*170 Re AFaulty Baguette

(Case 5OB 217/04d)

Before the Oberster Gerichtshof (Austrian Supreme Court)

21 December 2004

[2006] E.C.C. 17
(Hon. Prof. Dr Langer, Presiding; Dr Flo²man, Dr Baumann, Dr Hurch and Dr Kalivoda, Judge)

December 21, 2004

Damages; Food products; Information; Product liability

H1 Product liability— baguette containing stone— failure to declare manufacturer in reasonable time—
liability under s.1(2) of the Product Liability Act— purpose to make it easier for claims to be brought— so
information to include legal form of originator— seven months to supply that information not reasonable
time— defendant liable as placer of product on the market

H2 On an appeal from the Oberlandesgericht (Regional Court of Appeal), Wiener Neustadt, which was
dismissed.

H3 The claimant's wife bought what was described as an “ original French baguette” from a branch of
the defendant shop. There was nothing on the packaging to indicate the manufacturer. When the
claimant ate the baguette, he bit on to a small stone, damaging one of his teeth. On the same day,
the claimant wrote to the defendant, describing the incident and asking for compensation. He did not
expressly mention the Product Liability Act. In its reply, the defendant mentioned the Act, and
supplied the name and address of the firm that had made the baguette and supplied the name of a
person for the claimant to speak to. The letter said the manufacturer had been informed of the
incident and was conducting an internal inquiry. The claimant's lawyer approached the manufacturer
and was told its insurers were dealing with the matter. The insurers then stated that the putative
manufacturer (B) was in fact only a vendor and stated that S.A. C was the manufacturer. A few days
later, the claimant's lawyer again asked the defendant and its insurer to provide cover for the claim in
damages. The insurer then supplied a letter confirming that the baguette had been made in South
West France, and conceded that the real name of B was C and that B was a trade name.

The defendant bought the baguettes deep-frozen from B in France. The goods were delivered to a
cold store in Austria which belonged to B, and were not delivered to the defendant's branches until
called for by the defendant through a third company. Payment was made not direct to B but to T. The
agreement on price was concluded with B. Although the defendant paid T a higher price, it then
received a credit from B under internal agreements on price. The defendant's only *171 involvement
in the processing of the baguettes, which were already 70– 80 per cent baked, was to finish off the
baking in the ovens at its various branches. B had always represented itself to the defendant as the
producer and importer of the baguettes. The defendant's staff understood B to be a firm, and not
merely a trade name. B provided the ingredients for the baguettes and supervised their manufacture
by the outside firm of C. B also entered into business contracts with the defendant using only the
name B. The defendant's staff were not aware that C existed.

Even after the action had been started, it was still not clear to the claimant precisely who was the
producer or dealer that supplied the baguette to him. The claimant sued under s.1(2) of the Product
Liability Act on the basis that the defendant had not taken sufficient care to inform the claimant of the
identity of the manufacturer. The defendant denied that it had failed to give the claimant the
necessary details. The first instance court dismissed the claim, ruling that the defendant was not
liable as the manufacturer of the end product. The defendant's information had been given in a
reasonable time, although the relevant establishment's legal form had not been stated. The Court of
Appeal set aside the judgment and referred the case back for rehearing. It concluded that the
defendant was not to be considered the manufacturer within the meaning of s.3 of the Act because it
had produced neither the product itself nor the materials and part of the product. But it held the
defendant liable under s.1(2). It was for the defendant to prove that the delay in providing
information about the identity of the manufacturer had not disadvantaged the claimant. However, it
appeared that it had not even attempted to adduce such proof, and the claimant had suffered because
he had incurred legal costs of involving a lawyer before the information was provided. Moreover, it
was not possible to ascertain whether a French company called S.A. B existed at all. Leave was given
to appeal to the Supreme Court because there was no Supreme Court case law on whether or not
 failure to make known the legal form of the party above the dealer in the supply chain was prejudicial
to a decision on liability under s.1(2) of the Product Liability Act. The defendant appealed.
Held:

