Term and meaning of consequential damages
Als Consequential damages are defined in German law as damages that arise indirectly from a primary damage or an initially occurring damaging event. This type of damage does not occur immediately at the time of the damaging event, but develops with a delay as a consequence of the primary injury. Consequential damages can be both pecuniary and non-pecuniary in nature and concern various areas of law such as civil law, criminal law, and social law.
Distinction: Primary damage and consequential damage
Ein Primary damage (also: direct damage) represents the direct detriment caused at the time the damage occurs. A damage, on the other hand, is considered a consequential damageif it is triggered by the primary damage and occurs at a later stage. The distinction between primary and consequential damage is of considerable legal importance, especially for limitation periods and the calculation of damages.
Examples
- In a traffic accident, the bodywork damage to the vehicle is the primary damage, while health complications arising later may be considered consequential damages.
- After a faulty medical treatment, an initially harmless infection (primary damage) can lead to a chronic illness (consequential damage).
Manifestations and legal classification
Pecuniary consequential damages
Pecuniary consequential damages affect the injured party’s assets. These include costs for repairs, loss of income, reduced earning capacity, and other financial losses that arise only some time after the damaging event.
Non-pecuniary consequential damages
Non-pecuniary consequential damages are those that cannot be measured in monetary terms, such as pain, emotional distress, or loss of enjoyment of life. They are often claimed as part of compensation for pain and suffering under Section 253 of the German Civil Code (BGB).
Legal basis for consequential damages
The assertion of consequential damages requires certain legal prerequisites to be met. Key provisions can be found in particular in the German Civil Code (BGB) as well as in specific laws depending on the cause of the damage.
Damages under civil law
Section 249 BGB – Principle of restitution in kind
According to Section 249 (1) BGB, the injured party is to be placed as if the damaging event had not occurred. This principle expressly includes consequential damages, provided there is an adequate causal link between the damage and the causal event.
Section 823 BGB – Tortious act
The right to compensation for consequential damages can arise from Section 823 BGB if a primary damage has occurred due to a tortious act from which further financial losses or non-pecuniary damages (consequential damages) later result.
Limitation of claims for consequential damages
Determining limitation periods for consequential damages is often complex. The decisive factor is generally when the damage and the person liable for compensation become known (Section 199 BGB). The period starts to run independently for each consequential damage, provided it constitutes an independent damage that can be distinguished from the primary damage.
Causality and attribution
For the compensability of a consequential damage, it must be examined whether an adequate causal link exists between the causal event and the consequential damage. Furthermore, consequential damages must not fall outside the scope of protection of the infringed rule (scope of protection relation).
Special features in insurance and social law
Insurance law
In insurance law, consequential damages may be relevant in the context of liability insurance, accident insurance, or occupational disability insurance. Depending on the policy, the occurrence of consequential damages may be covered to varying extents. Medical evidence of the extent of the consequential damages is regularly required.
Social law claims
Consequential damages after occupational accidents or occupational diseases can lead to claims against institutions of statutory accident insurance. These include medical rehabilitation measures, pension benefits, or nursing benefits if consequential damages result in a permanent reduction in earning capacity.
Consequential damages in medical law
In cases of medical malpractice, consequential damages often occur, the occurrence and extent of which are not immediately predictable. The burden of proof for the link between the treatment error and the consequential damage initially lies with the claimant.
Consequential damages in environmental law
Damage caused by environmental influences can lead to long-term consequential damages, such as soil or water contamination. Claims for such consequential damages are governed by the Environmental Liability Act (UmweltHG) and the Federal Soil Protection Act (BBodSchG).
Establishing and proving consequential damages
Establishing consequential damages generally requires an accurate assessment and prognosis of the further development of the damage. The burden of presentation and proof – as is usually the case in compensation law – lies with the injured party. Due to unforeseeable developments, a declaratory action under Section 256 ZPO can be filed in order to have the obligation to compensate future, not yet quantifiable consequential damages judicially established.
Significance in case law
The case law treats consequential damages differently in each individual case. Particularly in the areas of accident settlement, product liability law, and suspected faulty medical treatment, there are numerous decisions in which the claim for compensation for consequential damages is recognized or rejected. The crucial factors are always causality, foreseeability, and attribution.
Summary
Consequential damages are legally significant damages that arise after a primary damage and result from a damaging event. The assertion and compensation of consequential damages are subject to complex legal requirements, particularly concerning causality, attribution, and limitation. The issue is significant in all areas of civil, insurance, social, and environmental law and is subject to differentiated consideration by the courts. A comprehensive understanding of all aspects of consequential damages is central not only for the enforcement of claims but also for risk assessment in liability cases.
