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MICHAEL COESTER
BASIL MARKESINIS
A. GERMAN LAW
I. Introduction
1. The Problem
Professional advice is sought for (and paid for) in many contexts.
This happens much more often today than in earlier times because
the overall societal and economic structures have become more com-
plex, knowledge has expanded dramatically, and the willingness to
pay for it has greatly increased. At the same time, knowledge has
inevitably also become very specialized. The specialist professionals
sell their knowledge on a contractual basis, and the buyers rely on it
to make important decisions. In principle, if the provider of advice
has been negligent,' and the advice relied upon turns out to be false,
it seems only fair that he be held liable to pay damages. But many
other considerations may help dilute this starting point.
In contemporary legal systems the liability of experts has taken
on specific forms in different contexts (e.g., the liability of doctors,
lawyers, etc.). A broad field in which professional advice plays an im-
portant role and on which the following article will focus, is money
investment. Banks or private lenders often seek information about
the value of a business, its financial situation, or about the value of
securities before they decide about their own financial engagement. If
275
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276 THE AMERICAN JOURNAL OF COMPARATIVE LAW [Vol. 51
the information they have relied upon proves to be false, they may
suffer substantial financial loss. The magnitude of the loss, both in
terms of the number of people affected and total amounts at stake,
may be a particular feature of this type of experts' liability.
It is also a feature of modern business conditions that informa-
tion spreads easily so that even persons who were not parties to the
contract with the expert may become aware of his or her statement
and rely on it when making financial decisions. When they suffer
damage they, too, are likely to want to sue the expert. The latter may
often seek refuge in the doctrine of privity of contract and argue that,
by giving one advice to one contractual party, he should not be liable
towards a potentially indeterminate number of other persons. Never-
theless German as well as many American courts have imposed lia-
bility on the expert in these triangular situations. The aim of this
article is to mention some of the doctrinal differences in approach
adopted in these two systems and highlight some of their underlying
policy assumptions, which can be both similar and different. This, in
turn, can lead to insights about the respective role their courts are
prepared to play in shaping the law in this intricate area of profes-
sional negligence. On these grounds it will then be possible to suggest
ways in which one legal system might benefit from studying the
other. But in what frame of mind does one approach such a complex
comparative task?
A glass fifty per cent filled with water can, with equal accuracy,
be described as half full and half empty. The comparison of legal sys-
tems can equally proceed with a wish (expressed or unexpressed) to
demonstrate how different or how similar they are. We prefer the lat-
ter approach because we like to stress how similar we are-physio-
logically and in our societal, economic, and moral needs-as human
beings. From the last point it also follows that, increasingly, because
of enhanced communications, travel contacts, urbanization, and as-
similation of tastes, we are facing similar legal problems. We also feel
that the mental frame of looking for similarities can help the under-
standing of foreign legal institutions and-in appropriate circum-
stances-increase legal borrowings, whereas the 'differences'
approach encourages the neglect of foreign law. For when time means
money, many (especially busy practitioners) may be tempted to say,
"why bother to look at another system which is so different to ours?"
Though for the reasons given we subscribe to the 'growing legal
convergence' school of thought, we do not underestimate differences.
In our subject we thus note that they are significant. Nonetheless, we
also tentatively predict that in the current climate of globalization of
markets the systems cannot, in their essentials, remain divergent for
long. When talking of differences, we have in mind not just differ-
ences in academic and judicial reasoning. Just as important are dif-
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2. Basil Markesinis, Foreign Law and Comparative Methodology (1967) and Al-
ways on the Same Path (2001). For a learned and informative (but methodologically
different) account of our subject in the European Union see Ebke, "Die Haftung des
gesetzlichen Abschlusspriifers in der Europaiischen Union," 100 ZvglRWiss 62-89
(2001).
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6. Compare, for instance, von Bar, 44 RabelsZ 477, 478 (1980); Deutsch,
Unerlaubte Handlung und Schadenersatz (1987), n. 250. It should be remembered
that the special status of professionals relates back to the Romans: If learned noble
men rendered services to others, this was inconceivable as being an "employment con-
tract"-free men would not subordinate themselves to others (still today, most profes-
sionals of this type in Germany are called "Freiberufler", which translates into
freelance/ self-employed person). The relation was seen as a "mandate" (which was-
by definition-executed without consideration). A client, though, had the "honorary
duty" to reward the professional in exchange (Honorarium); see Theo Mayer-Maly,
Rimisches Recht 146 (2nd ed. 1999).
