided was a typical case of a claim arising out of a chain of dealings against a firm which had neither manufactured the product nor had distributed it as a detached agency of the manufacturing firm, and that for this reason there was no room to introduce the principles of product liability; that was also to be deduced from the unabridged statement of facts in the judgment reported in WM 1976, 839.
(d) Contrary to the view of the Court of Appeal the plaintiff has also alleged in sufficient detail the existence of the property of the D firm and damage resulting from it. [Details follow.]
(e) The Court of Appeal declares as regards the cost of repairing the cleansing apparatus, that in any case there was no interference with property, because, according to the plaintiffs statement, the apparatus was originally delivered in a defective condition and therefore the D firm was never the possessor or owner of an object free from defects. This view is based on a mistake of law. It is indeed correct that both the Reichsgericht (RG JW 1905, 367) and the Bundesgerichtshof (BGHZ 39, 366) denied a claim of the owner of a building for damage to property based on the defective erection of a building (§ 823 I BGB) in respect of that particular building, when the materials used in the building were defective and when, with the completion of each phase, each time a further defectively produced portion passed into the landowners ownership (cf. also OLG Karlsruhe 1956, 913; Schafer in Staudinger, BGB, 10/11 edn. § 823, n. 49). It is essential in these cases that the defect in the object transferred was inherent beforehand to the object as such; it was therefore completely useless to the owner from the start and that the defect was identical with the damage complained of (cf. Duns/Kraus, Haftung für schädliche Ware (1969) p. 66). In such a case the damage to an object of another is in fact already excluded conceptually; only economic damage exists for which § 823 I BGB does not provide redress (BGHZ, above).
That is however not so here. Apart altogether from the fact that the above-mentioned considerations of the Court of Appeal concern only the damage to the cleansing apparatus itself, but not the damage caused by the fire to other property of the D firm, the defendant here had transferred to the D firm the ownership of an apparatus which was otherwise free from fault and only contained a regulating device which was defective as regards a limited functionthe failure of which caused further damage to the whole apparatus after ownership has passed. In such a case it does not matter that from the formal point of view the purchaser only acquired property which was defective at the outset (cf. Diederichsen, VersR 1971, 1078, 1098; Schlechtriem, VersR 1973, 581, 589). Instead, it is decisive that the danger arising from the accompanying delivery of the switch resulted in damage exceeding that represented by the defect only after title had passed and thereby the property of the purchaser, otherwise from defect. (Duns and Kraus, op. cit., 66; Schmidt-Salzer, Entscheidungssammlung Produkthaftung, 30 ff.). In cases of that kindespecially when the injured party has acquired the ownership on the basis of a contract of salethere is no reason to restrain him from having recourse to claims in tort. That is true all the more so since, if the injured party wishes to retain the apparatus (perhaps in order to maintain production) and only wants compensation for the cost of repairs, he cannot rely on a contractual claim to compensation because the law of warranties in sale (§§ 459 ff. BGB) does not provide for damages beyond the express warranties of quality (§§ 463, 480 II BGB). Moreover, claims for breach of contract by a positive act (positive Vertragsverletzung), arising out of the delivery of defective objects, are restricted to compensation for damage caused to other legally protected interests but do not cover damage to the object of the sale itself [reference]; thus, to that extent the buyer would be largely without a remedy if he could not fall back on claims in tort.
The Senate does not fail to recognize that in some cases the boundary may be difficult to draw between a defect affecting the transferred object as a whole and a limited defect which later on causes new damage to the object transferred which was otherwise free from defect, as for instance when what was to begin with a limited defect expands like a creeping disease and afterwards takes hold of the entire object (cf. Schlechtriem, op. cit. 589; Duns/Kraus, op. cit., 66 fn. 7). In the present case it is not necessary to set down unambiguous criteria for delimiting the two given the small value of the ballcock and the total value of the cleansing apparatus sold for some DM 20,000.
( f ) Finally, the claim for compensation put forward by the plaintiff, in so far as it is based on tort, is not excluded on legal grounds. The short period of limitation of § 477 BGB is not applicable to such a claim (see judgment of this Senate of 24 May 1976ZR 10/74). The same applies to the disclaimer of liability regulated in section VIII no. 9 of the defendants general conditions of delivery, which it may be assumed in the defendants favour, were incorporated in the contract. Whether such a disclaimer also includes claims in tort, in so far as they are connected with the defective performance, is a question of interpretation in the light of the individual case (cf. BGH judgment of 23 April 1970VII ZR 150/68 = JZ 1970, 903). Since the Court of Appealconsistently with its point of viewdid not attempt an interpretation of the general delivery conditions, this Senate can itself interpret this clause (see Senate judgment of 25 June 1975VIII ZR 244/73 = WM 1975, 895 = NJW 1974, 1693). For this purpose it must be taken into account not only that exemption clauses being exceptions from liability provided by dispositive lawmust in principle be construed narrowly, but also in the present case that according to the so-called obscurity rule any remaining doubts as to the extent of the provisions contained in the general conditions of trade must be interpreted against the party who drafted them and makes use of them. In the present case the exemption clause is found in a section of the general conditions of trade which is headed Liability for defects in delivery and which regulated in particular the contractual warranty by the seller, and therefore by modifying §§ 450 ff. BGB and §§ 377 ff. HGB regulates the contractual claims for a warranty. It need not be decided whether the buyers or contracting partys disclaimer which is mentioned only in no. 9 also includes claims for compensation for breach of contract by positive act arising from a defective delivery. In any case there is no sufficiently clear provision that claims for a blameworthy injury to the legal interests protected by § 823 I BGB are to be excluded. If this had been the defendants intention, it ought to have been indicated to the D firm by an unambiguously formulated clause that the latters legal position was being further restricted to an appreciable degree, for example as regards any claims arising from a negligent bodily injury or a destructive threatening the existence of an entire business.
In so far as this Senate stated in the decision BGHZ 64, 355 that the exclusion of liability contained in section II no. 5 of the General Conditions for the supply of Electrical Power from the Low Tension Network (AVB), embraces not only contractual but also delictual claims for damage arising from the break in the supply of current, those statements relate to a state of facts and interests which is not comparable with the present case. Quite apart from the fact that the AVB are regarded as a legal enactment (BGHZ 9, 390) and that for this reason the so-called obscurity rule cannot be invoked for its interpretation (cf. judgment of the Senate of 21 October 1958VIII ZR 145/57 = NJW 1959, 38), the exclusion of liability in no. II 5 AVB takes account of the circumstance that the energy undertakings can only perform the task allotted to them of providing the public with cheap current, if they are as far as possible exempt from liability; this particular task demands the widest possible exemption from liability with the consequence thatas far as admissibleclaims for compensation are included in whatever legal form (judgment of this Senate of 9 June 1959VIII ZR 61/58 = NJW 1959, 1423 = LM BGB § 138 [Cc] no. 2). On the other hand in the present case, which involves a shift from the seller to the buyer by means of general trade conditions, these considerations do not apply.
III. The decision of the dispute depends therefore on whether the plaintiff succeeds in proving that a defective or unsuitable switch caused the fire. To that extent the dispute requires a further clarification of facts.
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