The German Federal Supreme Court took this judgment as an opportunity to state its position on the scope of application of the contract with protective effects towards third parties once again. The judgment was based on the following set of facts: A firm G, which was not itself a party to the dispute, dealt in the business of tempering items made of steel and other metals. The tempering process took place in a so-called nitration oven. The parties to the dispute were customers of G and on one occasion the products of both parties destined for nitration were placed in G's oven at the same time. Some time after the start of the nitration process there was an explostion, which caused large sections of the oven to fly into the air. According to the plaintiff, the product delivered for nitration by the defendant was not in accordance with G's regulations and because of the explosion caused as a result the product delivered for nitration by the plaintiff were destroyed. The District Court approached at first instance allowed the plaintiff's claim to the fullest extent and assessed damages on the basis that § 823 (1) of the Civil Code applied. On an appeal by the defendant, the Appeal Court confirmed the findings of fact made by the District Court, but decided the appeal in accordance with the principles of the contract with protective effects towards third parties.
The further appeal on a point of law led to this decision being quashed and referred back to the Appeal Court. The Supreme Court in its judgment first of all rehearsed - in a passage that is well worth reading - the development of the contract with protective effects towards third parties, and stressed that it had always been a concern of the case law to avoid an endless extention of the the range of persons falling within the field of protection. In the present case there was an absence of certain decisive criteria, which previous cases had insisted must exist before a contract with protective effects towards third parties could be recognised. The plaintiff lacked the necessary closeness to the unperformed obligation because the parties had concluded independent and unrelated contracts with G, and the plaintiff had no connection at all with the defendant's principle obligation, namely payment of the agreed fee. Furthermore, the plaintiff had no need to be protected by being drawn within the field of protection of the contract between the defendant and G, because the plaintiff had its own warranty claim against G arising out of the contract entered into between G and itself.
The authors examine the decision from the point of view of German (Stoll), Swiss (Probst) and Greek (Doris) law and subject the contract with protective effects towards third parties as a legal institution to a critical evaluation.European Review of Private Law