Fundamental principles, functions and premises of tort law
The traditional rules of tort law stem from the fundamental notion that it is not appropriate and fair for the injured party to bear the damage itself. However, this notion is consistent only when the infliction of damage can be attributed to someone. Therefore, the function of the above-mentioned rules is to determine the premises under which the liability for damages will be incurred. One of the characteristics of tort law is its nature of judicial precedent, through which abstract and general legal bases are concretised and the rules used by case law in specific real-life cases are created. Legal and philosophical principles on the purpose and function of tort law guide this process. It is moral, punitive (preventive and educational) and compensatory (restitution or equivalence) or satisfactory nature, with its social function also emphasised in some legal orders.
According to the dualistic theory, liability for damage is fundamentally divided into non-commercial and commercial liability, where theorists see the difference between the two liabilities particularly in the fact that non-commercial liability is a liability arising from a breach of a legal norm (co-existence rules), whereas the commercial liability is characterised by the fact that it arose from a violation of a rule created by the will of the parties (decision of the parties is violated).
The Obligations Code, which governs the prohibition of infliction of damage as one of the fundamental principles, distinguishes commercial liability for damage from non-commercial liability for damage – this distinction is important. The correct qualification of a compensation case is important primarily because of the differences between the first and second type of liability for damage, which can be inferred from the provisions of the Obligations Code. The essence of tort law is the distribution of the risk of damage. Liability for damage is not based on a fact of damage (origin of damage), but on the damage itself (which must be rectified).
The following premises are fundamental for non-commercial liability for damage (general civil delict): unlawful conduct or omission, damage, causality and culpability (subjective – fault-based liability for damage). On the other hand, objective liability for damage is exceptionally presented with the following premises: damage event, damage, causality and objective liability for damage (liability regardless of fault, causality is presumed, particularly involving a dangerous thing or dangerous activity that is the cause damage).
Article 131 of the Obligations Code stipulates that any person that inflicts damage on another shall be obliged to reimburse it, unless it is proved that the damage was incurred without the culpability of the former (general premise: unlawful conduct – a violation of the general principle of prohibition of causing damage originates from the sphere of the responsible person, and the negative consequence – the damage that arises in the sphere of the injured person, and the damage caused in the sphere of the injured person by the unlawful conduct or the unlawful consequence arising from the sphere of the responsible person). Persons shall be liable for material damage and activities that result in major risk of damage to the environment, irrespective of culpability. Persons shall also be liable for damage irrespective of culpability in other cases defined by law. In this article, the law fundamentally regulates the premises of general non-commercial liability for damage. Damage can be material or non-material.
The responsible person is obliged to restore the situation that existed before the damage occurred. If the damage is not completely eliminated by restoring the previous situation, the responsible person shall be obliged to pay monetary compensation for the remainder of the damage. When the restoration of the previous situation is not possible or when the court is of the opinion that it is not necessary for the responsible person to do so, the court shall order the responsible person to pay appropriate monetary compensation to the injured party. The court shall award monetary compensation to the injured party if the latter so demands, unless the circumstances of the case in question justify the restoration of the previous state.
The amount of reimbursement of material damage includes ordinary damage and lost profit. The assessment of lost profit shall take into account the profits that could reasonably be expected in view of the normal course of events or in view of special circumstances, which could not be achieved due to the injurer’s act or omission. If an object was destroyed or damaged intentionally the court may assess compensation according to the value the object had for the injured party (praetium affectionis). The principle of full compensation applies – in considering the circumstances arising after the infliction of damage the court shall award the injured party compensation in the amount necessary to restore the injured party’s financial situation to what it would have been without the damaging act or omission. A special institute of reduced compensation has been enacted – taking the injured party’s financial situation into consideration, the court may order the responsible person to pay less compensation than the amount of damage if the damage was not caused intentionally or out of gross negligence, the responsible person is in a weak financial situation and the payment of full compensation would entail great hardship for the responsible person. If the injurer caused the damage while acting for the benefit of the injured party, the court may order reduced compensation; in so doing the court shall take the diligence shown by the injurer in the injurer’s own matters into consideration. We also have to point out the institute of shared liability – an injured party who also contributed to the occurrence of damage or caused damage to be greater that it would otherwise have been, shall have the right to proportionately reduced compensation only. When it is not possible to determine which part of the damage is the consequence of the injured party’s action, the court shall award compensation having taken the circumstances of the case into consideration.
