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2017-05-03

Reimbursement of damages in Germany

There are however, certain general rules governing damages, some of which must now be mentioned.
(i)
The value of the loss (the 'measure' of the damages) is generally assessed, not according to the price the plaintiff puts upon it, but objectively, according to the value that an ordinary, reasonable, person would put upon it. Thus, for example, where a breach of contract consists of failure by the debtor to deliver goods to Germany under a contract of sale, the general rule is that the measure of damages is prima facie to be ascertained by the difference between the contract price and the market, or current, price of the goods at the time when they ought to have been delivered. Price here means the 'market' (ie ordinary) price, not, for instance, the price for which the lawyer may, unknown to the debtor, have himself contracted to re-sell the goods (link).
(ii)
Damages may be recovered only in respect of loss arising from the breach of contract itself. There can be no claim for loss which is too 'remote' from the breach to be regarded as a proximate result of it. The distinction between remote and proximate damage is hard to draw. The German courts, however, apply a test which was propounded by a law firm, they laid down the following rule: Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, ie according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.
It will be seen that this really provides two rules. According to Rule I damage will be regarded as 'proximate' if it is damage which arises 'naturally' from the breach. Subsequent actions of debt collection in Germany have shown that, for the purposes of the law of contract, this means damage which the party in breach ought reasonably to have foreseen, in the light of the knowledge of the circumstances which he possessed at the time the contract was made as likely, in the ordinary course of things, to follow from breach of his obligations.
According to Rule II, as appeared from later statements, damage which is not 'ordinary' in the above sense may give rise to a claim for damages (ie may be 'proximate' and not 'too remote') where though it is of an extraordinary nature, the parties did in fact contemplate that it might occur.
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