[1.3]
TORT AND CONTRACT
CHAPTER ONE
GENERAL TOPICS
1.3.
TORT AND CONTRACT
1.3.2. CONTRACTUAL CHAINS
Introductory Note
The principle of privity of contract does not preclude third parties from suing contracting
parties in tort. In England the opposite proposition is commonly called the “contract
fallacy” and rejected by the House of Lords in Donoghue v. Stevenson.1 But of
course it is also necessary “to avoid the converse fallacy of assuming that C will
automatically have a good cause of action against A merely because A’s failure to
perform his contract with B has resulted in damage to C”.2 Indeed, not every breach
of contract is at the same time a tort as against third parties harmed by it.
This is particularly important in the situation of a chain of contract: A enters into a
contract with B who in turn enters into a contract with C. The question is whether A,
although not in privity with C, has a remedy against C and, if so, whether that remedy
is in contract or in tort. More specifically, does the existence of a chain of contract
render a tort remedy from A against C impossible so that A has to sue B in contract
and B in turn has to sue C in contract as well?
French law will be dealt with first because the issue has been much debated there,
not only in legal literature but also between several chambers of the Cour de cassation.
Although the House of Lords has recently dealt with the issue in Henderson v. Merrett
Syndicates Ltd.,3 the situation is still not crystal-clear in English law, nor is it in German
law. Reference is also made to a judgment of the European Court of Justice rendered
in the context of the Brussels Convention, which partly departs from the solution
adopted in France.
1
See infra, 1.E.23.
Salmond and Heuston at 11.
3
Supra, 1.E.14 and, in respect of the present question, infra, 1.E.17.
2
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1.F.16.
GENERAL TOPICS
Cass. Ass. plén., 12 July 19914
Besse v. Protois
1.F.16.
CONTRACT GROUPS
Defective plumbing
Between parties to a chain of contracts who are not in privity with one another
(e.g. between the owner of a building and a sub-contractor), no contractual
remedy is available unless a direct contractual link can be proven to exist between
the parties.
Facts: Besse employed the building contractor Alhada to build a dwelling house. The latter sub-contracted
a large part of the plumbing to Protois. Ten years after having taken delivery, the building owner sued the
main contractor and the sub-contractor for damages, because the plumbing revealed itself to be defective.
The question arose whether the remedy of a building owner against a sub-contractor is in tort or in contract.
If the remedy is in contract, the action would be barred by the ten-year limitation period applicable to
actions in contract (Art. 2270 C.civ.).
Held: The court of appeal found the claim inadmissible because the limitation period has run out. The Cour
de cassation reversed the decision of the court of appeal.
Judgment: “In order to declare the pleas against the sub-contractor inadmissible, the court of
appeal held that, where the debtor of a contractual obligation has entrusted another person with
the performance thereof, the creditor of that obligation can sue that person solely in contract,
within the limitations of the creditor’s rights [under the contract] and of the obligations
undertaken by the main debtor (débiteur substitué). Consequently, Protois [the sub-contractor]
can invoke against Besse [the building owner] all defences drawn from the building contract
concluded between the latter and the main contractor [Alhada] and from the statutory provisions
governing that contract, more particularly the limitation period of ten years.
Since the sub-contractor is not contractually bound towards the building owner, the court
of appeal infringed the law in ruling as it did…”
4
D 1991.Jur.549, annotated by J. Ghestin, D 1991.Somm.321, annotated by J.-L. Aubert, JCP
1991.II.21743, annotated by G. Viney, RTDciv. 1991.750, annotated by P. Jourdain. Translation by A.
Dumas-Eymard. See additional comments by P. Jourdain, “La nature de la responsabilité civile dans les
chaînes de contrats après l’arrêt d’Assemblée plénière du 12 juillet 1991” D 1992.Chron.149; C. Larroumet,
“L’effet relatif des contrats et la négation de l’existence d’une action en responsabilité nécessairement
contractuelle dans les ensembles contractuels” JCP 1991.I.3531.
