BGHZ 69, 82 II. Civil Senate (II ZR 52/75)
28 February 1977
Professor B.S. Markesinis
K. Lipstein

The plaintiff, in the course of current business transactions delivered limestone to the building firm GmbH, until the latter was declared bankrupt on 7 August 1973. GmbH had agreed in 1972 that the claims of the plaintiff arising from its sales should be settled by directly debiting its account, and had on 13 September 1972 given a revocable instruction to the defendant Volksbank, where it kept an account, to pay the creditor upon the receipt of its invoices and to debit its account with the defendant. It is disputed whether GmbH authorized the plaintiff in addition to collect its claims. During the period in issue here the plaintiff, who had no business relations with the defendant, lodged with the Bank für Gemeinwirtschaft, where it had a giro account, the following invoices to be collected by directly debiting the account of GmbH with the defendant: on 30 May 1973 for deliveries on 29 May amounting to DM 13,100.25; on 6 June for deliveries on 31 May amounting to DM 15,672.83; on 14 June for deliveries on 13 June amounting to DM 15,672.83; on 14 June for deliveries on 13 June amounting to DM 6016.88; on 20 June for deliveries on 19 June amounting to DM 12,835.18; and on 27 June for deliveries on 26 June amounting to DM 17,468.75. All these invoices carried the imprint: ‘The recipient of the payments holds an authorization from the debtor to collect the amounts outstanding.’ When the invoices were received by the defendant the account of GmbH was overdrawn. Therefore the defendant did not credit the plaintiff. For reasons which form the object of a dispute between the parties, the invoices remained for the time being with the defendant and were only returned on 29 June 1973 to the Bank für Gemeinwirtschaft which had submitted them. According to the plaintiff he only got to know on 4 July 1973 that the invoices had not been paid, because on this day his account with the Bank für Gemeinwirtschaft had been debited again to the amount of the invoices previously credited to his account.

In the present proceedings the plaintiff claims damages in respect of losses suffered by him in that he continued to supply goods to GmbH on 13, 19, and 26 June 1973, to the value of DM 36,321.81 which remained unpaid. The plaintiff contends that if the defendant had returned the invoices immediately on 30 May 1973, the plaintiff would have known of the failure to pay by 8 June 1973 at the latest. He would then only have made the subsequent deliveries against pre-payment.

The Court of First Instance at Osnabrück and the Court of Appeal at Oldenburg rejected the claim. Upon a second appeal by the plaintiff the judgment below was quashed and the case referred back for the following


The plaintiff in setting out the facts has shown conclusively that he has suffered damage because the defendant bank kept the invoices submitted to it for direct debit until the end of the month without taking action. If, instead, it had returned the invoices immediately, the plaintiff would have known on 8 June 1973 at the latest that no further payments could be expected. The plaintiff would then not have made the deliveries which remained unpaid for. . . . The plaintiff in asking the defendant to compensate him for this loss is also established conclusively, contrary to the views expressed by the courts below; its basis is contractual.

1. The Court of Appeal has held correctly that the plaintiff was not entitled to claim any performance by the defendant which may lead to claims for damages. No direct contractual relations are created between the creditor and the debtor’s bank as a result of direct debiting. Thus the situation is similar to that of giro proceedings. In the latter situation the fact that the transferor and the recipient of the transfer maintain giro accounts with different banks did not create a direct contractual relationship between the recipient and the bank of the transferor nor do the legal relationships between the transferor and his bank or between the individual banks constitute contracts in favour of the recipient of the transfer as a third party. The situation is no different in direct debit proceedings; they are a kind of ‘transfer in reverse’. The recipient (creditor) is only contracting with his own bank. The debtor bank, which receives the invoices for payment, only acts upon instructions which the creditor bank (or another bank interposed by it) gives in its own name within the framework of giro activities between the banks concerned (again not in favour of the creditor). The debtor, on his part, either instructs his bank in writing to credit directly invoices submitted by a particular creditor (procedure of direct crediting); as in the case of instructions to transfer money it constitutes an instruction (general in these circumstances) in the meaning of §§ 665, 675 BGB within the contract of giro between himself and his bank, with which the creditor is not concerned. Alternatively the debtor authorizes the creditor in writing to collect the payments which are due by way of debiting his account with the debtor bank (‘Procedure authorizing Collection’). Thereby, too, the creditor does not obtain a claim against the debtor bank. The procedure of direct debiting serves mainly the interest of the creditor in settling his affairs and involves additional risks for the debtor; in the light of the interests involved no reason exists for assuming that the debtor wishes to grant to the creditor more rights than he would enjoy if the payments were made by bank transfer. Finally, the Agreement between the Principal Organizations of Credit Institutions concerning the Principle of Direct Debiting [references] only creates rights and duties between the credit institutions involved. Contractual claims by clients of banks for performance by the banks concerned are not to be derived from this Agreement according to Part IV no. 1 of the Agreement itself. Contrary to some other legal problems arising from the procedure of direct debiting this represents essentially the general opinion [references].

2. The plaintiff’s claim for damages is, however, presented conclusively from the point of view that a protective duty has been violated. It is to be derived in favour of the creditor of the direct debit from the legal relationship arising between the banks involved in carrying out the procedure of direct debit.

