Contributed By Luther Rechtsanwaltsgesellschaft mbH (Cologne)
Under German law, a limitation of liability both in terms of amount and differentiation according to the type of damage (direct and indirect damage) is contained in very few special provisions, for example in the area of logistics. In general, German law is not aware of the Anglo-Saxon distinction. Rather, the person responsible has to compensate all damages which have arisen causally through a breach of duty. However, contributory negligence of the injured party may have to be taken into account (§254 of the BGB).
With regard to the type of damage, according to the statutory regulation (defect and consequential damages), unlimited and comprehensive damages are included. This includes in particular consequential damages such as loss of profit. According to the legal logic, those damages are also to be compensated in, eg, the event of a standstill of the production line.
Since, however, this would be completely out of proportion for the provider of the outsourcing, limitations of liability are very common and also appropriate. The provider has a legitimate interest in modifying the legal situation in such a way that a reasonable limitation of liability is agreed upon. Market practice is that the obligation to pay compensation for typical operating risks such as loss of profit or goodwill is excluded or at least limited, and that the limit will be calculated by way of a percentage of the provider’s turnover with the business.
Very far-reaching limitations of liability can be made in contracts and it is also quite common (unlike in Anglo-Saxon contracts) that liability is also limited in cases of gross negligence. In this respect, it should be pointed out that the German courts tend to assume gross negligence quite easily. In 'general terms and conditions' (ie, contracts which were not negotiated), such limitations of liability are only possible within very narrow limits. In the market, however, the liability regulations are negotiated individually (for good reasons, since every project is different).