7. von Bar, supra n. 6.
8. RG, Oct. 27, 1902, RGZ 52, 365, 367; see also RG, Feb 9, 1921, RGZ 101, 297,
301; for a detailed discussion of the cases see Johannes Adolff, Die zivilrechtliche Ver-
antwortlichkeit deutscher Anwdlte bei der Abgabe von Third Party Legal Opinions
(1997) 86 ff.
9. BGH, Oct. 29, 1952, BGHZ 7, 371, 374; BGH, March 22, 1979, BGHZ 74, 103,
106.
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280 THE AMERICAN JOURNAL OF COMPARATIVE LAW [Vol.51
spite critical comments in the legal literature which argued that the
"contract"which the courts used to find implied in the parties' rela-
tions was rather fictitious and in reality imposed by judicial decree.
Moreover, the reasoning of the courts ignored and, in reality and
through interpretation, reversed the statutory rule of ? 675 II BGB
(until 1999: ? 676), according to which a person which gives an advice
to others cannot, normally, be held liable for the incorrectness of the
advice.
The "implied-contract approach" is still used today by German
courts,10 but its effect is limited to cases of direct contact between the
expert and the plaintiff. The wider idea of a contract "for whom it
may concern" has consistently been rejected by the Federal Supreme
Court." Sometimes, however, the requirements for an express con-
tact have been watered down substantially by the court. A good ex-
ample for this is the "Teneriffa-Hotel case".12
This case concerned the statement of a bank (D) about the
creditworthiness of a businessman (U). U had, with substantial loans
from D, built a huge hotel on Teneriffa, but his financial liquidity had
become tight. Since D was not willing to grant further credit, U tried
to raise money from private lenders. D helped him by providing an
investment broker (B) with a statement on the financial situation of
U, which concealed the facts, rather than disclosing them. P, one of
the prospective lenders, relied on the statement and gave U a loan,
which was not repaid when U went bankrupt. The complicated fac-
tual situation can be depicted diagrammatically as follows:
(Bank)D Credits U
Loan
Information
Lenders
z
10. See BGH, Sept. 26, 2000, NJW 2001, 360, where the court proceeded on the
assumption that even the expert contract itself was "in reality" concluded between the
expert and the "third party".
11. See BGH, July 6, 1970, NJW 1970, 1737; BGH, Feb. 12, 1979, NJW 1979,
1595, 1597; BGH, Oct. 16, 1990, NJW 1991, 352; for a different view see K6ndgen,
supra n. 5, at 43-44.
12. BGH, Feb. 12, 1979, NJW 1979, 1595 = M&U, case 19.
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Invoices BankAgreement
Bank Account .
(Debtor)D Debt Instruction DB (Debtor'sBank)
(Debtor) D Debt Instruction DB (Debtor's Bank)
From the above facts it will be noticed that there was no contrac-
tual relation between C and DB, but only between C and CB. Since
CB had not made a mistake, C did not have a contractual claim
against CB. A contractual situation also existed between the two
banks: CB and DB. DB had violated its duties under the internal
16. BGH, Jan 10, 1968, VersR 1968, 375; BGH, Jan. 22, 1968, BGHZ 49, 350, 354.
17. BGH, Feb. 28, 1977, BGHZ 69, 82 = M&U, case 20.
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bank agreement, but this did not result in any loss for CB: the bank
simply reversed the credit it had provisionally given to C. So the loss
fell on C. In considering whether the agreement between the two
banks (CD and DB) included C in its protective scope, the court found
that to look for some kind of "personal responsibility" of CB for the
well-being of C was besides the point. The interests and risks of CB
and C were at least very similar. C was a client of CB, and DB knew
that CB was contractually obliged to protect the interests of its cli-
ents. Thus, the principle of good faith required that the duty of DB to
give immediate notice was owed not only to CB, but also to C.18
While in the "debit-procedure case" there were at least some rela-
tions between a third party (C) and the contractual partner (CB), the
idea of including third parties in the protective scope of a contract
was soon extended to situations where the debtor had to perceive the
creditor as only one of a group of persons who shared the same or
similar interests. In the "group-of-buyers case" for instance, an expert
(D) was asked by a Mr. C to give a statement on the value of an apart-
ment building, which C "or one of the group of interested persons be-
hind C" was considering to buy. Some members of this group,
including P, were present when C gave D a respective order. After D
had delivered his opinion to C, eventually P bought the building, rely-
ing on D's value statement. Since D had failed to take into account
restrictions connected with a social housing regulation, the market
value of the building was much lower than that estimated by D, and
P ended up having to overpay the seller.'9
Diagrammatically this variation can be depicted as follows:
Contract
18. In fact, the court stated that such duty would even have existed had there
been no explicit agreement between the two banks (as a kind of quasi-contractual
duty). According to Canaris, the court should have conceived the duty of care towards
C as one imposed by law rather than by contract, see Canaris, "Die Vertrauenshaf-
tung im Lichte der Rechtsprechung des BGH," in Claus-Wilhelm Canaris (ed.), 50
Jahre Bundesgerichtshof Festgabe aus der Wissenschaft 129, 190 (2000).
