rutland ježek, a Czech law firm in Prague on liability for damages according to Czech Civil Code
Liability for damages is regulated by The Civil Code (Act No. 40/1964 Sb., as amended), a fundamental law regulating the substantive private law in the Czech Republic. This article describes basic principles of these concepts.
COMPENSATION FOR DAMAGES IN CZECH CIVIL LAW
General Liability for Damages under Czech law
Czech law contains a general clause dealing with liability for damages in section 420 of the Civil Code. It has a general validity and shall thus be applied always where there is no special provision on damages. If both section 420 and a special provision may be applied, it is at the discretion of the injured to choose the provision to base his claim. This applies both to individuals and companies.
Under section 420 (1) of the Czech Civil Code, each person causing damage by breaching of its legal duty shall be liable for such damage. To give rise to liability for damage, the following conditions must be fulfilled:
- Breach of a legal duty;
- Occurrence of damage (actual damage or lost profit) or damage to health;
- Causal link between the previous two conditions,
- Fault (either as unwilful negligence as described in section 420 or as an intent, e.g. s. 423, 424).
The first three prerequisites must objectively exist and must be proved. They are to be proved by the injured who is therefore bearing the burden of proof. Fault is required at least as unwilful negligence and is presumed as such. The burden of proof (disproof of fault) is therefore on the defendant. However, the wrongdoer’s intent must be proved by the injured. In the case of no-fault liability, the issue of fault is without any legal significance.
A. Breach of a Legal Duty
The breach of a legal duty is the basic prerequisite for liability for damages. The Czech Civil Code does not make any difference whether the breach relates to a legal duty arising from law or a contract.
Apart from various duties imposed by special provisions the Czech Civil Code provides also the general prevention duty in the Section 415: "Everyone must act so as to avoid damages to health, property, nature and environment." This provision is very comfortable for the plaintiff in cases when the particular duty of the wrongdoer is difficult to deduce.
The breach of a legal duty must always be proved by the injured.
If the law permits certain conduct, the defence is permitted. Such a defence is, typically, e.g. self-defence, necessity, and performance of a duty imposed by law. The proving of existence of such a circumstance is up to the liable person.
B. Existence of Damage and Types of Damages under Czech Law
Occurrence of damage is another prerequisite for liability for damages. Damage is defined as a loss suffered by the injured that may be expressed in money. Under the currently valid legal regulation, damage may be caused to a thing, property and health.
There are two categories, depending on the satisfaction that the injured may seek:
- Damage to property is a sum of all losses suffered by the injured as a result of the incident. It may consist of:
- Actual damage under Czech Law means the amount of money by which is reduced the property of the injured, i.e. in case of crashed car it consists of difference between the value of the car before it was damaged and after. But it can also include so-called meaningful expenses (it must incur after the damage occurred and be directly linked to it, i.e. cost for car repair) and unreasonable costs (costs that incurred before the damage occurred, but it is directly linked to the event, i.e. cost of theatre tickets you can not use because, thanks to the damaged car, you can not get to the theatre). In both cases it is necessary for the costs to incur in past, before demanding the damages.
- The term „lost profit“ is refferring to damage to the property of the injured that will occur in the future because of damage he suffered, i.e. money he could earn as a driver, if his car was not crashed.
- In case of damage to health it is right to seek compensation for property damage next to the right to pecuniary satisfaction of other than property loss – specifically, damages for pain and suffering, compensation for diminished social capability (in case of an accident) and for death.
Existence of damage and its amount shall be proved by the injured.
The moment when damage occurred is decisive for the ability to assert a claim in court, subject to the statutory limitation.
C. Causal Link
The existence of causal link between the breach of a legal duty and damage is the third prerequisite for occurrence of civil liability for damage. Causal link shall at all times be present as a separate prerequisite for liability – even though the existence of fault is not required. Causal link must be proved by plaintiff.
Causal link is always assessed on an individual basis with respect to specific circumstances. To assert whether or not there is liability for damages, the issue of the specific definition of damage (property damage) for which compensation is required is crucial. As for damage to health, it must be ascertained whether or not an illegal act was a direct and inducing cause for damages to health. There must always be a direct cause.
Causal link is not present where the harmful consequence would have occurred even without the effect of the inducing fact.
Fault is a mental condition of a person in connection with the intended consequence. It has two parts: Intellectual (knowledge) and wilful (controlling). Depending to which part is present and which is missing, there are then several types of wilful or negligent conduct.
Direct intent means that the wrongdoer knew he could cause damage with his conduct and wanted to cause it.
Indirect intent means that the wrongdoer knew he could cause damage with his conduct and understands that there will be a harmful consequence if it happens.
In the case of wilful negligence, the wrongdoer knew that he could cause damage with his conduct, but relied he would not cause it without any reasonable reason.
In the case of unwilful negligence, the wrongdoer did not know he could cause damage with his conduct although he should and could have expected so depending on the circumstances and with regard to his personal situation.
The form of fault (intent or negligence) is significant for the occurrence of liability for damages or for the application of the court’s discretionary power to lower the damages. Specific circumstances of the case and situation of the potential wrongdoer are always reviewed from the no-fault perspective by the court. The behaviour and conduct of a law-abiding and reasonable person shall always form a basis and be a criterion.
Damage may be caused even without fault of another, i.e. by a coincidence. Coincidence may be simple or qualified. Qualified coincidence is also branded as vis maior. In general, no liability arises for coincidence – coincidence affects those who experienced it. However, some cases of no-fault liability give rise to liability for coincidence – as mentioned in sections 421, 421a of the Civil Code.