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Notes
(1) The Besse judgment came as a reaction against the theory of “contract groups”
(“groupes de contrats”), which was launched in the 1970s by Bernard Teyssié5 and
Jean Néret,6 approved in the 1980s by the first civil chamber of the Cour de cassation,7
but strongly disapproved by the third civil chamber of that court.8 The theory
presupposes a close link between two or more contracts, such that events occurring
under one contract have an effect on the other(s) as well.9 The link would imply, among
other consequences, that the plaintiff must have an action in contract against a party to
a contract at the other end of the chain, even though the plaintiff is not privy to any
contract with that other party. Under that theory, the claim of the principal creditor, that
is, in the annotated judgment, the building owner, is subject to the defences and
restrictions, such as exemption clauses, which may arise from either contract (i.e. the
contract with the main contractor and the latter’s contract with the subcontractor)10. In
Besse, the Cour de cassation, in plenary session, refused to adhere to the “contract
group” theory, which it considered to violate the principle of privity (or relativity) of
contract (Art. 1165 C.civ.). The underlying reason was that the theory led to too many
unsettled consequences and ran counter to the principle of legal certainty.11 Since the
annotated decision, the first and third civil chambers of the French Cour de cassation
are again on the same path, that is in line with the view expressed in that decision.12
(2) However, with regard to chains of contracts that imply a transfer of property,
the prevailing opinion is still that the parties at both ends of the chain have an action
which is “of necessity” contractual in nature (“une action nécessairement
contractuelle”);13 thus in a chain of contracts of sale, the ultimate purchaser is
considered to have a contractual remedy against the initial seller for latent defects under
5
B. Teyssié, Les groupes de contrats (Paris: LGDJ, 1975).
J. Néret, Le sous-contrat (Paris: LGDJ, 1979). See also recent work of M. Bacache-Gibeili, La
relativité des conventions et les groupes de contrats (Paris: LGDJ, 1996).
7
Cass. civ. 1re, 8 March 1988, Bull.civ. 1988.I. 69, JCP.1988.II.21070, annotated by P. Jourdain and
RTDciv. 1988.551, annotated by P. Rémy (laboratory losing photo slides); Cass. civ. 1re, 21 June 1988,
Bull.civ. 1988.I.202, JCP 1988.II.21125, annotated by P. Jourdain, RTDciv. 1989.74, annotated by J.
Mestre.
8
Cass. civ. 3e, 22 June 1988, Bull.civ. 1988.III.115, JCP 1988.II.21125, annotated by P. Jourdain.
9
Le Tourneau and Cadiet at 103, para. 286.
10
Le Tourneau and Cadiet at 105, para. 289.
11
See among others Le Tourneau and Cadiet, ibid.
12
See Cass. civ. 3e, 11 December 1991, Bull.civ. 1991.III.319 (building renovation); Cass. civ. 1re, 7
July 1992, Bull.civ. 1992.I.221 (wine cellar).
13
Le Tourneau and Cadiet at 106, para. 290-3.
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1.F.16.
GENERAL TOPICS
the contractual warranty (garantie contre les vices cachés).14 The rule is generally
based on the maxim accessorium sequitur principale, according to which the claim
of the initial purchaser against the initial seller is transferred to the subsequent purchaser
as an accessory to the object being resold.15 The same holds true for the remedy of a
building owner against the supplier of defective goods which were ordered by a building
contractor and integrated in the building:16 here also the remedy of the building owner
against the supplier sounds in contract. In the same vein, the special decennial liability
of contractors and architects (garantie décennale)17 can be invoked not only by the
original building owner, but also by the subsequent acquirors of the building18.
It is interesting to note that, for the application of Article 5(1) of the Brussels
Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments
in Civil and Commercial Matters, which provides for special jurisdiction in contractual
matters, the ECJ does not characterize the claim of the subsequent buyer (at the end
of the contractual chain) against the manufacturer as contractual.19
(3) The judgment of the Cour de cassation in Besse and other cases, where it
refuses to allow actions in contract, does not of course preclude parties participating in
a chain of contracts, but without a direct contractual relationship between them, from
suing each other in tort.20 There the usual regimes of tort liability — with their
conditions —will apply: for instance, the facts making out a breach of contract between
parties to a contract, such as the main contractor and the sub-contractor, must at the
same time qualify as fault in the sense of Art. 1382-1383 C.civ. on the part of the subcontractor as against the building owner. However, under French law, fault is easily
found to exist where contractual misperformance occurred.21
14
See more on this infra, Chapter VI, 6.3.1.B., Introductory note under d).
