Under German law, liability for personal injury and property damage caused by defective products essentially comprises three key areas: strict liability under the Product Liability Act (ProdHaftG), tort liability under Sections 823 et seq of the German Civil Code (BGB), and contractual liability under Sections 280 et seq of the German Civil Code (BGB). In addition, there are specific statutory grounds for strict liability, for example in pharmaceutical or nuclear law.

The most important basis for claims independent of fault is the Product Liability Act, which is based on the European Product Liability Directive (Directive 85/374/EC). According to this, the manufacturer is liable if a product has a defect within the meaning of Section 3 of the Product Liability Act, ie does not offer the safety that can reasonably be expected. Fault is not required; proof of defect, damage and causality is sufficient. Compensation is available for personal injury as well as damage to other items used privately (subject to a €500 excess). The manufacturer can only discharge itself of liability under strict conditions (eg development risk). On 23 October 2024, the new Product Liability Directive (Directive 2024/2853/EU) was adopted, which must be transposed into national law by 9 December 2026 at the latest. In Germany, a draft implementation act is currently going through the legislative process, which forms the basis for the information in this questionnaire. According to this, liability will be extended and the risk of successful claims by injured parties will be significantly increased.

In contrast, tort liability under Section 823(1) of the German Civil Code (BGB) is fault-based. It requires intent or negligence and covers, in particular, defects in design, manufacture, instructions and product monitoring. However, the burden of proof is shifted in favour of the injured party, particularly with regard to organisational negligence. In addition, Section 823(2) of the BGB may apply in the event of a breach of a protective statute (eg product safety regulations). Section 826 of the BGB covers intentional tortious harm contrary to good morals and plays a very limited role in practice. Finally, contractual liability may apply, particularly under contract law via Sections 437 no. 3, 280 et seq of the BGB. This is generally fault-based; however, a statutory presumption of fault applies (Section 280(1) sentence 2 BGB). Contractual claims are limited to the respective contracting parties (or third parties involved). They are generally of minor importance in product liability claims.

In summary, only liability under the Product Liability Act – as well as under specific special laws – is strict liability; tortious and contractual claims generally require fault.

The concept of a ‘product’ is not uniformly regulated under German liability law. In contract law, traditional sales law applies to physical goods. Special provisions apply to digital content and software. The warranty provisions applicable in these cases differ in substance from those governing the warranty for goods. For example, subjective needs or requirements are also relevant here. If and to the extent that property damage or personal injury occurs and there is fault, the seller is liable for this. Under the Product Liability Act, a ‘product’ is defined by law as any tangible item as well as electricity. Software is not explicitly mentioned there; however, it is generally considered to be a product if it is stored on a physical data storage medium. Software delivered in purely digital form is generally not included. The Product Liability Act does not distinguish between consumer and business products; however, compensation for property damage is only available for items that are of a type ordinarily intended for private use and are mainly used privately by the injured party. The legal situation will change fundamentally with the implementation of the new Product Liability Directive. After that, software, including AI, will generally be covered as well. The same applies to raw materials (such as water). In tort liability, there is no statutory definition of a product. The placing on the market of a dangerous source is decisive. Defective software may also give rise to liability here if it infringes absolutely protected legal interests, for example in the case of software for machinery, vehicles or medical devices. There is no distinction between consumer and business products.

Product liability claims may be brought by both natural persons and legal entities (eg enterprises) where and to the extent that a relevant injury to a person or damage to property has been caused by a product defect. So-called collective actions under the Representative Actions Directive (Directive 2020/1828) are also possible, meaning that claims may be brought collectively on behalf of several injured parties. However, certain restrictions and procedural requirements apply here, which have so far limited the use of this instrument in practice (see question 28 for further details). Compensation is due for damage to persons or property caused directly by the defective product. Immaterial damage cannot generally be claimed, except for compensation for pain and suffering in cases of liability under tort law, although the amount of such compensation is strictly limited in Germany. Pure financial losses (such as loss of profit) may be compensable under warranty law under certain conditions. If a person is killed by a defective product, the resulting claims of the deceased may be asserted by their legal successors (eg heirs). It is also conceivable that surviving relatives may have their own claims, for example due to the death of a family member. In this regard, the Product Liability Act provides, for instance, that dependants may have their own claim for reimbursement of the notional maintenance during the period of the deceased’s notional maintenance obligation, and that close relatives may be entitled to compensation for the mental suffering incurred.

