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Some Structural Questions on the Relationship Between Contractual and Extracontractual Liability in the New Hungarian Civil Code

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New Civil Codes in Hungary and Romania

Part of the book series: Ius Gentium: Comparative Perspectives on Law and Justice ((IUSGENT,volume 63))

Abstract

The new Hungarian Civil Code turns the contractual liability regime upside down. First, the fault based liability for breach of (onerous) contracts has been replaced by a strict liability according to Article 79 CISG. Second, the foreseeability limitation on consequential damages and loss of profit has been implemented in line with Article 74 CISG. Third, the new regime has been topped by the exclusion of parallel damage claims in tort (if the breach of contract qualifies simultaneously as wrongful or tortious conduct), i.e. Non-Cumul, the French approach of an exclusionary relationship between contract and tort, has been introduced. This Chapter reports briefly on all three pillars of the reform but focuses primarily on the third one. Besides the reasons for Non-Cumul, its outcome in the new Hungarian Civil Code, as well as its effects and side-effects, will be analysed. Beyond some general questions at a structural level on the relationship between contractual and extracontractual liability, the predictable difficulties of distinction and qualification and also the inequitable differences between the damage claims asserted by a party to the contract and by third parties are dealt with.

This chapter was presented at the conference “New Civil Codes in Hungary and Romania II” held on 20th September 2013 at the Eötvös Loránd University, Faculty of Law. Unless specified otherwise, the English translations are those of the author’s.

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Notes

  1. 1.

    The New Civil Code was enacted in February 2013 as Act No. V/2013 (henceforth referred to as the HCC or new code). The new Civil Code entered into force on 15th March 2014.

  2. 2.

    Vékás 2013, p. 20.

  3. 3.

    On the first two pillars, see generally Vékás 2010 and Fuglinszky 2015.

  4. 4.

    Act No. IV/1959, henceforth referred to as HCC of 1959 or old code.

  5. 5.

    Cf. Section 318, para 1 HCC of 1959 “The provisions of tort liability shall be applied to liability for breach of contract and to the extent of indemnification, with the difference that such indemnification may not be reduced, unless otherwise prescribed by legal regulation.” with reference to the general rule of extracontractual liability, Section 339, para 1 HCC of 1959 “A person who causes damage to another person in violation of the law shall be liable for such damage. He shall be relieved of liability if he is able to prove that he has acted in a manner that can generally be expected in the given situation.” (Translation of the ComplexJogtár online, WoltersKluwer group.).

  6. 6.

    Vékás 2010, 97–98.

  7. 7.

    Eidenmüller et al. 2012, 339.

  8. 8.

    The foreseeability rule is not completely unknown to the Hungarian lawyers, as Hungary joined the CISG. Moreover, according to para 18 of the so called Law Decree No. 8 of 1978 on the Application of the Civil Code of the Republic of Hungary Regarding External Economic Relations, “A person who caused damages is liable for such damages which arise directly out of his conduct and which could be foreseen as a possible consequence at the time the contract was made.” (Translation of the ComplexJogtár online, WoltersKluwer group.) Thus, foreseeability formed already an organic part of the Hungarian civil law, at least concerning export-import contracts.

  9. 9.

    The same stands true for Article 1150 of the French Code Civil. According to Article III-3:703 DCFR (and 9:503 PECL) besides intentional breach, foreseeability is also switched off if the breach was grossly negligent.

  10. 10.

    McDowell 19851986, 302–303.

  11. 11.

    Cf. the comprehensive analysis (from tort of negligence’s point of view) of Cardi 20042005, 954–956.

  12. 12.

    Vékás 2010, 99–100; Reasons 2013, § 6:143, Chap. 7. c.

  13. 13.

    Vékás 2010, 100.

  14. 14.

    Vékás 2010, 101–102.

  15. 15.

    Fuglinszky 2011, 1262–1263.

  16. 16.

    Hilley 1956, 135.

  17. 17.

    Hilley 1956, 119, 124, 144, 146–147; Hutschinson and Van Heerden 1997, 109–111.

  18. 18.

    Garoupa and Ligüerre 2011, 318.

  19. 19.