Art. 1615 C.civ.
16
See Cass. civ. 3e, 30 October 1991, Bull.civ. 1991.III. 251; Cass. Ass. plén., 7 February 1988, JCP
1986.II.20616, annotated by P. Malinvaud. See J. Huet, Les principaux contrats spéciaux (Paris: LGDJ,
1996) at para. 11.343.
17
Art. 2270 C.Civ.; see Cass. civ. 3e, 8 February 1995, Bull.civ. 1995.III.39, D 1995.IR.72.
18
Cass. civ. 3e, 23 March 1968, D 1970.Jur.663, annotated by P. Jestaz; Cass. civ. 3e, 8 February
1995, Bull.civ. 1995.III.39. See J. Huet, Les principaux contrats spéciaux (Paris: LGDJ, 1996) at para.
32.453.
19
See infra, 1.EC.19.
20
Cass. com. 17 February 1981, Bull.civ. 1981.IV.87.
21
J. Huet, Les principaux contrats spéciaux (Paris: LGDJ, 1996) at 1287, para. 32.322.
15
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House of Lords22
Henderson v. Merrett Syndicates Ltd.
1.E.17.
SUB-AGENCY
Indirect Names at Lloyd’s23
The agent’s principal has no tortious remedy against the sub-agent if that remedy
would short-circuit the contractual structure put in place by the parties.
Facts: In addition to the (so-called) direct Names,24 the indirect Names also suffered damages because of
alleged negligence of the agents. However, their relationship with these managing agents was not a direct
contractual relationship but a two-tier contractual relationship: on the one hand there was an underwriting
agreement between the Names and their underwriting agents (the “members” agents) and, on the other, a
sub-agency agreement between the latter and the managing agents who, defendants in a tort action brought
by the indirect Names, denied liability as against them because of the existing contractual structure.
Held: The court of appeal affirmed the judgment of the court of first instance that the duty of care in tort
owed by the managing agents to the indirect Names was not excluded by the contractual structure. The
House of Lords dismissed the appeal.
Judgment: LORD GOFF: “… In essence the argument must be that, because the managing agents
have, with the consent of the indirect Names, assumed responsibility in respect of the relevant
activities to another party. i.e. the members’ agents, under a sub-agency agreement, it would be
inconsistent to hold that they have also assumed responsibility in respect of the same activities
to the indirect Names. I for my part cannot see why in principle a party should not assume
responsibility to more than one person in respect of the same activity. Let it be assumed (unlikely
though it may be) that, in the present case, the managing agents [the defendants] were in a
contractual relationship not only with the members’ agents under a sub-agency agreement but
also directly with the relevant Names, under both of which they assumed responsibility for the
same activities. I can see no reason in principle why the two duties of care so arising should not
be capable of co-existing.
Of course I recognise that the present case presents the unusual feature that claims against
the managing agents [the defendants], whether by the members’ agents under the sub-agency
agreement or by the indirect Names in tort [emphasis added], will in both cases have the
22
[1995] 2 AC 145.
The distinction between Direct and Indirect Names now belongs to history (see another passage
from Henderson v. Merrett Syndicates Ltd., ibid. at 171). However, the case continues to be of interest
because of the general principles stated.
24
See supra, 1.E.14.