19. BGH, Nov. 2, 1983, NJW 1984, 355 = M&U case 22.
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284 THE AMERICAN JOURNAL OF COMPARATIVE LAW [Vol. 51
site for holding that such duty of care exists. In the present case it
will have to be considered that an interested party who asks for an
expert opinion to form the basis of a decision by a certain group, will
normally seek to protect not only his personal interests but also those
of the other members of the group... ."20 The court added that includ-
ing the other group members in the protective scope did not increase
the risks of the expert, since the damage remained the same if C or P
or some members jointly would have bought the house.
In this case, P had at least been present when the contract be-
tween D and C was made, and had been designated as one of the
potential buyers. In the famous "Consul case" it was found to be suffi-
cient that the expert should have realised that there was a third
party "behind his contract partner", although unknown by name and
identity.21
In the "Consul case", an expert (D) had, on an earlier instance,
given his opinion on the value of a large area of building land to a
land developer (L), who was looking for ways to fund his project. (L)
approached a Danish firm (F), which produced prefabricated houses.
F, in turn, asked a Danish bank (B) to grant a substantial loan to L. B
considered to use the building land as a security for the loan, and
tried to ascertain the value of the land. It asked the Danish Consul C
in Munich to call expert D and inquire whether his value statement,
already several months old, was still valid. In his telephone call, C
made it clear to D that the information given by D was required for
the purpose of deciding whether a loan was to be granted, but he did
not make any indication as to the potential lender. Expert D reaf-
firmed his earlier value statement and, at the request of C, gave him
a written confirmation of this oral information. Later on, B granted
the loan, but suffered substantial losses because the building project
was never realised. L became bankrupt and the value of the land had
been highly overestimated by the expert. B thus decided to sue D for
damages. The following diagram may, once again, help explain the
complex situation:
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L Negotiations
....
Opinion F (Firm)
Loan Loanto L?
-\
B (Bank)
(Expert) D ....................................................
Phone Call
--0
,
Written Confirmation
"• Ir""~ Value of Land?
C (Consul)
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286 THE AMERICAN JOURNAL OF COMPARATIVE LAW [Vol. 51
convinced the expert that there was no defect. The vendor later used
the report of the expert as the basis for the sale contract with P. After
the transaction was completed, grave defects were detected in the
roof framework of the building. Since the expert had no knowledge of
these defects, he had set the value of the house much too high, and P
had, accordingly, paid too much. P sued D for compensation of his
loss. The following diagram may help:
ExpertOpinion
(Expert)D Contract N V (Vendor)
P (Purchaser)
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approval. The court found an implied waiver on the side of the expert
to raise a defence of malice against a claim of P: The expert knew that
potential buyers would rely on his statement and that the statement
would dissipate potential distrust of the buyer against the vendor.
According to the Court, the statement could fulfil this function only if
the risk of deception by the vendor is taken over by the expert. If he
were not willing to take this risk, he would be obliged to say so explic-
itly in his statement.25
We conclude the evolutionary development of the case law of the
BGH by mentioning its seminal judgment of 2 April 199826 in what
English lawyers would describe as a Caparo27 type of setting.28 Over-
simplifying its facts, we note that the Federal Supreme Court held an
accountant, who conducted a mandatory audit (Pflichtpriifung)29 for
company A, liable to the owner of company B who purchased it by
relying on his (erroneous) assessment of the financial situation of A.
The decision is remarkable in the light of the fact that such cases are
governed by ? 323 I HGB,30 which provides that if the auditor negli-
gently fails in his duties he is liable only to the company in question.
Constant case law has also refused to hold that this statutory duty
could be construed as a "protective norm" including third parties
(e.g., shareholders of the audited company) within its protective scope
and thus leading to civil liability towards them under ? 823 II BGB.
