Auto­mo­ti­ve sup­pli­ers (not) lia­ble for cus­to­mer specifications

In a judgment of 9 Octo­ber 2019 (Case No. 10 O 193/13), the Dis­trict Court of Stutt­gart dis­missed a com­plaint from a Ger­man vehic­le manu­fac­tu­rer (OEM) against its sup­pli­er. In the com­plaint, the OEM alle­ged cos­ts in the hundreds of mil­li­ons (inclu­ding inte­rest) for exten­si­ve reme­di­al mea­su­res as a result of a defec­ti­ve part from the sup­pli­er in ques­ti­on. The com­plaint was dis­missed by the court in its enti­re­ty, fin­ding that the defect in ques­ti­on was attri­bu­ta­ble to the OEM’s spe­ci­fi­ca­ti­ons and that even a spe­cia­li­zed sup­pli­er was not gene­ral­ly lia­ble for its customer’s specifications.


As is the typi­cal prac­ti­ce in the auto­mo­ti­ve indus­try, the sup­pli­er first deve­lo­ped the part and was then award­ed a con­tract from the OEM to sup­p­ly the part in bulk. The part in ques­ti­on was a coo­lant out­let con­nec­tor, which was to be atta­ched to the char­ge air dis­tri­bu­tor using flan­ges and two screws for use in the OEM vehic­les as a stan­dard feature.

But the inte­gri­ty of this design began to fail after the vehic­les were ope­ra­ted for some time, resul­ting in coo­lant leaks and engi­ne fail­ure. In the cour­se of the court pro­cee­dings, an expert deter­mi­ned that the leaks can be attri­bu­ted to the way in which the part was desi­gned (in par­ti­cu­lar, that it used two screws ins­tead of three).

The court’s assessment

The court made two points:

  1. The court ack­now­led­ged that the supplier’s design was not sui­ta­ble for the inten­ded use, as the con­nec­tion was not suf­fi­ci­ent­ly tight, so that the part was defec­ti­ve. Howe­ver, the court poin­ted out that this ina­de­quacy can be ascri­bed to the OEM’s own spe­ci­fi­ca­ti­ons, which requi­red two screws rather than three. The court the­r­e­fo­re adopted the argu­ment made by the expert that the OEM’s spe­ci­fi­ca­ti­ons pre­sen­ted an ina­de­qua­te over­all con­cept. As a result, the court appli­ed a prin­ci­ple ori­gi­na­ting in the law gover­ning con­tracts for work and ser­vices, under which a con­trac­tor is not lia­ble for defects which are attri­bu­ta­ble to the customer’s erro­n­eous ins­truc­tions or spe­ci­fi­ca­ti­ons (§ 645(1) of the Civil Code).
  2. The court also found that the sup­pli­er did not breach its duties of inspec­tion and noti­fi­ca­ti­on when it fai­led to point out to the OEM in advan­ce that its spe­ci­fi­ca­ti­ons were erro­n­eous. While con­trac­tors are sub­ject to such duties of inspec­tion and noti­fi­ca­ti­on in accordance with § 645(1) of the Civil Code, tho­se duties can­not be brea­ched unless it is evi­dent to the con­trac­tor that the spe­ci­fi­ca­ti­ons were erro­n­eous. The ques­ti­on as to whe­ther this was evi­dent is to be deter­mi­ned on a case-by-case basis. But as a gene­ral rule, the grea­ter the customer’s tech­ni­cal exper­ti­se, the more the con­trac­tor can rely on the fact that the customer’s spe­ci­fi­ca­ti­ons are not erroneous.

Even though the sup­pli­er had spe­cia­li­zed know­ledge of its own pro­ducts, the court ruled that it was jus­ti­fied in rely­ing on the OEM’s spe­ci­fi­ca­ti­ons in the pre­sent case, as a cus­to­mer with a high degree of tech­ni­cal exper­ti­se, so that the sup­pli­er was only requi­red to inspect and report obvious defects. The court found that a two-screw con­nec­tion was not an obvious defect, sin­ce no more sui­ta­ble type of con­nec­tion was evi­dent e.g. from a DIN stan­dard or any other gene­ral­ly accept­ed engi­nee­ring standard.

Prac­ti­cal consequences

This judgment from the Dis­trict Court of Stutt­gart, which is alre­a­dy final and bin­ding, is one of the first judgments in the auto­mo­ti­ve indus­try deal­ing with the ques­ti­on of lia­bi­li­ty for cus­to­mer spe­ci­fi­ca­ti­ons of this kind, and it is a wel­co­me deve­lo­p­ment from the view­point of sup­pli­ers. After all, the stan­dard prac­ti­ce is that even high­ly spe­cia­li­zed sup­pli­ers have to meet detail­ed spe­ci­fi­ca­ti­ons from OEMs which can only be revi­sed after a leng­thy appr­oval pro­cess, if at all. Moreo­ver, sup­pli­ers often do not have access to all the data they would need to ful­ly eva­lua­te tho­se specifications.

The judgment may also have signi­fi­can­ce in case of an arran­ge­ment which is com­mon in the auto­mo­ti­ve indus­try, in which sup­pli­ers are requi­red to use sub-suppliers which are sel­ec­ted in advan­ce and pre­scri­bed by the OEM (direc­ted part sup­pli­ers). If a sup­pli­er places orders with a direc­ted part sup­pli­er and uses its pro­ducts, this may be view­ed as adhe­rence to the OEM’s spe­ci­fi­ca­ti­ons. As a result, the sup­pli­er may be able to deny lia­bi­li­ty in cases whe­re the design and/or pro­ducts in ques­ti­on are defec­ti­ve, on the grounds that it was only adhe­ring to the customer’s specifications.

[May 2021]


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