23
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GENERAL TOPICS
purpose immediate or ultimate, of obtaining compensation for the indirect Names. In these
circumstances, concurrent duties of care could, in theory at least, give rise to problems, for
example in the event of the insolvency of the managing agents or the members’ agents. …
I wish however to add that I strongly suspect that the situation which arises in the present
case is most unusual; and that in many cases in which a contractual chain comparable to that in
the present case is constructed it may well prove to be inconsistent with an assumption of
responsibility [in tort] which has the effect of, so to speak, short circuiting the contractual
structure so put in place by the parties… Let me take the analogy of the common case of an
ordinary building contract, under which main contractors contract with the building owner for
the construction of the relevant building, and the main contractor sub-contracts with subcontractors or suppliers (often nominated by the building owner) for the performance of work
or the supply of materials in accordance with standards and subject to terms established in the
sub-contract… [I]f the subcontracted work or materials do not in the result conform to the
required standard, it will not ordinarily be open to the building owner to sue the sub-contractor
or supplier direct [in tort] under the Hedley Byrne principle claiming damages from him on the
basis that he has been negligent in relation to the performance of his functions. For there is
generally no assumption of responsibility by the sub-contractor or supplier direct to the building
owner, the parties having so structured their relationship that it is inconsistent with any such
assumption of responsibility. This was the conclusion of the Court of Appeal in Simaan General
Contracting Co. v. Pilkington Class Ltd.(No.2) [1988] Q.B. 758. As Bingham L.J. put it at p.781:
‘I do not, however, see any basis on which (the nominated suppliers) could be said to have
assumed a direct responsibility for the quality of the goods to (the building owners): such a
responsibility is, I think, inconsistent with the structure of the contract the parties have chosen
to make.’”
Notes
(1) In English law, as regards contractual chains such as those studied in relation
to the previous case, the issue is not whether A can sue C in contract, because a
contract remedy is unthinkable in a system which has a strict doctrine of privity of
contract.25 Rather, the issue is whether A is precluded from suing C in tort because
of the existence of a contractual chain. In some cases, the House of Lords accepted
that a tort remedy was available, but only exceptionally, that is where it is not
inconsistent with the contractual structure, e.g. in the special situation of the annotated
judgment or under the Hedley Byrne principle to which Lord Goff referred in the
annotated judgment.26
According to Lord Goff, the annotated case is atypical in two respects. First,
because both the claim brought by the Names in tort against the managing agents and
the claim brought by the underwriting agents under the sub-agency agreement against
25
But see now the Contracts (Rights of Third Parties) Act 1999.
See on this principle infra, 1.4.1.B., Introductory Note. See also infra, Chapter II, 2.E.47., Note (1)
and (2) and 2.E. 48, Note (1).
26
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the same defendants share “the purpose, immediate or ultimate, of obtaining
compensation” for the indirect Names, “whereas usually a claim brought by a third
party in tort will pursue compensation for injury different from that pursued by the
contracting party”. Secondly, in most cases involving a chain of contracts “it may well
prove to be inconsistent with an assumption of responsibility which has the effect of, so
to speak, short-circuiting the contractual structure so put in place by the parties.” (with
a reference to Simaan General Contracting Co. v. Pilkington Class Ltd. (No. 2)).27
In other words, the contractual setup may very well be such as to preclude actions in
tort from third parties.
(2) In Junior Books Ltd. v. Veitchi Ltd.,28 a much commented —and often
criticized — case, the building owner Junior Books Ltd. sued the sub-contractor Veitchi
Ltd. (chosen by Junior Books’ architects) who had laid the floor in a defective way
(cracks in the floor) resulting in costs of relaying the floor, removing machines and loss
of profits (all items being pure economic loss). The Lord Ordinary and, on appeal, the
Court of Session held that a good cause of action was made out and the majority of the
House of Lords dismissed the appeal. Lord Roskill, referring to Lord Wilberforce’s
speech in Anns v. Morton London Borough Council,29 held that “there was the
requisite degree of proximity so as to give rise to the relevant duty of care relied on by
the respondents” (i.e. the building owner). The judgment in Junior Books was,
however, together with the judgment in Anns, one of the decisions which tried to turn
the neighbour principle of Donoghue v. Stevenson30 into a general principle,31 an effort
which did not succeed and was soon replaced by a renewed preference for an
incremental development of the tort of negligence.32 And indeed, in his concurring
speech Lord Keith had already emphasized the limited scope of the judgment in Junior
Books33 and stated that he did not “consider this to be an appropriate case for seeking
27
[1988] QB 758.