While the Federal Supreme Court, in its 1998 decision, acknowledged
that the "legislative intention" expressed in this provision was "to
limit appropriately the risk of the auditor's liability", it also stressed
that this provision did not have an "exclusionary" effect. The conse-
quence of such an approach is that the auditor could, in principle,
owe a duty also to persons not expressly mentioned in ? 323 HGB.
This was the case where the auditor (contractually) undertook to per-
form his service without prejudicing the interests of a third party, in
the instant case a purchaser of the company. It is not entirely clear
whether this requires that the auditor issues a statement in addition
to the actual audit before his liability widens to include third parties.
In the somewhat unusual facts of the 1998 decision, the auditor had
25. For fuller details the Common law reader might wish to consult M&U, pp. 292
ff. According to Medicus (JZ 1995, 308, 309), ? 334 BGB is not applicable to such
situations from the outset. For other alternative solutions, see infra 3. The BGH, how-
ever, seems to be little impressed by the critique; it went on to apply the "contract
with protective effects" to situations of "contradictory interests" even where the stat-
ute expressly excludes the liability of the expert towards third parties, BGH, Apr. 2,
1998, BGHZ 138, 257 = NJW 1998, 1948 = M&U, case 24 (concerning an auditor's
report for a company; compare ? 323 HGB); see also BGH, Oct. 17, 2000, NJW 2001,
512; BGH Nov. 14, 2000, NJW 2001, 514.
26. BGHZ 138, 257 = NJW 1998, 1948 = JZ 1998, 1013.
27. Caparo Industries Plc v. Dickman [1990] 2 AC 605.
28. For a fuller comparative discussion see M&U, pp. 52-67 and pp. 291-306.
29. Such mandatory audits are the formation, annual, and special audits.
30. German Commercial Code.
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3. Culpa in contrahendo
In the view of many critics, the BGH has stretched the concept of
a contract with protective effects towards third parties beyond its
proper limits. These critics point out that the emphasis of the judge-
ments has drifted away from the contract between the expert and the
creditor and has now been placed more and more on the professional
duties of the expert and the high degree of trust and reliance which is
normally attributed by the public at large to expert opinions. This
would suggest that the basis of the liability of experts flows directly
from their professional status and not from some kind of contractual
bond between persons who have really concluded a contract (even
though such a contract may modify or limit the liability imposed by
law). This is a justification, which, if anything, may also be fed by the
concern generated in Europe by the recent reported accounting irreg-
ularities that have affected adversely American shareholders and the
desire to keep auditors to high standards.
In the academic literature we can find several proposals as to
how this end-result can be achieved. One of them should be men-
tioned here because it may influence the future development of Ger-
31. On this see Canaris, "Die Reichweite der Expertenhaftung gegentiber Drit-
ten," 163 ZHR 206, 208 (1999).
32. "Abschlul3priifer,Bestatigungsvermerk und Drittschutz," JZ 1998, 991, 993.
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may change the future approach towards the liability of experts vis-a-
vis third parties, because the legislature-influenced by Canaris-
has addressed the doctrinal basis of liability explicitly. The relevant
new provisions read as follows:
? 241 II BGB:
Each party to the obligation may, according to the content of the
obligation, be required to apply proper care as to the rights and
interests of the other party.
39. Very critical in so far Lieb in, Dauner-Lieb et al. (eds.), Das neue Schuldrecht
142-44 (2002).
40. For this double meaning of ? 311 III 1 BGB see Canaris, "Die Reform des
Rechts der Leistungsstbirungen," JZ 2001, 499, 520; Stephen Lorenz & Thomas
Riehm, Lehrbuch zum neuen Schuldrecht 191, n. 376 (2002); Krebs, in Anwaltkom-
mentar Schuldrecht (Barbara Dauner-Lieb et al., eds. 2002) ? 311 n. 47.
41. Lieb, supra n. 39, at 142-43, n. 45, 144, n. 47; Peter Huber & Florian Faust,
Schuldrechtsmodernisierung 18, n. 32 (2002); Krebs, id. (supra n. 40).