Whether the manufacturer's name was supplied within a reasonable period of time

H4 If, as a result of a product defect, a person sustained bodily injury etc. or a different physical item
was damaged by the product, the party liable to make good the loss— if it was not possible to
determine the manufacturer or importer— was the undertaking that brought the product on to the
market, if it did not within a reasonable time give the injured party the name of the manufacturer or
importer or of the person who supplied it with the product ( s.1(2) of the Product Liability Act). In this
case, the issue was whether the defendant had fulfilled its obligation to name the manufacturer or
importer within a reasonable period of time. The period began to run when a claim in damages was
brought against the supplier if it was possible for the dealer to understand from the claim letter that
the injured party was making claims under the Product Liability Act. It was not necessary for the
injured party *172 specifically to ask the dealer to state the name of the manufacturer or importer.
Thus, even though the claimant had not expressly based his claim on liability under the Act in his
claim letter to the defendant, his letter had nevertheless been understood by both the defendant and
its insurer to mean that a claim in damages was being made under the Act. The reasonable period of
time therefore began to run on the date of that letter. Although the length of such period was not
precisely stated by statute, it was governed by the particular circumstances of each case, in particular
the type of product, place of establishment of the party with primary liability and the number of
enquiries that had to be made by the supplier. There could be no doubt that the information about the
firm B had been given within a reasonable time. However, it ultimately took seven months for the
necessary information to be revealed, and that period could not be considered reasonable. [10]– [14],
[16]

Whether the information supplied in time was sufficient for the purposes of the Product
Liability Act

H5 The information supplied under the Product Liability Act by a dealer had to include at least the
name and address of the manufacturer or importer so that the details were sufficient to enable the
claimant to bring legal proceedings. The information was required to be such that the injured party
did not have to make any further inquiries. The object of the provision was to make it easier for a
claimant to bring a claim, so the information supplied had to give a full and precise indication of the
proper defendant's name, including its legal form. The details given in this case did not fulfil those
requirements, and the defendant could not be relieved of its obligation to give the information by
saying that it had no more details than those it had passed on. [15]

Whether the defendant was liable

H6 As the defendant had not fulfilled its obligation to give the name of the manufacturer or importer,
it had to be held liable under s.1(2) of the Product Liability Act as the establishment that had brought
the product on to the market. [17]

H7 Cases referred to:

• Before Austrian courts:
• Case 2 Ob 240/99d
• Case 3 Ob 107/01h
• Case 6 Ob 272/03y
• Case 7 Ob 581/92
H8 Representation
• Dr Erich Proksch, lawyer, appeared for the claimant.
• Dr Helmut Weinzettl, lawyer, appeared for the defendant.
Judgment

Grounds
1 On July 4, 2002, the claimant's wife bought (according to the labelling on the packaging) an “
original French baguette” from the defendant's branch in G. There *173 was no indication on the
packaging to say which company had manufactured the baguette. When the claimant was eating the
baguette, he bit onto a small stone in the dough, damaging one of his teeth that had until then been
quite sound. On that very same day, in a letter to the defendant's management, the claimant
described the incident and claimed reasonable compensation for the damage that had occurred. No
express mention was made of the Product Liability Act (“ PLA” ). In its reply of July 22, 2002, the
defendant referred to the PLA and gave firm B as the name of the supplier of the baguette with its
address as T. It also gave the name of a person to speak to. It said that firm B had been informed of
the incident and an attempt was being made to clarify any claims with that establishment. The
claimant's lawyer approached firm B claiming damages from it. The insurance broker for firm B got in
touch saying that the matter had been passed on to the insurers. The third-party insurers for firm B
contacted the person acting for the claimant in a letter of January 9, 2003 and enquired once again as
to the underlying facts. The third-party insurer for firm B stated in a letter of February 11, 2003 that
firm B was only the vendor of the baguette, the subject of the complaint, and that the actual
manufacturer was firm C, so that claims should be addressed to firm C. A few days later, the
claimant's lawyer again asked the defendant and its third-party insurer to provide cover for the claim
in damages. The defendant's third-party insurer, in a letter of March 4, 2003, then forwarded a copy
of the letter from firm B in which it confirmed that the baguette had been supplied by its works
situated in the south west of France. It was also conceded that the real name of B was C and that in
this case B was to be considered a trade name.

2 The defendant buys the baguettes deep-frozen from firm B in France. The goods are delivered to
the cold store in Austria. The goods in the cold store belong to firm B and are not supplied to the
defendant's branches until called for by the defendant through a third company. Payment is not made
direct to firm B but to T. The agreement on price was concluded with firm B. Although the defendant
pays T a higher price, it then receives a credit from firm B under internal agreements on price. Firm T
is just the intermediate logician. The defendant's only involvement in relation to the baguettes that
are already 70– 80 per cent baked is to finish off the baking in the ovens at its various branches. Firm
B always represented itself to the defendant as the producer and importer of the baguettes.

3 According to the understanding of the defendant's staff, B was a “ firm” and not just a trade name.
Firm B provided the ingredients for the baguettes and also supervised their manufacture by the
outside firm of C. Firm B also entered into business contact with the defendant using only the name B
without any further description of any legal form. The defendant's staff were not aware of any C
company.