Junior Books Ltd. v. Veitchi Co. Ltd. [1983] AC 520 (HL).
29
Anns v. Merton London Borough Council [1978] AC 728 (HL); see infra, 1.4.1.B., Introductory
Note under b) and d).
30
Infra, 1.E.23.
31
See infra, 1.4.1.B., Introductory Note under b).
32
Ibid. under c) and d).
33
Junior Books Ltd. v. Veitchi Co. Ltd. [1983] AC 520 (HL). Lord Keith wrote: “To introduce a
general liability covering such situations would be disruptive of commercial practice, under which
manufacturers of products commonly provide the ultimate purchaser with limited guarantees usually
undertaking only to replace parts exhibiting defective workmanship and excluding any consequential loss.
There being no contractual relationship between manufacturer and ultimate consumer, no room would exist,
if the suggested principle were accepted, for limiting the manufacturer’s liability. The policy considerations
which would be involved in introducing such a state of affairs appear to me to be such as a court of law
28
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1.E.17.
GENERAL TOPICS
to advance the frontiers of the law of negligence upon the broad lines favoured by
certain of your Lordships”.34 Moreover, in his dissenting speech Lord Brandon stressed
that the question in the case was not the recoverability of pure economic loss in tort, but
rather “what is the scope of the duty of care owed by the subcontractor (Veitchi) to the
building owner (Junior Books) on the assumed facts of the present case”. In his view
the majority opinion leads to very difficult problems, such as whether the main contract
or the sub-agreement provides the standard to which the product must adhere and
whether exemption clauses must obstruct a tort remedy, if it is admitted. Because of
later developments, Junior Books is now part of past history and no longer worth citing
as authority beyond its own facts.35
(3) In Simaan General Contracting Co. v. Pilkington Glass Ltd.,36 the traditional
incremental approach was again taken. In that case the main contractor, who was
employed by a Sheikh, ordered a sub-contractor to purchase an amount of glass with
Pilkington Glass. The glass turned out not to be green (the colour of peace in the Islam),
as ordered, and thus proved to be defective. Because of this the main contractor did not
receive the full price from the Sheikh. Consequently, the main contractor brought an
action in negligence for compensation of pure economic loss against the supplier,
Pilkington Glass, with which it was not in a direct contractual relationship (the subcontractor was). In its judgment the Court of Appeal found for the defendant in not
allowing the tortious action. A claim in negligence for pure economic loss can only arise,
the court stated, when a special relationship exists between the plaintiff and the
defendant, which is absent in the present case, since there was no direct contractual
relationship (or anything similar to it). The reference to Simaan in the annotated
judgment shows that the House of Lords will only exceptionally, as Lord Goff’s speech
indicates, allow claims in tort to be brought by a third party participating in a chain of
contracts against a contracting party with which it is not in privity. Tort claims (for pure
economic loss) will only be allowed where a special relationship links the plaintiff and
the defendant, and where that does not short circuit the contractual structure put in
place by the parties.
cannot properly assess, and the question whether or not it would be in the interests of commerce and the
public generally is, in my view, much better left for the legislature. The purchaser of a defective product
normally can proceed for breach of contract against the seller who can bring his own supplier into the
proceedings by third party procedure”
34
Ibid. at 536.
35
Markesinis and Deakin at 82.
36
Simaan General Contracting Co. v. Pilkington Glass Ltd. [1988] QB 758.
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BGH, 2 July 199637
1.G.18.
CONTRACT WITH PROTECTIVE EFFECT FOR THIRD PARTIES
Tempered steel
In a chain of contracts, the doctrine of contracts with protective effect for third
parties (Vertrag mit Schutzwirkung für Dritte) does not allow to short-circuit the
sequence of contractual claims if the injured third party has a remedy against its
own contractual counterpart which is equivalent to the one it would have under
the aforementioned doctrine.