The compensation for damages under product liability law varies considerably based on the claim. Under the Product Liability Act, personal injury is fully compensable, including immaterial damages (compensation for pain and suffering). This covers medical expenses, loss of earnings and loss of financial support for dependants. However, damage to property is only compensable if another item used for private purposes is damaged; a deductible of EUR 500 applies. Damage to the defective product itself, as well as purely financial losses (eg loss of production without damage to property), are not eligible for compensation. Here too, changes will be introduced by the new Product Liability Directive. In future, compensation will also be available for mental health impairments as well as the destruction or damage to data. The existing excesses and liability limits will be eliminated.

Tort liability of the manufacturer also covers personal injury and property damage, without restriction to goods used for private purposes. Compensation for pain and suffering is possible in the event of injury to the body or health. Pure monetary losses are generally not compensable. Exceptions apply to violations of specific protective provisions (Section 823(2) of the German Civil Code) or intentional tortious harm contrary to good morals (Section 826 of the German Civil Code), where the underlying protective provision is intended to protect financial interests. Product safety regulations do not normally provide for the protection of property, and therefore no claim for compensation for financial loss arises in the event of breaches. Under warranty law, in addition to personal injury and damage to property, purely financial losses, including loss of profit, are compensable provided there has been a breach of duties. Immaterial damages are only compensable in the event of personal injury or damage to health.

Under German law, whether a product is ‘defective’ under product liability law is not determined by a technical defect in its narrow sense, but by a safety defect. Crucial is whether the product offers the level of safety that a reasonable user may expect in the specific situation.

Under the Product Liability Act, a product is defective if, due to its design, manufacture or the absence of, or inadequacy in, instructions, it creates an unacceptable risk to life, health or certain material goods. Three types of defects are typical: design defects (the product is inherently too dangerous in its conception), manufacturing defects (products deviate from the planned safe production run in a defective way) and instruction defects (inadequate user instructions, warnings or hazard communication). The benchmark is the safety expectations that reasonable users in the relevant target group would have, considering the type of product, its price, its technical capabilities, product standards and regulatory requirements.

In tort liability for manufacturers, the concept of defect is essentially the same: here the issue is also whether the manufacturer has fulfilled its duty of care. However, there is an additional important potential cause of liability: if a manufacturer fails to monitor its products in the field with regard to unknown or neglected safety risks, or if it takes no or insufficient measures (eg no repair or recall) in the event of safety defects identified retrospectively, this may constitute a breach of duty giving rise to liability for loss and damage. This also applies if the product complied with statutory safety requirements at the time of placing it on the market, but these requirements did not guarantee a sufficient level of safety. An example of this are so-called development risks, which were not recognisable at the time of placing the product on the market based on the available state of science and technology.

In warranty law, ‘defect’ has a different meaning:

Here, it is sufficient that the delivered product deviates from the agreed quality or is not fit for its ordinary or agreed purpose. A product may therefore be defective under warranty law without being ‘dangerous’ in the sense of product liability law (eg colour variations, malfunctions with no safety implications).

Conversely, a safety-related defect may exist even though the product complies with the characteristics specified in the contract. Under the law governing contracts for work and services, a defect exists if the work does not possess the quality or function agreed in the contract or is not fit for the intended or usual purpose, and fails to meet the standard of quality usual for comparable works.

Safety-related aspects constitute a defect if the work does not provide the level of safety that the customer may reasonably expect given the nature, purpose and circumstances. This applies in particular where recognised rules of technology, relevant safety standards or official requirements are not met, or where the design results in unreasonable risks of accident, health or fire.

Based on the legal situation expected from December 2026 following the implementation of the new Product Liability Directive, the definition of a defect will be expanded. A defect will no longer only be present if a product fails to provide the safety that a person can expect, but also if the safety requirements stipulated by Union or national law are not met. In this regard, the Directive refers by way of example to various circumstances and aspects that are new compared to the previous legal situation. For instance, the ability to learn or acquire further functions after the product has been placed on the market or put into service, and the requirements for product safety, may form the basis for a defect. Whereas under the previous legal situation it was the date of placing on the market that was decisive for identifying the presence of a defect, subsequent changes to a product may now also result in a legally relevant defect if the manufacturer retains control over the product after that date. This covers, for example, updates, upgrades or other subsequent ways in which the manufacturer can influence a product that has been placed on the market. Liability for defects may also arise if, despite the technical and practical possibility of doing so, no update or upgrade is subsequently carried out for products.