Claims for damages arising from a violation of a protective duty can arise in general if a legal relationship between two parties is not sufficient to fulfil the requirements of § 328 BGB, but where the inclusion of certain third parties in its protective sphere is indicated according to good faith by the purpose of the contract and in view of the apparent effect upon them of the contractual performance. In order to avoid a flood of claims of this kind to an incalculable extent and to establish limits beyond which the protection of third parties is restricted to the law of tort, the practice of the courts has stated repeatedly that such an inclusion of third parties can normally be considered only if the internal relationship between the creditor and the debtor discloses aspects of a personal law character and shows that the creditor acts on behalf of a third party for whom he shares responsibility and to whom he owes a duty of care. In so far as characteristics of a personal law nature are thus required, the principles developed in the light of individual agreements as to what should apply according to good faith, are unnecessarily narrow where—as in the present case—bulk transactions of a certain type are in issue which follow a uniformly practised procedure provided on a general scale for legal transactions based upon the confidence that they will be settled properly and with due regard for the interests involved. In these circumstances the inclusion of third parties in the protective sphere of the contractual relations in issue may be possible and indicated according to good faith, if the mechanism entails for the third party who employs it certain risks inherent in it and if the participants charged with handling the mechanism can be called upon without further discussion to keep these risks down. Such is the case in so far as in direct debit proceedings the debtor bank must return invoices because the payments cannot be made in the absence of funds. According to the Agreement of the Banks concerning direct debits, invoices exceeding DM 1000 not met by payment must be returned together with a notice of dishonour either on the same day to the first payor (the creditor’s bank) or latest on the second working day by the reverse process of claiming payment from the first payor, accompanied by a notification by telegram, telephone, or telex (Part II no. 1 para. 2). This solution may have been adopted primarily in the interest of the creditor bank concerned. When the invoices are submitted to it, it credits the creditor’s account with the amount to be debited (subject to a proviso) and normally allows the creditor to dispose of it. Therefore it runs the risk of losing that sum when the invoices are not honoured if the customer has disposed of the amount in the meantime and is no longer able to repay it. Consequently the creditor bank has an interest that the ‘critical’ interval between crediting the amount and a possible failure to honour the invoices is kept short; the debtor bank should therefore immediately provide the necessary information by returning the dishonoured invoices or in some other way, on the strength of which the creditor can be debited again. The interest of the creditor is, however, involved to an even greater extent since he issued the instruction to collect the debt. Firstly, he will be interested quite generally, having regard to his business arrangements, not to be surprised by a re-debiting; instead he wishes to be informed in good time that the amount credited to him provisionally on the strength of the invoices is not at his disposal in reality. Secondly, if he employs the procedure of direct debiting for the purpose of collecting outstanding monies, he will normally be engaged in current business relations with the debtor. If these relations extend over a longer period he has a considerable interest which goes beyond collecting whatever amount may have fallen due, to receive early notice of any difficulties in the operation of these relations. The fact that invoices are not honoured is often an alarm signal that the debtor is in payment difficulties. If the creditor is not notified in time but remains ignorant because the invoices are not dealt with, he will continue the business relationship in good faith and will be prevented, to his detriment, from discontinuing them or from continuing them subject to the usual measures of security. While not sharing an identical interest, the creditor bank and the creditor nevertheless share what is at least an equal interest, based on a similarity of risks, in the immediate return of unpaid invoices after having received and examined them, or in immediate notification. Every bank if interposed as the creditor’s bank, must protect this interest of the creditor as if it were its own in relation to all other participating banks, having regard to the contractual fiduciary relationship with its own customer, since every bank acts from case to case either as the creditor or the debtor bank in the many proceedings of direct debiting; all other banks are aware of this and treat it as a matter of course. For these special reasons and because legal relationships rely upon the observance of the practice of the banks confirmed by the Agreement on Direct Debits, the duty to return dishonoured invoices constitutes not only a contractual obligation of the debtor bank towards the creditor bank which was created between the banks themselves in virtue of the Agreement, but also a protective obligation of the debtor bank, based on good faith, in favour of the particular creditor claiming a direct debit. In individual cases where the creditor bank sends invoices to the debtor bank direct this protective duty is based on the legal relationship between the two banks which is created in respect of the individual direct debit on the basis of the giro contract. If, however, additional banks are interposed in carrying out direct debiting procedures between the creditor bank and the debtor bank, this protective duty is based upon the legal relationship between the bank which is the last to be interposed and the debtor bank. The reason is that interposed banks, too, are bound, having regard to the chain of contractual relations which leads back to the creditor bank, to follow through to the debtor bank the obligation of the creditor bank to protect the interests of the creditor. From this follows naturally that the duty of protection incumbent upon the debtor bank for the benefit of the creditor of the direct debit is not excluded by Part IV no. 1 of the Agreement on Direct Debits, contrary to the contention of the defendant, although the Agreement is intended to create ‘only rights and duties between the participating credit institutions’. The protective duty is not based upon the Agreement but on the legal relationships described above, their contractual purpose and the principle of good faith, and moreover this duty would also have to be recognized if the agreement between the banks did not exist. For the same reason the claims for damages of the creditor of the direct debit against the debtor bank are not affected by the internal special arrangement of Part IV no. 2 of the Agreement, if the protective duty has been violated.

In the present case the defendant bank, by failing to handle the invoices for a long time, has therefore violated the protective duty incumbent upon it and must compensate the plaintiff for the loss resulting the reform, unless the defendant . . . had retained the invoices with the express consent of the plaintiff’s manager . . .

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