Facts: Two firms, the plaintiff and the defendant, each chose another firm, G., to temper their respective
steel. According to the contracts each of them concluded with G., the steel had to be in conformity with
specific requirements in order to avoid explosions. The defendant’s steel did not meet these requirements
and caused an explosion, damaging the plaintiff’s steel that was being tempered simultaneously in the same
oven. The plaintiff sued the defendant for damages in tort as well as in contract, on the basis of the doctrine
of contracts with protective effect for third parties (Verträge mit Schutzwirkung für Dritte).
Held: The court of first instance allowed the claim in tort on the basis of § 823(1) BGB, but the court of
appeal allowed the claim in contract in accordance with the doctrine of Verträge mit Schutzwirkung für
Dritte. The BGH reversed the decision of the court of appeal.
Judgment: “According to BGH case law and prevailing opinion, inclusion of a third party [in the
contractual sphere of protection] is to be rejected if there is no need for protection of the third
party. It is generally to be rejected if the third party is entitled to contractual claims of its own —
irrespective of whom they are against — which have the same or at least an equivalent content
to claims which would accrue to it through inclusion in the sphere of protection of a contract.
The BGH formulated this principle in [a judgment of 15 February 1978,] BGHZ 70, 327 at 330, NJW
1978, 883, LM § 538 BGB No 27 when ruling on the question of whether the sub-tenant was
included in the sphere of protection of the (main) tenancy contract. It answered the question in
the negative. The sub-tenant therefore is not entitled to bring contractual claims for damages
deriving from § 538 BGB directly against the (main) landlord… In such cases, allowing claims in
contract on the basis of the doctrine of contracts with protective effect for third parties (Vertrag
mit Schutzwirkung für Dritte) would also come up against the concern, always expressed in the
case law, to avoid an endless extension of the circle of persons included under the protection
of the contract [reference omitted]…
...The court of appeal found a contract with protective effect in favour of third parties. [Yet]
the criteria developed in the case law... are obviously not met here…
37
NJW 1996,2927. This case was discussed in a comparative light at (1999) 7 Eur. R. Priv. L. 101,
with annotations by H. Stoll, T. Probst and P. Doris.
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According to the findings of the court of appeal, the plaintiff and the defendant concluded
independent work contracts with G, the content of which was that G hardened the goods
supplied by the plaintiff and the defendant in its nitriding furnace. The main service by G
therefore consisted in the production of the promised work and the main obligation of the
defendant as purchaser consisted in paying the agreed remuneration (§ 631(1) BGB). No findings
of fact beyond those made by the court of appeal are needed thus far, for it is obvious that the
plaintiff does not come into contact with the main obligation of the defendant, i.e. the payment
of the agreed remuneration for the work. Case law requires sufficient proximity to the obligation
for proper delimitation of the circle of protected persons; it is lacking here…
In addition, on the basis of findings of the court of appeal, the plaintiff has no need for
protection such as would justify including it in the scope of protection of the contract between
the defendant and G… This condition is not fulfilled for, under §§ 633ff. BGB, the plaintiff has
its own claim against G, independently of the defendant, on the basis of the work contract
concluded between the plaintiff and G. The [defendant] rightly refers to this. These contractual
claims of the plaintiff against G are in substance equivalent in every respect to the claims which
the plaintiff wishes to pursue against the defendant with the help of the doctrine of contracts
with protective effect in favour of third parties…
The judgment of the court of appeal cannot be sustained…”
Notes
(1) As a general rule German law, like English law and French law (at present),
does not give the building owner (Hauptauftraggeber or Bauherr) any contractual
remedy against a sub-contractor (Nachunternehmer or Subunternehmer).38 It could
be that a building owner would be deemed to come under the scope of protection of the
contract between the main contractor and the sub-contractor, and thus to have a
remedy against the sub-contractor on the basis of the doctrine of contracts with
protective effect for third parties (Vertrag mit Schutzwirkung für Dritte). However,
this issue has not yet been brought before the BGH.39 The answer will probably be
negative, along the lines laid down in the annotated case. Moreover, in a case relating
to litigation between a main contractor and its sub-contractor, the BGH stated in obiter
dictum that “the sub-contractor is only indebted to the main contractor and not to the
38
BGH, 23 April 1981, NJW 1981,1779; see also BGH, 13 December 1973, WM 1974, 197 (no
contractual action of subcontractor against building employer); Palandt, § 631 at para. 9; W. Kleine-Möller,
H. Merl, W. Oelmaier, Handbuch des privaten Baurechts (München: Beck, 1992) at 127, para. 7. The
keyword is the “legal autonomy of the sub-contract” (rechtliche Eigenständigkeit des
Nachunternehmervertrags).