4 The claimant is now claiming damages from the defendant under the provisions of the PLA. It is still
not clear to the claimant precisely who is the producer or dealer who supplied the baguette to the
defendant. The defendant is therefore liable under s.1(2) of the PLA. The defendant did not take
sufficient care to inform the claimant of who the actual manufacturer of the goods was, of its legal
form and of its address. The name was given too late. The defendant is asking for the claim to be
dismissed essentially on the grounds that it told the claimant who the manufacturer of the product
was in the letter of July 22, 2002, namely the French *174 firm B. The defendant had also obtained
confirmation from the French manufacturer establishing its status as producer and had informed the
claimant's lawyer of this in the letter of March, 4, 2003. The fact that a French insurer might name
another producercould not be held against the defendant. It had in any event been possible to identify
the relevant company from the name firm B. The defendant had not been aware of the existence of a
firm C. Both the design of the product and the essential product features of the baguette lay within
the sphere of competence of firm B. Firm B was the manufacturer, or in any event the “ prima facie
producer” within the meaning of s.3 of the PLA. By providing its name to the injured party, the
defendant had been released from any liability within the meaning of s.1(2) of the PLA.

5 The Court of First Instance dismissed the claimant's action. It ruled that the defendant was not
liable as the manufacturer of the end product. The defendant had told the claimant that firm B was
the supplier of the defective product. It was both the manufacturer (albeit the prima facie
manufacturer within the meaning of s.3 of the PLA) as well as the defendant's supplier. A maximum
period of 17 days (excluding posting time) had elapsed between the defendant being informed of the
damage by the claimant and the defendant giving firm B as the supplier, so that meant the
information had been provided within a reasonable period within the meaning of s.1(2) of the PLA.
Admittedly, however, the establishment's legal form had not been stated. The subsequent naming of
a party further up the supply chain did not, in principle, release a dealer from liability. However, it
was only the legal form of the party further up the supply chain that had been given to the claimant
late, that was to say not until the letter of February 11, 2003, but this had not caused the claimant
any disadvantage. The fact that the supplier named by the dealer did itself deny liability was
irrelevant. The defendant had fulfilled its obligation under s.1(2) of the PLA in good time.

6 The Appeal Court set aside the judgment and referred the case back to the Court of First Instance
 for a new hearing and ruling. On the legal side, it came to the conclusion that the defendant was not
to be considered the manufacturer within the meaning of s.3 of the PLA because it had produced
neither the end product nor the basic materials or part of the product. However, it held the defendant
liable under s.1(2) of the PLA. Admittedly, the name of firm B stated in the letter of July 22, 2002 had
been provided in good time and within a reasonable period, but it had been inadequate in substance
because it had not stated the legal form of the establishment. It must be possible to clearly identify
the establishment so that no further enquiries are required. Without knowing the form of the
undertaking, it was not possible for the claimant to lodge a successful claim in the courts without
making further enquiries. It could not be said that the legal form of the undertaking had been made
known by the defendant at a later date simply because the letter of February 11, 2003 was not sent
by the defendant but by the third-party insurers for firm B. It was for the dealer to prove that the
delay in providing the information had not disadvantaged the injured party. The defendant had not
even attempted to adduce such proof. It could, however, be refuted by the fact that the claimant's
lawyer had written a claim letter that resulted in costs being incurred even before that information
was provided. Apart from this, however, it is not possible to determine from the case file whether any
S.A. B, that is to say a French limited *175 company with that name, exists at all. However, it would
not be possible to extend the proceedings on those grounds because even if such a company should
exist its name had been given to the claimant too late. As the defendant should be held liable the
action that had previously been confined to the question of liability should be extended to cover
quantum.

7 The Appeal Court ruled that leave should be given to appeal to the Supreme Court because there
was no Supreme Court case law available on the question of whether or not failure to make known
the legal form of the party above the dealer in the supply chain is prejudicial to a decision on liability
under s.1(2) of the PLA.

8 The defendant has appealed against that ruling, asking for the judgment at first instance to be
restored or, alternatively, for the judgment setting it aside to be itself set aside without any
replacement and for the matter to be referred back to the Court of Appeal for a new ruling.
9 The claimant is asking for the appeal to be dismissed.