Monetary compensation – for physical pain suffered, for mental pain suffered due to a reduction in life activities, disfigurement, the defamation of good name or reputation, the curtailment of freedom or a personal right, or the death of a close associate, and for fear, belongs to the injured party, if the circumstances of the case, particularly the level and duration of distress and fear, so justify, fair monetary compensation independent of the reimbursement of material damage, even if there was no material damage. The amount of compensation for non-material damage shall depend on the importance of the good affected and the purpose of the compensation, but it may not support tendencies that are not compatible with its nature and purpose. Reimbursement of future damage – at the request of an injured party, the court also award compensation for future non-material damage if according to the customary course of events, it is certain that the damage will last into the future. Monetary compensation for legal person – the court shall award a legal person fair monetary compensation for defamation of reputation or good name, independent of the reimbursement of material damage, if it finds that the circumstances so justify, even if there is no material damage.
The premises of the general form of commercial liability for damage are regulated in Articles 239 and 240 of the Obligations Code (and are partly different from the premises of the general non-commercial liability for damage), which stipulate the following: a debtor that was given an appropriate additional deadline for performance by the creditor shall also be liable for damage because of a delay in performance; a debtor shall also be liable for the partial or full incapacity to perform, even if not culpable, if it occurred when there was a delay for which the debtor was responsible; nevertheless the debtor shall be released from liability for damage if it is shown that the thing that was the subject of the obligation would have been destroyed accidentally even if the debtor had performed the obligation on time. The debtor shall be released from liability for damage if it is shown that the debtor was unable to perform the obligation or was late in performing the obligation owing to circumstances arising after the conclusion of the contract that could not be prevented, eliminated or avoided. Article 243 of the Obligations Code defines the amount of compensation for damage and recognises the creditor’s right to the reimbursement of ordinary damage and lost profit that the debtor should have expected upon breach of contract as potential consequences of the breach of the contract given the facts that were known or should have been known. In the case of fraud, intentional non-performance or non-performance owing to gross negligence, the creditor shall have the right to demand that the debtor reimburse all the damage that occurred because of the breach of contract, irrespective of whether the debtor knew of the particular circumstances for which reason it occurred. If during a breach of contract any benefit accrued to the creditor in addition to the damage, the benefit must be taken appropriately into consideration in assessing the compensation. A party that makes reference to a breach of contract must take all reasonable measures to reduce the damage inflicted by the breach; otherwise the other party may demand reduced compensation.
A special form of commercial liability for damage is liability for material (and legal) errors. Regarding specific types of contract, the Obligations Code also regulates certain premises of (special) commercial liability for damage, related to violation of obligations typical for specific contracts. As an example, we point out Article 503 of the Obligations Code, which states that if a sales contract has been rescinded because one of the contracting parties breached the contract, the other party have the right to the reimbursement of damage incurred for this reason under the general rules on the reimbursement of damage inflicted by a breach of contract, and Article 506 of the Obligations Code, which states that in addition to the right to the reimbursement of damage under the rules laid down in the preceding articles, a party that remains faithful to the contract shall have the right to the reimbursement of any major damage. Regarding commercial liability for damage, we also have to point out Article 246 of the Obligations Code, which states that unless otherwise provided in the provisions on commercial liability for damage, the provisions of the Code on the reimbursement of non-contractual damage shall apply mutatis mutandis to the reimbursement of damage occurring through the breach of a contractual obligation.
