– How the 2002 reform of the law of obligations will relieve the judiciary –
New era in the limitation period for damages
In the normal case of investment advice or asset management, the statute of limitations begins with the investor’s knowledge of the person who caused the damage and of the damage. If the investor is grossly negligent in this respect, the limitation period also starts to run. In the case of possible breaches of ancillary obligations (false advice, investor deception, etc.), a maximum period of 30 years has applied since the BGB came into force. This is called an absolute statute of limitations. From 01.01.2012 this period will be reduced to 10 years.
Special case of investment advice on securities
However, if the brokerage of financial instruments (e.g. certificates, shares, open-ended investment funds, bonds) is concerned, a period of three years has always applied – to be calculated to the day. This short time limit may apply in the case of negligence on tort claims, as well as faulty asset management. If, on the other hand, the bank or the asset manager deliberately kicks about. Backs, it regularly concerns deliberate fraud or deliberate embezzlement (this as examples means “tortious claims”), so that the period of three years does not have to geiten.
Multiple advisory errors trigger multiple statutes of limitations
By judgement of 09.11.2007 (Az. V ZR 25/07) the BGH clarified: ” If a claim for damages can be based on several consulting errors, the knowledge-dependent limitation period begins to run separately for each consulting error”. It is not uncommon for customers to be placated, reassured or misled again by the advisor or broker when there are signs that a capital investment is going wrong. However, even simple continued inaction can constitute an advisory error, e.g. in the case of an obligation to provide “support” – not only a support commission, which is customary in the case of insurance companies, can be an indication of this.
Expert investigation forces action
It often happens that banks, insurers or asset managers submit inaccurate statements. The spectrum ranges from simple input errors or the use of out-of-date data, to incorrect formulas in billing programs, to deliberate manipulation to deceive customers. Often, only the recalculation of maturity and other insurance benefits or credit accounts or an analysis of securities account statements or surplus and contract histories for life insurance policies will reveal where the insurer or financial institution “miscalculated”.
Calculation of the period of limitation
As soon as the customer has this knowledge after an expert analysis, i.e. as soon as he has to know positively for the first time that he has suffered a damage, a so-called short limitation period starts to run at the latest. This period shall be three years from the date of recognition, calculated from the end of the following year. Even if a customer could not recognize the “errors” at all, it remains with the up to now 30 and in the future only 10 years of the absolute limitation. As soon as the “short statute of limitations” or the “absolute statute of limitations” has occurred, the opposing party can successfully object to this.
Expiry of short deadlines puts advisers and brokers at risk
Experience has shown that even the 30-year limitation period is short if the error is only noticed towards the end of an insurance policy concluded for 30 years. In the future, many affected parties will therefore only notice the error after the statute of limitations has run. But even then, all is not lost if the injured party can prove intentional fraud, for example. The shortened limitation periods could therefore result in a stricter approach against incorrect advice – unfortunately, in the case of intent, the financial loss liability protection of the intermediary is also not applicable. The aggrieved party could also rely on the fact that the intermediary has not fulfilled its ongoing further obligations to advise and assist, thereby causing the limitation period to run.
For example, by failing to point out that the claims against the insurer were in danger of becoming time-barred. The intermediary for whom the limitation period only commenced with the commencement of the limitation period for the original claims can then be liable for the damage caused by the commencement of the limitation period for the claims against the insurer. For until then he could still have averted the damage as a result of the commencement of the limitation period by providing timely advice in accordance with his duties.
by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm
by courtesy of
www.innovationundtechnik.de (published in Innovation und Technik 12/2011, page 38-39)
www.handwerke.de (published in Computers in Crafts 11/2012, page 5-6 under the headline: reform of the law of obligations: limitation of claims for damages on 31.12.2011)
www.kaden-verlag.de (published in (CHAZ 12/2011, page 683 under the headline: At the end of 2011, claims for damages by investors and policyholders become time-barred)
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About the author
PhD, MBA, MM
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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