39
P. Schlechtriem, “Deliktshaftung des Subunternehmens gegenüber dem Bauherrn wegen Minderwerts
seines Werks - Eine neue Entscheidung des House of Lords” VersR 1983, Special Issue 25 Jahre
Karlsruher Reform. Jubiliäumsausgabe 64 at 65.
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building employer”.40 In practice, the main contractor often assigns its claims against
sub-contractors to the building owner, which probably explains why no case involving
a building owner and a sub-contractor has been brought before the BGH.41
(2) Where the building owner acts not against a sub-contractor, but against a
manufacturer of defective goods, however, the doctrine of Vertrag mit Schutzwirkung
für Dritte may offer a successful basis for the claim. For instance, the main contractor
could be bound under contract to perform work on behalf of a building owner, for which
the contractor buys special insulated glass (Isolierglas) from a glass manufacturer
through an intermediary. After a few years the glass appears to be defective. Although
no direct contractual link was established between the building owner and the glass
manufacturer, the BGH allowed the action of the building owner against the
manufacturer on the basis of a contract with protective effect for third parties.42
ECJ, 17 June 199243
Handte v. T.M.S.
1.EC.19.
CHAINS OF CONTRACTS TRANSFERRING PROPERTY
Defective metal-polishing machines
The action of a subsequent purchaser against a manufacturer for defects in the
goods sold or for their unsuitability for their intended purpose does not fall within
Article 5(1) of the Brussels Convention determining jurisdiction, which provides
for special jurisdiction in matters relating to contract.
Facts: Bula, a Swiss company, sold two metal-polishing machines to the French company TMCS. That
company had a suction system fitted to them that was manufactured by Handte Germany but sold and
installed by Handte France. The equipment turned out not to comply with rules on hygiene and safety at
work and to be unsuitable for its intended purpose. TMCS claimed damages from Bula, Handte Germany
40
Der Nachunternehmer schuldet seine Leistung allein dem Hauptunternehmer, nicht dem Bauherrn:
BGH 23 April 1981, NJW 981, 1779. See also M. Rohe, Netzverträge. Rechtsprobleme komplexer
Vertragsverbindungen (Tübingen: Mohr, 1998) at 370.
41
B.S. Markesinis, W. Lorenz and G. Dannemann, The German Law of Obligations, I - The Law of
Contracts and Restitution. A Comparative Introduction (Oxford: Clarendon, 1997) at 278; Markesinis at
52; P. Schlechtriem, “Deliktshaftung des Subunternehmens gegenüber dem Bauherrn wegen Minderwerts
seines Werks - Eine neue Entscheidung des House of Lords” VersR 1983, Special Issue 25 Jahre
Karlsruher Reform. Jubiliäumsausgabe 64 at 64-65.
42
Garantievertrag zugunsten des Klägers als Endabnehmer: BGH, 28 June 1979, BGHZ 75, 78.
43
Case C-26/91 [1992] ECR I-3967.
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1.EC.19.
GENERAL TOPICS
and Handte France before the French courts. At issue was whether Article 5(1) of the Brussels Convention,
which derogates, for contractual matters, from the general rule of Article 2(1), applied so as to confer
jurisdiction on French courts.