We should also briefly mention as important the burden of proof of the presumptions of liability for damages, which is basically on the injured party, of course with exceptions. According to theory and legislation, the burden of proof is reversed when the law seeks to alleviate the injured party’s position. The law determines the reversed burden of proof when the debtor has caused the damage by violating a contractual obligation or obligation arising from law. The reversed burden of proof exists also with objective liability – anyone possessing a dangerous object is liable for damages arising from that danger, unless they prove that there is a reason that the law recognises as exculpatory. The burden of proof is also reversed in the event of presumption of guilt. The principle – presumption of guilt – arises from the general, i.e. fundamental, provision of Article 131 of the Obligations Code.
The general principle of liability for damage arises from the culpability established when the injurer inflicts damage intentionally or out of negligence. Intent (dolus) is the most severe form of culpability; in terms of civil law, it is divided into direct (dolus directus) and eventual (dolus eventualis), while negligence is divided into grave or major (culpa lata, related to culpa in abstracto – the diligence of any average man), ordinary and slight (culpa levis) and to that in one’s own affairs (diligentia quam in suis). These are different levels of negligence depending on each particular case and its circumstances, with levels of negligence being reflected in the level of diligence in legal transactions.
Direct damage due to the defect of the thing itself (inferiority, damnum quoad rem) can be successfully remedied only by bringing guarantee claims and the success thereof. Damages due to trust (damnum circa rem) are indirect damages closely related to the thing that is the subject of performance, which cannot be remedied by claims arising from liability for material errors. These are, for example, cost of storage, vehicle storage, vehicle maintenance costs, etc. This damage can only be (cumulatively) claimed, together with claims for liability for material errors. Therefore, in this sense, it is also linked to the success of guarantee claims. Accompanying damage (damnum extra rem) encompasses damage to other legal goods, not to purchased items. It is treated according to the general rules on (commercial) liability for damage, independent of the seller’s liability for material errors.
Article 468 of the Obligations Code states that in each of these cases of guarantee claims, the buyer shall have the right to demand the reimbursement of damage (damage due to trust). In addition and independently of this (accompanying damage), the seller shall also be liable to the buyer for damage incurred by other assets of the buyer because of the defect in the thing, according to the general rules on liability for damage. Article 37.c of the Consumer Protection Act specifically states that in any case, the consumer has the right to require the seller to reimburse them for any damage, in particular reimbursement of costs of material, spare parts, labour, transfer and transport of products incurred in relation to the fulfilment of obligations related to guarantee claims.
Provision of Article 155 of the Obligations Code mentions manufacturer’s liability for faulty objects (first paragraph) and liability for dangerous attributes of an object (second paragraph). In theory, both liability for material defect of a thing and specific product liability include the fact that manufacturers release a product on the market that, due to a defect or a dangerous property, poses a risk of damage. By releasing a product on the market, the manufacturer makes a commitment that the product will not be harmful or, if it is dangerous, that it will protect the product from improper use with sufficient instructions and appropriate packaging. This obligation stems from the manufacturer’s social contact (social contact theory). By making contact with its customer, the manufacturer triggers their actions. The manufacturer is responsible for these responses if they resulted in torts due to insufficient care for safe use of the product. If the manufacturer’s responsibility is acknowledged, the effect is small if that responsibility is limited to culpability. It is through the actions of the manufacturer, which creates the product that is then distributed, that the most valuable resources of people are destroyed: their life and health. There is no reason why victims should bear the risk of unhealthy products, even though they did not contribute to this risk, while the manufacturer who created the risk should be free from the consequences. This is to say that liability should be especially objective when it comes to safeguarding the most valuable resources of mankind.
Regarding the topic in question, the next article will specifically address (especially in practical terms – in our opinion – open legal dilemmas) the basis (commercial and non-commercial) liability for damages, types of material and non-material damage (including direct and indirect) that may result from the scandal. We do not ignore the responsibility of the manufacturer for a defect under Article 155 of the Obligations Code and the general culpable tort liability (its individual basic elements, but only those of interest in the scandal) on the basis of Article 131 of the Obligations Code and general potential reimbursements for damage caused in individual cases of injured parties, which we consider possible.
Source: Pravni vidiki afere Dieselgate [Legal Aspects of Dieselgate] (master’s thesis), 2016, Damjan Merhar