42. Canaris, supra n. 40, at 520; Lorenz & Riehm, supra n. 40, at 190, n. 374;
Dieter Medicus, Schuldrecht II (13th ed. 2002), n. 111; for a more restrictive interpre-
tation, which would exclude the liability of experts from the coverage of the statute,
see Krebs, supra n. 40, at ? 311 n. 49 (this interpretation is not likely to prevail be-
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that liability may be less controllable where pure economic loss is in-
volved. This, however, should not be taken to suggest that the more
abstract justifications once invoked in Germany have not found simi-
lar advocates-at least in England. The considerable immunity ac-
corded for a long time to members of the medical profession and to
barristers was justified by an overall belief (no longer widely tenable)
that these kind of professionals needed greater protection. The differ-
ing efficacy of the remedies afforded by the Common law in protecting
life, land, chattels and-least of all-economic interests also suggests
a certain societal hierarchy of values reflected in the legal rules
adopted for their protection. But the doctrinal ways of explaining the
'dislike' for economic loss does not merit further discussion. Suffice it
only to stress the tone they adopted in each system and, more impor-
tantly, to note that over the passage of time both systems were
forced, in response to changing societal circumstances, to introduce
an ever-growing number of exceptions to their basic stance. The re-
sulting position is no longer always easy to predict; and the task of
reconciling among themselves leading judgments has become almost
impossible. This, we think, is true of both systems, suggesting, at the
very least, that the quest for the ideal answer has not yet come to an
end.
Until the mid 1960s,45 English law held that the maker of a neg-
ligent statement could not be held liable towards a third party for any
damage which the latter may have suffered as a result of relying on
such a statement. Absent fraud, liability could be engaged only if a
contractual link could be discovered between the maker of the state-
ment and the person who relied upon it (and suffered loss)-and in
practice this happened very rarely.46 When the change came, through
the landmark decision of Hedley Byrne v. Heller and Partners, the
imposition of liability had to be justified by the discovery of a duty of
care. To put it differently, it had to be tortious in nature, though an
eminent judge who participated in this decision-Lord Devlin-ad-
mitted that the problem facing the court was really "a by-product of
the doctrine of consideration".47
45. The turning point came with Hedley Byrne & Co. Ltd. v. Heller & Partners
Ltd. [1964] AC 465.
46. For an example see De La Bere v. Pearson Ltd. [1908] 1 KB 280. The first
major breakthrough came where a fiduciary relationship could be found to exist:
Nocton v. Lord Asburton [1914] AC 932, a case where it has been argued that Lord
Haldane (who had been a pupil of Gierke's in Germany) may have transferred (with-
out attribution) German ideas into English law. On this see Honore in 8 J.S.P.T.L.
284, 295 (1965).
47. Hedely Byrne & Co. Ltd. v. Heller & Partners Ltd. [1964] AC 465, 525.
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56. Id.
57. The two may and, perhaps, should be combined; but on their face at least the
German decisions give no signs that either this happens or is desirable. Doctrine,
instead, reins supreme.
58. Which is assumed by the BGH in its decision of Nov. 11, 1994, BGHZ 127, 378
(and by academic) commentators and leads both to speak in terms of special trust
being placed on such experts. By contrast, the American courts are either imbued by
mistrust or, at the very least, realize the fallibility of the process and its intrinsic
dangers.
59. Ironically, this was also the problem in case 23 reproduced in M&U (pp. 280
ff.) since there the surveyor also relied on false information received from the client.
But the German court did not regard this as defeating liability because in its view the
surveyor ought not to have relied on the information provided by the client.
60. The leading German comparatist Professor Hein Kotz admitted this in his
"Der Bundesgerichtshof und die Rechtsvergleichung," in Andreas Heldrich & Klaus J.
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tion we shall illustrate briefly how varied American law is; whilst in
the second we shall put forward evidence to suggest that this contrast
between monolithic German law and diversified American law is not
exactly what it appears to be once one brings the academic literature
into the picture.
61. "Das Problem der Haftung ftir primare Vermogensschiden bei der Erteilung
einer unrichtigen Auskunft," in Festschrift K. Larenz 575 (1973); see also Medicus,
supra n. 42, n. 111.
62. OLG Mtinchen BB 1956, 866 is such a case and it is discussed along with
other similar cases in Lawson and Markesinis, I, 83 ff. For further German decisions
see, inter alia, BGH WM 1965, 287; BGH WM 1963, 913.
63. 233 N.Y. 236, 135 N.E. 275 (1922).
64. 255 N.Y. 170, 174 N.E. 441 (1931).