    Hilley 1956, 124–130, see also Viney 1993–1994, 819 with reference to burden of proof, foreseeability, limitation clauses, prescription and jurisdiction. Regarding the DCFR, the plaintiff is generally allowed to choose liability in tort. However tort law does not apply in so far as its application would contradict the purpose of other private law rules such as foreseeability. If this is the case, the contract rule takes priority. Cf. Article VI-1:103(c) and Lando 2009, 636–637, 639.

  20. 20.

    Garoupa and Ligüerre 2011, 316; Schlechtriem 1972, 437.

  21. 21.

    Cf. Van Rossum 1995, 544, 548.

  22. 22.

    Garoupa and Ligüerre 2011, 317; Ogus 2004, 399–400. As to the negotiation costs: if parallel claims are allowed, the legal system in question must provide an answer to whether a contractual exclusion or limitation of liability extends to the extracontractual claims automatically or only if the parties also extended the scope of the limitation to these claims. Non-Cumul is thus not the exclusive method of preventing the evasion of contractual limitation and exclusionary clauses.

  23. 23.

    In this regard very convincing Pusztahelyi 2016, 71–72.

  24. 24.

    Hilley 1956, 120.

  25. 25.

    Whittaker 1995, 336.

  26. 26.

    Cf. Van Rossum with examples from the French, German and Dutch law; Van Rossum 1995, 546, 553, 557.

  27. 27.

    Hilley 1956, 130.

  28. 28.

    McDowell 19851986, 311; Hilley 1956, 141–142 refers similarly to the abuse of rights as a relay from contractual to the delictual track in French law. The subsumption of architect’s, builder’s, attorney’s and doctor’s liability under professional fault (faute professionelle), which is part of the tort law regime, can be also traced back to policy considerations aimed at the equalisation of the information asymmetry between the professional and the consumer, cf. Van Rossum 1995, 549; however these policy considerations have been replaced by special rules on some contracts of the kind, particularly if residential property is concerned; as to the English and French law on this matter cf. 546, 550. In Hungary, according to Section 8, para 20 of Act No. CCLII/2013 on the amendment of specific acts related to the new Civil Code’s coming into force, Section 244, para 2 of Act No. CLIV/1997 on health services has been amended and, according to the amended text, extracontractual liability is to apply to medical malpractice, which is a fault based liability even in the new HCC. As such, doctors’ professional liability is subsumed expressly under the extracontractual regime. The goal of the special rule in Hungary is exactly the opposite to that in French law. In French law, the professional fault (faute professionelle) aims at a stricter liability than the contractual regime. The Hungarian derogation aims at the detachment of the doctor’s liability from the strict contractual liability regime in order to arrive at the less severe fault-based extracontractual liability, because the latter fits better to the doctor’s activity within the context of a best effort contract (obligation de moyens).

  29. 29.

    Viney 19931994, 824–826; she proposes to allow the choice concerning these duties on a case by case basis if this does not infringe the autonomy of the contract.

  30. 30.

    It goes far beyond the aim of this chapter to substantiate, for example, the German approach on accessory or secondary obligations depending on whether they are related to the performance of contractual services or not (leistungsbezogene Nebenpflichten, nichtleistungsbezogene Nebenpflichten). In this respect, breaking the vase or of the window could qualify as the breach of an accessory obligation not related to the contractual services.

  31. 31.

    Reasons 2013, § 6:146, Chap. 9.

  32. 32.

    Garoupa and Ligüerre 2011, 317.

  33. 33.

    Reasons 2013, § 6:145, Chap. 8.

  34. 34.

    Cf. Section 6:152 HCC in contractual and Section 6:526 HCC in extracontractual liability.

  35. 35.

    Hilley 1956, 120–121 asks the same question from the defendant’s point of view with reference to the pluralist approach arguing for the free choice of the plaintiff: there is no reason to treat somebody who breached the contract more favourably than a third party who is not contractually bound to anything.

  36. 36.

    For these and more example cf. Eörsi 1962, 191 et seq.

  37. 37.

    Viney 19931994, 821 with reference to the qualification difficulties in French law.

  38. 38.

    For these and more example cf. Litvinoff 1999, 4, 19, 20.

  39. 39.

    Litvinoff 1999, pp. 16–18.

  40. 40.