Liability for Another Person under Czech Law
Damage is caused by a company or individual if it was caused during their activities by those who were used for such activities. Such persons are not under this law liable for this damage; their liability is governed by employment regulations and remains unaffected hereby.
This provision shall be applied if damage is caused by a wrongdoer within his authorisation (usually contractual authorisation) by a company or an individual, and if damage was caused during activities falling within the scope of such person’s activities. Liability for damage is then attributed to the entrepreneur. The entrepreneur or a company is liable for damage caused by another if the following conditions are cumulatively fulfilled:
- Damage was caused by his employees or other persons used to undertake his activities, and
- Damage was caused by the activities of such company or individual.
The range of such persons is not subject to any substantial limitations. It may be anybody whom an entrepreneur or a company used for its activities without any lasting employment and contractual relationship, i.e. anybody acting on the basis of a single order. This shows the basic difference due to which any damage is then attributed to the entrepreneur – as the wrongdoer did not act in his own name and at his own risk, but for the entrepreneur.
An unlawful act of a used person may be both a breach of a certain specific legal duty and a breach of the general duty to prevent under section 415.
Damages caused within the acitivites of a company or an individual involve performance of employment, assignments arising from employment, acts directly related thereto, and any other activities not lacking a local (spatial), time and subject matter (internal, purposeful) relation to the entrepreneur’s activities. An authorised person must perform such activities in the name and for the benefit of the entrepreneur.
If the authorised person causes any damage within the entrepreneur’s activities that, however, exclusively is a result of his personal activities, it is only such person who is liable for such damage.
Such liability is not of choice, meaning that the injured would have a choice to seek damages from the entrepreneur or the authorised person. If the prerequisites for the entrepreneur’s liability are fulfilled, it is the entrepreneur’s exclusive liability towards the injured. The entrepreneur or company is thus entitled to recourse against the authorised person causing harm in accordance with Czech employment law.
Exemption from Liability
The Czech Civil Code declares the principle of presumed fault of the wrongdoer. The doctrine and case law support restriction of such presumption to unwilful (simple) negligence. If all the three other prerequisites for liability for damages were proved (breach of a legal duty, damage and their causality), fault in the form of unwilful (simple) negligence is deemed to be a proved fact until the other party refutes it.
If the wrongdoer asserts that he did not cause the damage, he can only exculpate himself by proving that he did not act even in unwilful (simple) negligence.
A company may also exculpate itself if it proves a lack of fault on the part of those acting on its behalf or those it used for its activities. If such an authorised person acted based on fault, an artificial person cannot be exempt from liability.
Mitigation of Damages under Czech Law; Fault of the Injured
The duty to prevent (mitigate) damages is one of the principles of Czech civil law. This is the so-called duty to prevent damages being of a subsidiary nature in respect of other legal regulations.
If there is no express legal standard imposing a certain behaviour, each and any act or activity when a wrongdoer did not act carefully to prevent damage (to health, property, rights of another, nature and environment) is unlawful with regard to this general duty to prevent.
Therefore in case the injured party knew the damage is about to happen or rise and did not make any measures to mitigate the damage, such injured cannot seek compensation for such damage over the original extent.
The similar principle applies in the situation when the injured has also partly caused the occurrence of the damage (e.g. both vehicles from car accident did not obey the traffic regulations). The damage is then borne proportionally according the level of fault of both parties.
Moderation of Damages by Czech courts
Under section 450 of the Civil Code, Czech court has the right to reasonably moderate damages for reasons worth consideration. This is so-called discretionary principle (moderating discretion).
The law neither specifies the „reasons worth consideration“, nor does it require that all the aspects mentioned in the indicative list be fulfilled. In justified cases, a court may apply its discretionary powers for other reasons (e.g. of social character, impact of damage). As far as the personal and property situation of the wrongdoer and the injured is concerned, it means their earnings from occupational activities and other gainful activities, their property, duty to support and maintain, life style, etc. might be taken into consideration. A court’s discretionary powers are also affected by the existence and degree of the wrongdoer‘s fault.
The existence of fault, plurality of wrongdoers or contributory fault of the injured has no effect on a court’s discretionary powers whatsoever, a court may apply these powers or not at its absolute discretion.
If the injured participated in the causation of damage, the moderating discretion will be applied under section 450 only after the deduction of that portion related to the contributory fault of the injured. Also, in the case of joint and several liabilities of several wrongdoers, a court may abridge damages only after their distribution among individual wrongdoers depending on their involvement in causing the damage. Damages are then abridged proportionately.
Statutory limitation of damages under Czech law
Statutory limitation on a right is contained in sections 100 to 114 of the Civil Code.
The statutory limitation on damages is regulated by section 106 of the Civil Code as follows:
(1) The right to damages is subject to the statutory limitation within two (2) years of the day the injured learns about damage and about who is liable for such damage.
(2) The right to damages is subject to the statutory limitation in three (3) years at the latest, and if the damage was caused wilfully, then in ten (10) years of the day the event of damage occurred; this shall not be applied in the case of damage to health.
It is essential for the running of the limitation period that if the entitlement is applied in court (action is filed), the limitation period does not run for the period when the procedure to award the claim is held. In other words, a defendant may successfully seek a statutory limitation on a claim unless an action is filed with court to apply this claim against the defendant before the limitation period expires.