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to do), are, in such cases, forced to seek a balance between two oppos-
ing positions. The first is liability resting on pure foresight (or some
equivalent concept). The second is liability based only on a form of
direct nexus between the representor and the representee of the kind
found in the aforementioned decision of the Court of Appeal of Mu-
nich or in the Glanzer decision. Yet a third option, available to some
plaintiffs, is to rely on statutory enactments such as ss. 11 and 12 of
the (American) Securities Act of 1932 or s. 18 of the Securities Ex-
change Act of 1934.65
The US provides, as one would expect, the greatest variety of
court-devised techniques to avoid the strictures of the Ultramares
rule. Thus some courts, while not overruling Ultramares, appear to
be extending the rationale of the Glanzer decision, namely the third
party can recover only if he can show to be "the end and aim of the
transaction".66 According to this approach, if A prepares a report for
B for a particular purpose, knowing that C will-in furtherance of
that purpose-rely upon the said report, then he will be liable to C if
there is evidence of some conduct linking A to C and evincing A's un-
derstanding of C's reliance on his report. Though these conditions
may represent a modification of the Ultramares tough stance, the
New York court in Credit Alliance was eager to stress its willingness
to adhere to the policy objectives set out in Ultramares. So, in the
absence of some actual and meaningful contact between A and C, it
was thus been said by way of an illustration that a mere telephone
exchange between A and C will not suffice and liability will thus not
ensue.67 A New Jersey statute68 adopts a similar position and spares
the accountant of all liability unless he knew the specific plaintiff and
the specific transaction for which his report was intended.69
A more middling or flexible approach is that advocated by the
Restatement,70 which rejects the private requirement and renders ac-
countants liable not only to those persons whom they intended to in-
fluence but also towards the persons whom the accountants know
65. But such actions have been of limited use to ordinary investors or creditors,
besides suffering from the drawback of a short-one year-limitation period. For the
protection currently afforded by federal securities law see Kraakman, "Gatekeepers:
The Anatomy of a Third-Party Enforcement Strategy?" 2 J. of Law, Econ. & Org. 53
(1986).
66. See, for example, White v. Guarente, 43 N.Y.2d 356, 372 N.E.2d 315 (N.Y.
1977); Credit Alliance Corp. v. Arthur Andersen and Co., 476 N.Y.S.2d 539 (1984);
rev'd in 483 N.E.2d 110, 493 NYS 2d 435 (1985); amended 489 N.E.2d 249 (1985).
67. Security Pacific Business Credit, Inc. v. Peat Marwick Main & Co., 597 N.E.
2d 1080.
68. New Jersey Stat. Ann. 2A 53A-25.
69. To our knowledge, four further States-Arkansas (Ark. Code Ann. ? 16-114-
302, (1995)), Illinois (Ill. Ann. Stat. Ch. 225 (1993)), Kansas (Kan. Stat. Ann. ? 1-402
(1991)), Utah (Utah Code Ann. ? 58-26-12 (1996)) and Wyoming (Wyo. Stat. ? 33-3-
201 (1995))-have passed analogous but differently phrased limiting legislation.
70. (Second) of Torts, para. 552 (1977).
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eager to stress that liability would not be imposed where the harm
was found to be too remote, disproportionate, or financially crushing.
This approach may evince some awareness of the realities that troub-
led Cardozo; but it also suggests that judicial reliance be placed more
on causative notions rather than on the duty of care (with all the
drawbacks that this approach may entail, especially in a jury depen-
dant system). Additionally, all States insist that "justifiable reliance"
is a conditio sine qua non. Thus, a North Carolina court held that
reliance on the audit, not directly but through a summary of it pro-
duced in a Dun & Bradstreet report, was not sufficient.85
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302 THE AMERICAN JOURNAL OF COMPARATIVE LAW [Vol. 51
89. See, for example, von Bar, Verkehrspflichten (1980), 204 ff.; id., "Vertragliche
Schadenersatzpflichten ohne Vertrag?" JuS 1982, 637; id., "Vertrauenshaftung ohne
Vertrauen," ZGR 1983, 476; Mertens, "Deliktsrecht und Sonderprivatrecht," AcP 178
(1978) 227; Huber, "Verkehrspflichten zum Schutz fremden Verm6gens," in Fest-
schrift von Caemmerer 359 (1978). For a critical view see Picker, "Positive Forderung-
sverletzung und culpa in contrahendo - zur Problematik der Haftung 'zwischen'
Vertrag und Delikt," AcP 183 (1983) 369, 489.
90. ? 826 BGB declares: "A person who wilfully causes damage to another in a
manner contra bonos mores is bound to compensate the other for the damage".