    Cf. Sections 6:535 and 6:536 HCC, translated by Prof. Attila Menyhárd.

  41. 41.

    This case is also mentioned by Vékás 2013, § 6:145, 609.

  42. 42.

    Cf. the following cases on the exclusionary nature of the harmonised product liability law: C-52/00 Commission v France, C-154/00 Commission v Greece, C-183/00 María Victoria González Sanchez v Medicina Asturiana SA. With the same conclusion Pusztahelyi 2016, p. 12.

  43. 43.

    Viney 19931994, 823–824.

  44. 44.

    Viney 19931994, 825–826.

  45. 45.

    Such an attempt can be discerned from the Statement of Reasons on Section 121 of Act No. CCXXXVI/2013 on the amendment of specific financial acts related to EU law harmonization; see also the Statement of Reasons at page 74 of the Draft Act T/13082. It is prefaced by the statement (with reference to the amendment of Act No. LXII/2009 on Compulsory Third-Party Vehicle Insurance), that “The injuries caused by the operation of a motor vehicle qualify as losses caused by an extracontractual conduct.” However, is a sentence obiter dictum in the reasoning of an act with a completely different subject sufficient to break through the Non-Cumul principle provided for by the new Civil Code? Such solutions are definitely the sources of legal uncertainty, which is why they should be repudiated.

  46. 46.

    Viney 19931994, 821 analyses a French case wherein the plaintiff was injured by a chainsaw while helping his brother. Using a chainsaw qualifies certainly as a dangerous activity according to Hungarian law, thus surely the strict extracontractual liability applies if a third party (a bystander or passer-by) is injured by the chainsaw. If a gratuitous service was provided to the injured person, fault-based liability for the breach of a gratuitous contract would apply without any possibility to choose tort law. I do not see any reason to treat alike cases differently. Although one could give an explanation with reference to the increased frequency with which a car is used and can cause an accident if one wanted; i.e. de facto more people use cars than chainsaws, thus the chance of being injured by a car or a car accident is bigger than being cut by a chainsaw. This would however be a policy rationale which might be reflected by the argumentation quoted above in footnote No. 45.

  47. 47.

    This was an option based on the thoughts of my colleague Prof. Attila Menyhárd (not yet published).

  48. 48.

    Cf. Opinion No. 2/2016. (XI.24.) of the Civil Law Department of the Szeged Regional Court of Appeal (Szegedi Ítélőtábla), explained by Kemenes 2017, 7, 10. The Court and the cited author refer to the Reasons referred to above in note 45 too. In order to avoid the contradiction tackled by us above, the Szeged Regional Court of Appeal takes the view that there is no significant difference between the strict liability in tort for dangerous activities on the one hand and the strict liability for losses caused by the breach of (onerous) contracts on the other.

  49. 49.

    Kemenes 2017, p. 4.

  50. 50.

    Pusztahelyi 2016, pp. 73–74.

  51. 51.

    Kemenes 2017, 4 cf. however the opposite view of Pusztahelyi 2016, pp. 73–74.

  52. 52.

    Limitation and exclusion clauses should definitely be under judicial control by invalidity rules (violation of good morals or unfair commercial terms).

  53. 53.

    Similarly Pusztahelyi 2016, pp. 77–78. She considers other alternatives, for example to keep the Non-Cumul principle but to reshape it as a default rule or to keep it but make a general exception for personal injuries.

  54. 54.

    Pusztahelyi 2016, p. 77 considers this too and remarks that there is another difference between the two foreseeability clauses. As far as the contractual foreseeability rule is concerned, intentional breach of the contract sets foreseeability aside and the party in breach is liable for all losses irrespective of their foreseeability; while there is no such “cancel button” for deliberate wrongfulness among the rules of extracontractual liability and she is right in this respect too and so this should be considered indeed.

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Fuglinszky, Á. (2017). Some Structural Questions on the Relationship Between Contractual and Extracontractual Liability in the New Hungarian Civil Code. In: Menyhárd, A., Veress, E. (eds) New Civil Codes in Hungary and Romania. Ius Gentium: Comparative Perspectives on Law and Justice, vol 63. Springer, Cham. https://doi.org/10.1007/978-3-319-63327-5_9

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