Held: The court of first instance decided that Article 5(1) applied to give it jurisdiction as regards TMCS’
claim against Handte France and Handte Germany, but not as regards the action against Bula. The court
of appeal dismissed the appeal of Handte Germany. On appeal against that judgment, the Cour de
Cassation referred a preliminary question to the ECJ: “Does Article 5(1) of the Convention, which
provides for special jurisdiction in matters relating to a contract, apply to an action between a sub-buyer
of goods and the manufacturer, who is not the seller, relating to defects in those goods or unsuitability for
their intended purpose?”. The ECJ answered the question in the negative.
Judgment: … “10. In replying to the question from the national court, it should first be observed
that the Court has consistently held that the phrase ‘matters relating to a contract’ in Article 5(1)
of the Convention is to be interpreted independently, having regard primarily to the objectives
and general scheme of the Convention, in order to ensure that it is applied uniformly in all the
Contracting States [references omitted]. The phrase should not therefore be taken as referring
to how the legal relationship in question before the national court is classified by the relevant
national law…
14. The rules on special and exclusive jurisdiction and those relating to prorogation of
jurisdiction thus derogate from the general principle, set out in the first paragraph of Article 2 of
the Convention, that the courts of the Contracting State in which the defendant is domiciled are
to have jurisdiction. That jurisdictional rule is a general principle because it makes it easier, in
principle, for a defendant to defend himself. Consequently, the jurisdictional rules which
derogate from that general principle must not lead to an interpretation going beyond the
situations envisaged by the Convention.
15. It follows that the phrase ‘matters relating to a contract’, as used in Article 5(1) of the
Convention, is not to be understood as covering a situation in which there is no obligation freely
assumed by one party towards another.
16. Where a sub-buyer of goods purchased from an intermediate seller brings an action
against the manufacturer for damages on the ground that the goods are not in conformity, it must
be observed that there is no contractual relationship between the sub-buyer and the
manufacturer because the latter has not undertaken any contractual obligation towards the
former.
17. Furthermore, particularly where there is a chain of international contracts, the parties’
contractual obligations may vary from contract to contract, so that the contractual rights which
the sub-buyer can enforce against his immediate seller will not necessarily be the same as those
which the manufacturer will have accepted in his relationship with the first buyer.
18. The objective of strengthening legal protection of persons established in the Community,
which is one of the objectives which the Convention is designed to achieve, also requires that
the jurisdictional rules which derogate from the general principle of the Convention should be
interpreted in such a way as to enable a normally well-informed defendant reasonably to predict
before which courts, other than those of the State in which he is domiciled, he may be sued.
19. However, in a situation such as that with which the main proceedings are concerned, the
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application of the special jurisdictional rule laid down by Article 5(1) of the Convention to an
action brought by a sub-buyer of goods against the manufacturer is not foreseeable by the latter
and is therefore incompatible with the principle of legal certainty.
20. Apart from the fact that the manufacturer has no contractual relationship with the subbuyer and undertakes no contractual obligation towards that buyer, whose identity and domicile
may, quite reasonably, be unknown to him, it appears that in the great majority of Contracting
States the liability of a manufacturer towards a sub-buyer for defects in the goods sold is not
regarded as being of a contractual nature.
21. It follows that the answer to the question submitted by the national court must be that
Article 5 (1) of the Convention is to be understood as meaning that it does not apply to an action
between a sub-buyer of goods and the manufacturer, who is not the seller, relating to defects in
those goods or to their unsuitability for their intended purpose…”
Note
Although the Cour de cassation in Besse44 rejected the doctrine of groups of
contracts, French law still allows a contractual action to be brought directly by a
subsequent buyer against a manufacturer in respect of chains of contracts whereby
property is transferred, on the basis of the maxim “accessorium sequitur principale”.45
The annotated judgment does not change that situation since it has no impact on
substantive French law. It is important only for determining the jurisdiction of French
national courts in accordance with Articles 2(1) and 5(1) of the Brussels Convention of
27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and
Commercial Matters.46 In that respect, the ECJ rejects the interpretation that an action
of a subsequent buyer against a manufacturer of goods must be regarded as
contractual.
44
Supra, 1.F.16.
Ibid., Note (2).
46
On this Convention, see also infra, Chapter VI, 6.EC.43. and notes thereafter.
45
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