91. Supra A. II. 1.
92. For this approach see Philippsen, Zur Dritthaftung des privat beauftragten
Gutachters fiar fahrldssig verursachte Verm6gensschdden (1998), 142 ff.
93. Supra A. II. 2.; for critical comments on this approach see Philippsen, supra n.
92, at 44 ff.; Canaris, "Die Reichweite der Expertenhaftung gegentiber Dritten," ZHR
163 206, 215 (1999); K6ndgen, supra n. 5, at 365.
94. Supra A. III.
95. "Vertrauenshaftung"; see Canaris, supra n. 34.
96. "Selbstbindung ohne Vertrag"; see K6ndgen, supra n. 5.
97. Krebs, supra n. 33, at 275, 339, 625.
98. Hopt, "Nichtvertragliche Haftung ausserhalb von Schadens-oder Ber-
eicherungsausgleich," AcP 183 (1983) 608.
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99. See, for example, Canaris, "Die Reichweite der Expertenhaftung gegeniiber
Dritten," ZHR 163 (1999) 206, 232 ff.; id., supra n. 18, at 184 ff; more restrictive
Neuner, supra n. 33, at 135; a comprehensive system of different aspects is offered by
Krebs, supra n. 33.
100. Philippsen, supra n. 92, at 156; Canaris, id. at 235.
101. Canaris, id. at 230 (with further references).
102. Supra A. 3.
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dits"•07we note also the protective effect of ? 323 I HGB which, effec-
tively, sets an upper limit of liability per certification. For public
registered companies this does not exceed the amount of 4 million
Euros, which, at the time of writing, equals about $4 million. For
smaller companies, the ceiling is lower. In the case of Prospektus-
Priifungen, affecting future investors, the auditors' liability is limited
by the agreement between the fund/investment initiator and the au-
ditor with the initiator not being allowed to circulate the prospectus
(along with the auditors' report) without the investor agreeing in
writing to the limitation of liability clauses. These provisions still
leave uncovered many of the litigated "valuation cases", which did
not involve auditing company records. Here, we are told, the defen-
sive mechanism often used is to insert a clause in the valuation con-
tract limiting the liability of the valuer to the amount of his
insurance coverage. A further clause in the same contract may state
that the valuation report can only be shown to third parties if they,
too, agree to be bound by the same clause which is, in any event,
brought to their attention since it is included in the valuation report.
Alternatively or additionally, valuers are advised to state precisely
the facts (and who supplied them) on which they base their assess-
ments and evaluations. The "vendor decision" of the BGH of 1994,
discussed above, is seen as a good illustration of the valuer having
failed to protect himself by stating that he had been prevented from
inspecting the roof and thus having, it is said, ultimately only himself
to blame.
The above quick sketch suggests a regulatory environment and a
multitude of practices which may make the "avenues for expressing
human greed"-to quote the words recently used by Mr. Allan Green-
span-less accessible than they appear to be at present in the US.
None of these factors seem to exist (or to exist to the same degree)
there. This conclusion could well justify the view that US courts, im-
bued in the American idea of how markets work, may well feel the
need to limit potential liability by (over-) utilizing the one concept in
their control-duty of care-that allows them to achieve this goal.
Though we believe that the above explanations are plausible, it
is difficult to argue that there is an over-abundance of supporting evi-
dence for them in contemporary German legal literature. On the con-
trary, this seems much more concerned to define the nature of the
potential liability in doctrinal terms than review the law in action.
Nonetheless, isolated German decisions do exist that make allusion
to some of these factors;10s and discussions with some colleagues
107. These Pflichtpriifungen include the formation audit, the annual audits and
"special" audits.
108. E.g., BGH WM 1985, 450, nos. 6 and 8 (availability of insurance); BGH NJW
1987, 1758, 1760 (litigation may, de facto, be limited to the amount of insurance
coverage).
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306 THE AMERICAN JOURNAL OF COMPARATIVE LAW [Vol. 51
C. POSTSCRIPT
German case law may not display the diversity of possible solu-
tions to the problem under discussion in the way that its American
counterpart does. In this way it immediately makes us aware of the
existence of the different patterns of federalism: the American and
the German. But diversity in Germany can be found aplenty if one
looks at a different level, namely the level of academic doctrine,
which most German lawyers regard as the real powerhouse of the
intellectual tradition. And here, indeed, one finds not just doctrinal
discussions but also the whole range of options favoured by diverse
American courts-from the one that shows excessive attachment to
the privity doctrine and abhors the expansion of liability to the most
liberal position of all, which makes liability coterminous with foresee-
ability of harm. Learning where to look can thus help reveal con-
cealed similarities.