Frequently asked questions
Who is liable for consequential damages after a damaging event?
Liability for consequential damages is generally determined by the principle of causation: The person or company who culpably caused the original damage is also liable for the resulting consequential damages. This is regulated, for example, in German civil law by the German Civil Code (BGB), particularly in Sections 249 et seq. BGB. The extent and limits of liability depend on both the degree of fault (intent or negligence) and the foreseeability of the consequential damages. Case law distinguishes between typical, foreseeable, and completely extraordinary, unforeseeable consequential damages. Liability may arise under contractual relationships or also under tort. In the case of multiple parties involved (e.g., in a traffic accident with several participants), joint and several liability often applies. For legal entities, companies, or public institutions, special liability regulations may apply, such as the Product Liability Act or official liability law.
To what extent must consequential damages be compensated?
According to German compensation law, consequential damages must generally be compensated in full, as far as they are adequately causally attributable to the damaging event. This means that not only direct, but also indirect damages are reimbursed, provided they are related to the accident and were foreseeable for the tortfeasor. These include, for example, loss of earnings, loss of use, treatment costs, but also possible costs for replacement purchases or repairs that only become apparent over time. However, the principle of damage mitigation applies, which means that the injured party is obliged to keep the damage – including all consequential damages – as low as possible. Excessive or completely unusual damages, not foreseeable by the liable party, are typically not to be compensated.
What limitation periods apply to claims for compensation for consequential damages?
The limitation periods for claims for compensation for consequential damages are generally governed by the general limitation provisions of the BGB. In principle, the limitation period for compensation claims is three years (Section 195 BGB), with the period beginning at the end of the year in which the injured party became aware of the damage and the injuring party (Section 199 BGB). If consequential damages only appeared later or were initially unrecognizable, the limitation period begins from the time knowledge is obtained. The same periods apply to claims arising from tort, but there are special provisions, for example in product liability law (ten-year maximum period) or construction law. Therefore, it should always be checked in individual cases which period is applicable.
How is causality between the original damage and consequential damages legally assessed?
In the legal context, so-called ‘adequate causality’ must be established between the original damage and the asserted consequential damages. This means that the primary damage must have been the cause of the consequential damages, and the consequential damages must not lie completely outside the usual and foreseeable course of events. In court proceedings, this is often a central point of dispute and usually requires specific evidence, for example through expert opinions. Case law requires that the consequential damages are attributable to the typical risk of the tortfeasor’s conduct (risk connection). If there are doubts about causation, a so-called reversal of the burden of proof may apply, for example in certain cases of strict liability.
Are consequential damages also covered by liability or other insurances?
Whether and to what extent consequential damages are covered by insurance depends primarily on the insurance conditions and the underlying contract. In the case of liability insurances, it is usually stipulated that damages are covered for all personal, property, or financial losses caused by the insured risk, including their consequential damages. Restrictions often arise from so-called exclusion clauses, for example for certain consequential damages intentionally caused, for atypical consequential damages, or for purely non-pecuniary damages. Special types of insurance (e.g., professional liability, product liability, building insurance) have their own regulations. Therefore, careful examination of the individual case and the insurance conditions is always necessary.
How can a claimant prove their claim for compensation for consequential damages?
The injured party generally bears the burden of proof that the asserted consequential damages are causally attributable to the damaging event. This means they must prove both that the consequential damage has actually occurred and that it is due to the tortious conduct of the liable party. Proof can be provided, for example, by documentation, expert opinions, witness testimony, or other evidence. Especially in complex damage cases or unexpectedly occurring late effects, professional expertise, from experts or physicians, is often required. If a link cannot be demonstrated with sufficient probability, there is no entitlement to compensation for the consequential damages.
What special features apply to consequential damages in rental, employment, or medical law?
In tenancy law, consequential damages are relevant, for example, if a defect in the rented property initially causes a primary damage (e.g., water damage), followed later by additional damages (e.g., mold growth, damage to furniture). In labor law, consequential damages play a major role in the context of occupational accidents, for instance, when an accident leads to long-term effects or occupational disability. In medical law, consequential damages are often the subject of medical liability cases: it must be clarified here whether complications or late effects result from a treatment error. In all the areas mentioned, there are special rules on evidence and liability, often with particular facilitation of evidence for the injured party, for example through a reversal of the burden of proof or by presumption of a causal connection.
