– Pools, distributors, associations, insurers in the recourse liability trap ? –
*by Dr. Johannes Fiala, Attorney at Law (Munich), MBA Financial Services (Univ.), MM (Univ.), Certified Financial and Investment Advisor (A.F.A.), Lecturer in Civil and Insurance Law (BA Heidenheim, Univ. of Cooperative Education), (www.fiala.de) and Hermann Siebenhaar, insurance broker as well as management consultant for risk and pension management (Neutraubling), court-appointed expert, lecturer (Univ. of Cooperative Education), retail salesman (www.hermannsiebenhaar. de)
All just favors?
Students learn what favours are – these have the charm of being liable “for nothing”, § 675 II BGB. Prerequisites are in particular: a) There is no agency agreement, § 675 BGB. b) There is no intention to be legally bound – therefore pure courtesy. But it does not depend on the “inner” will “not to want to be liable”, but on the “objectively recognizable will”, i.e. the recipient’s horizon, §§ 133, 157 BGB. Examples that have saved many a financial intermediary from damages and liability are investment advisors who had given (wrong !) advice within family or close circle of friends.
But by no means liability-free favors !
With the objectively recognizable will it depends on circumstantial evidence. Typical indications are: Value of the thing Economic significance Interests of the beneficiary Extent of the risks in the case of faulty performance Own economic or legal interest of the person acting Favour in everyday life (advice, assistance). Ergo: If the person providing the information (pool, etc.) has his own economic interest, or if he is (only allegedly?) particularly knowledgeable (sales manager?), an information contract is concluded (even tacitly !): The liability of the person providing the information is thus certain – it is by no means a matter of liability-free “everyday advice” !
Case law summarises three groups of cases in which liability applies:
The information is recognisably of considerable importance to the recipient because he intends to use it as the basis for important decisions. Expertise of the informant. Own economic interest of the informant. Case-related: If the advice is of great importance to the client; the value of the entrusted object was high; or there is an own economic interest of the contracting party, then there is no question of courtesy: It is clear that distributors, insurers, pools and associations have their own interests – associations and pools among others because of friendly “donations” from the insurer (sponsoring). Intermediate result: The “secret powers”, which “control” the “free forms” have own economic interests – the liability is therefore probably also safe for them ! Incidentally, it does not matter that the “advice” or the “model form” were provided free of charge. The (feigned) expertise or economic interest of the person providing such forms is fully sufficient for complete liability. This is because it is not a “social event” (BGH, judgement of 16-10-1990 – XI ZR 165/88) but clear (also own) economic interests.
Example of insurance liability:
Insurance companies are also liable for inadequate information provided by investment advisors who, for example, propagated the financing of an endowment life insurance policy by means of credit: Interest speculation – BGH, judgement of 9.7.98 in: BB 1998, 1763: An investment intermediary, together with an insurance company, had brokered a yield project to the plaintiff, according to which a life insurance policy of DM 1.5 million was to be financed with a loan from a Swiss bank. As a result, the plaintiff ended up with a loss of DM 277,000, which he is claiming from the insurance company. It had not informed him that the plan would only be profitable if the interest rate on the loan did not exceed 5,75 %. In fact, it was 6.5%. It did not fall in the subsequent period either. In addition the BGH: Even if the insurance company did not manage the entire project on its own, it is liable together with the investment advisor due to faulty information about the risks of the transaction.
Marketing liability may also intervene:
The same happens to those intermediaries (and employers) together with their occupational pension provider when they offer their services as “the best on the market”. How will a pool, insurer, distributor or agent prove which rate is “best” in terms of return and matching the employee’s income and assets ? In case of doubt, not only insurers (cf. inter alia the judgement of the OLG Celle of 13.09.2007) are also subject to vicarious liability.
And how is the lawyer liable?
The lawyer who lets himself be named by “pool, distribution, association, insurer” as the originator/author of the sample contract (knowledge or acquiescence is sufficient!) is liable to all users, similar to an expert – even if he was also active “free of charge”. As a rule, he is underinsured, because his statutory minimum insurance (250 TEUR) is hardly sufficient to “adequately” cover about 1000 pool members, or 5000 software users. Ergo, the suspicion is allowed that such “experts” either appear unserious and/or do not know their responsibilities. The “simple” intermediary, however, lulls himself into a sense of security: a pre-programmed “bankruptcy”?
Then there is the expert liability:
It affects lawyers, accountants and law professors who are regarded as experts in their field – their “advertising” for products and/or product providers of a commercial nature is generally not insured, indeed in most cases not insurable. If someone discovers such “confidence advertisement” a “creditworthiness information” is sufficient around to recognize that a liability/responsibility does not bring money – at most to the existence destruction of the “negligent respondent” could lead. Typical are certificates “this software is EU-VRL compliant” or “our VSH concept is liability-proof” etc.: Almost any reservation with the pool, especially that it is “only” a sample contract, will rarely be heard by judges. Almost any reservation in the pool, especially that it is “only” a sample contract, will rarely be heard by judges. In fact, these are “not very serious marketing gags” or the document templates for knowledgeable experts are real “samples without economic value”.
Anyone can become an expert – and thus be personally liable with their private assets:
In addition to professional “experts”, there is also the situation of claiming “personal trust”, for example by presenting oneself as a “specialist or big shot”; probably the rule in occupational pension mediation: liability analogous to § 177 BGB. Some training and sales managers are even more brazen: half-truths are unconscionably conveyed, important key points are forgotten – after all, they don’t want to worry the salesperson. Such false instructions are regularly considered as “intentional immoral damage”: liability according to § 826 BGB – and for this there is usually no coverage in any pecuniary damage liability policy, at the latest when a criminal offence is established.
Conclusion: Pools, distributors, associations and insurers in liability !
Consequently, these “market participants” are liable, because there can be no question of a “favour” in legal terms, even if all “samples without value” are distributed free of charge. The attorney for the mediator will advise “let’s file a declaratory judgment action for the future damages before anything can become time-barred …”.
Practical example: JURA professors liable for “nonsense”?
A law professor lets himself be quoted in a product flyer with, among other things, the words “I am firmly convinced that XXX has developed a concept which is not only forward-looking, which not only contains quality, but which also contains extensive and intensive controls. These are the reasons why I am personally involved in this area ….”. Now XXX is broke, the initiators in “jail”, the professor sued several times (at least he still has an attachable pension) – let’s see if and how he would get along with the attachment-free subsistence minimum. He is not even “prospectus responsible person” but “only” guarantor as professional expert, and in this league belong according to BGH beside lawyers and chartered accoutants, also insurance brokers !
a) Pools, distributors, associations and insurers should not allow themselves to be served by pseudo-brokers (even for their own VSH insurance) – bankruptcy could be pre-programmed, and the reach-through or manager liability could “destroy” private assets. Risk management is necessary – this should also be checked with the business partners.
b) Unseriöse and above all uninsured market participants are to be recognized as “Hochstapler”, and “to separate” – alone the image damage would be much too expensive for a tolerance opposite intransparent advisors, in particular without sufficient security.
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About the author
Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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