And yet, despite this effort to reduce the differences between the
two systems, comparison is (again) difficult to make, not least be-
cause so much of the German learning is devoted to notions, concepts,
and dogmas. These are not only complex; worse, one often gets the
impression that they are used by courts as smokescreens to conceal
what really is happening in the judicial mind. The decision of the
BGH of 12 February 1979109 thus rambles on as if the judge is
searching for signs of reliance and then, suddenly, concludes with an
implied contract, apparently supported by good faith. Decisions such
as this suggest that the judge knows what result he wishes to reach
and hardly cares how he is going to justify it in legal parlance. This,
of course, it could be argued (and has been argued by an eminent
English judge"1), can also happen in the Common law world."11
109. NJW 1979,1595, M&U, case 19.
110. Lord Mustill has argued this point extra-judicially in his "What do Judges
do?"Sdrtryck ur Juridisk Tidskrift, 1995-96 Nr. 3, 611 ff. Variations on this theme
can, of course, be found in the literature of the Realist movement and, more recently,
the Critical Legal Studies School.
111. Thus policy hides behind vague and open-ended notions such as 'duty' or 'fair,
just and reasonable'-though one hastens to add that not all Common lawyers would
adopt such skepticism towards the role played by concepts. Professor Robertson is one
who, in his comments to us, observed that "good legal doctrine is often an efficient
way to exchange policy information and argumentation among those who speak the
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language." The problem, however, is that not everyone uses the notions in the same
way. Thus, duty and forseeability are notoriously vague notions; fairness and reason-
ableness, it would seem, even more. The search for legislative intent, on the face of it
a straightforward exercise, is often also a smokescreen for the judges' view of what
the outcome should be in a particular case. The way German courts have shifted from
one contractual notion to another also suggests that the judges have reached the re-
sult and are just searching for the best tool available to formulate it in their decisions.
This is why we feel that the open discussion of policy, such as we find it in the Billy
decision, could be usefully undertaken in the German context, as well. And if it were,
it might throw up policy arguments (e.g., a different regulatory background), which
dictate a different result in Germany than the one, which may be appropriate to the
U.S. In any event, in comparative law a comparison of systems via their concepts and
not the functions they try to achieve can lead to dead ends and should be avoided.
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112. Though strongly advocated by some of their most eminent jurists. See, for in-
stance, Zweigert, "Rechtsvergleichung als universale Interpretationsmethode" (inau-
gural lecture in Tiibingen) RabelZ 15 (1949/1950), 5-21; Haiberle,Rechtsvergleichung
im Kraftfeld des Verfassungsstaates (1992), pp. 27 ff.
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the state in a modern society (e.g., the need to 'protect' weaker par-
ties, the idea of socialization of risks, etc.) that one must explain what
we termed "the consumerist movement in German (and European)
law. One needs a much greater awareness of the content of these de-
bates both in Germany and in the US in order to understand how and
why the rules we have described were born and the extent to which
they are limited in practice by other factors. But we hope we have
said enough to suggest that, whatever the origins of the German
rules, their soundness in practice has been ensured by a cluster of
rules and practices, which are not always immediately apparent to
the 'pure' lawyer, most certainly the foreign lawyer who is studying
German law through books. This brings us to our last and, from a
methodological point of view, the most important point of our piece.
To attempt the presentation of a foreign system to a lawyer who
belongs to another legal family, one is best advised to start his study
of the foreign system by focusing on narrow problems and institu-
tions. The well-selected foreign decision or decisions is the best start-
ing point. For it puts the foreign observer at ease just as he is about
to start his journey into the unknown, by equipping him with factual
situations which are familiar to him from his own practice. But this
will not be enough. The foreign judicial answer, once found and di-
gested, must also be seen in the wider context of its environment and
not to be taken as containing the whole truth and nothing but the
truth. Once this has been more or less grasped and the basic answers
discovered, they must then be 'packaged' in a suitable way for expor-
tation. If the work is done properly, it will lead to reflection-if not
cross-fertilization of ideas and solutions. Intellectually, this is an ex-
citing and, even, a noble task. And in practical terms it can lead to
the kind of enhanced mutual understanding that the globalization of
financial trade and markets nowadays require.
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