Legal argument

10 The appeal is admissible but unfounded. If, as a result of a product defect, a person should be
killed, should sustain personal injury or ill health or if a different physical item should be damaged by
the product, the party liable to make good the loss if it is not possible to determine the manufacturer,
or— in the case of imported products— the importer is the undertaking that brought the product onto
the market if it does not within a reasonable period of time give the injured party the name of the
manufacturer, or— in the case of imported products— of the importer, or of the person that supplied
it with the product ( s.1(2) of the PLA).

11 In the present case, which concerns countries within the EEA (see Fitz/Grau, PHG2, s.1, para.4),
the issue in dispute is whether the defendant fulfilled its obligation to name the manufacturer,
importer or party that supplied it with the product within a reasonable period of time. The period
begins to run when claims in damages are brought against the supplier if it is possible for the dealer
to understand from the claim letter that the injured party is (also) making claims in damages under
the Product Liability Act (2 Ob 240/99d, 6 Ob 272/03y). It is not necessary for the injured party to
specifically ask the dealer to state the name of the manufacturer, importer or sub-supplier (6 Ob
272/03y).

12 Even though the claimant had therefore not expressly based his claim on liability under the PLA in
his claim letter to the defendant, his claim letter had nevertheless been understood both by the
defendant and by its third-party insurer to mean that claims in damages were being made under the
Product Liability Act. The reasonable period of time stated in s.1(2) of the PLA therefore began to run
on the date of that letter.

13 The length of that period is not precisely stipulated by statute. Those Member States that have
dealt with this matter differently and set a particular period of time have chosen a period of between
one month and three months (see Welser/Rabl, Kommentar zum Produkthaftungsgesetz, para.64).
The Supreme Court has already ruled that the reasonable nature of a period within which information
has to be given is to be governed by the particular circumstances of the individual case and is to be
assessed, in particular, according to the type of product, the place of establishment of the party with
primary liability or of the sub-supplier and the *176 number of enquiries and queries that have to be
made by the dealer under the obligation to provide the information (2 Ob 240/99d and further
references).
14 According to the court's findings, the defendant replied to the claimant's claim letter of July 4,
2002 in a letter of July 22, 2002 in which it gave the name of the manufacturer of the product as firm
B together with its address. There cannot be any doubt that this information must be considered to
have been given in good time. The question at issue here, however, is whether the content of that
information was sufficient to fulfil the obligation under s.1(2) of the PLA because the information (just
in its external form) cannot have been complete because the name of the firm did not include any
indication of its legal form.

15 The content of that information must at least include the name and address of the manufacturer,
importer or sub-supplier, so that the details are sufficient for legal action to be brought (Welser/Rabl,
cited above, para.68; Rabl, Die Haftung des Händlers nach dem Produkthaftungsgesetz in JBl 1999,
p.506 et seq.). The injured party must not have to make any other subsequent enquiries (Preslmayr,
Handbuch der Produkthaftung, p.35). If one proceeds on the basis of the objective of the provision,
which is to make it easier for an injured party to obtain damages (see 7 Ob 581/92) then the details
appropriate to bringing a claim must, of course, extend to a full and precise indication of the name of
the firm, including details of the legal form of the establishment (see Welser/Rabl, cited above). Only
in this way is it possible to ensure that, on the one hand, the establishment is clearly and sufficiently
identified and, on the other, that it is possible to bring legal action against that establishment without
any further enquiries being required by the injured party. The details of firm B do not meet those
requirements as the precise name of the firm is not immediately apparent in the absence of any
details of its legal form. The defendant cannot be relieved of its obligation to give that information by
saying that it allegedly does not have any more details of the establishment than those that it has
passed on. It concludes legal transactions with a contracting party whose precise company name it
does not know on its own commercial responsibility and at its own risk. It cannot, however, shift that
risk onto the injured party.

16 It took around seven months from the beginning of the period for the provision of that information
for the legal form of firm B to be stated— and this was not even stated by the defendant itself but by
a French company; this must be considered too late (see 3 Ob 107/01h, where a period of more than
four months after a claim was first made was definitely found to be too long). Furthermore, the
information provided in the letter from firm B passed on by the defendant's third- party insurer on
March 4, 2003 was weaker in that it said that B was a trade name and that the real name of B was C.
The defendant's arguments must therefore be answered in this context by pointing out that the
claimant has already included in his action both the claim that the name of the manufacturer,
importer or sub-supplier was incomplete and that the name was given too late.

17 As the defendant has not therefore fulfilled its obligation to give the name of the manufacturer,
importer or sub-supplier it must be held liable under s.1(2) of the PLA as the establishment that
brought the product onto the market.
18 The defendant's appeal therefore proves unfounded.

19 Costs reserved under s.52 of the ZPO [ Code of Civil Procedure]. *177
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