Violations of regulatory safety requirements under national and EU product safety law are of fundamental and increasingly important significance for all bases of liability (see also Question 7). This concerns, for example, requirements relating to electrical safety (Low Voltage Directive), machinery safety, the safety of medicinal products and medical devices, and safety requirements for consumer products under the EU General Product Safety Regulation (GPSR). In this respect, the product regulation that has been significantly expanded and tightened in recent years – ie the increased safety requirements for the placing on the market of nearly all types of products – is a major risk factor for manufacturer liability. This is because breaches of safety-related regulations lead most often to product defects under the Product Liability Act (see question 6 for further details), tort liability of the manufacturer and warranty claims.

To prove a product defect under the Product Liability Act, injured parties must generally provide evidence of three points: firstly, that the product has a safety defect; secondly, that they have suffered compensable damage (personal injury or specific property damage); and thirdly, that there is a causal link between the product defect and the damage. The injured party does not need to prove where in the manufacturing process the defect arose or which specific component failed; it is sufficient that the product’s unsafe condition has resulted in the damage. However, as experience shows, proving this in complex technical products is a difficult task and often requires expert reports and internal company documentation.

In tort liability, the burden of proof for the injured party is stricter: in addition to defect, damage and causality, they must generally also demonstrate wrongful conduct on the part of the manufacturer, ie a breach of design, production, instruction or product monitoring obligations. In practice, judicial easing of the burden of proof and presumed facts often helps, for example when there are serious safety breaches or official recalls. Nevertheless, from the claimant’s perspective, tort liability is generally more difficult to enforce than strict liability.

Under warranty law, proof of a defect is usually provided by establishing that the product does not operate or perform as contractually agreed or as is customary in the industry. The buyer does not need to demonstrate the cause of the defect; it is sufficient that the actual condition deviates from the required performance. Depending on the circumstances, statutory presumptions may even shift the burden of proof to the seller for a certain period after delivery, a point that must be noted particularly in the sale of goods to consumers.

With the new Product Liability Directive and the proposed new Product Liability Act, the situation for manufacturers is becoming more challenging, particularly regarding the burden of proof for defects. The concept of a defect is being more closely linked to product safety law: non-compliance with mandatory safety requirements, safety-related cybersecurity deficiencies, regulatory action (eg recall orders) and the handling of software updates or associated services are explicitly listed as material circumstances. Under the proposed law, there will also be statutory presumptions: for instance, it is to be presumed that a product is defective if it contravenes certain product safety requirements, if there is an obvious malfunction during foreseeable use, or if the manufacturer fails to disclose relevant documents despite a court order. Furthermore, in the case of products that are particularly complex from a technical or scientific perspective, proof of merely ‘probable’ defectiveness and causality may already be sufficient to trigger legal presumptions in favour of the claimant. Companies are thus effectively being pushed much more strongly into the role of actively proving the absence of defects and causality, whilst the injured party benefits from legal presumptions and de facto discovery mechanisms.

Courts always assess a product’s defectiveness from the perspective of a reasonable user’s safety expectations in the specific situation. Several factors are taken into account. Courts evaluate the product’s design and presentation, its construction, the materials used, its technical features and workmanship, as well as its packaging, accompanying leaflet, instructions for use, warning notices and marketing claims. Sensational advertising (‘particularly safe’, ‘absolutely risk-free’) can raise expectations, whilst clear, comprehensible and well-placed warnings can limit expectations – provided they are clear to the target group. Courts also consider the foreseeable use of the product. Not only the intended use is relevant, but also the misuse that can reasonably be expected. Conversely, completely non-typical, excessive misuse does not need to be covered.

Another factor is the state of science and technology at the time of placing the product on the market. Courts examine which safety solutions were technically feasible and economically reasonable, which industry standards and technical standards existed, and how competing products were designed. It is important to note that a product may be deemed defective despite compliance with a technical standard (EN, ISO, IEC, etc) if the standard falls short of the generally accepted safety level or if the state of the art has since progressed.

In terms of tort liability, the court also examines compliance with safety obligations: Was there adequate quality management in production? Were random checks and final inspections carried out? Were known risks monitored, customer complaints evaluated, safety information updated following market launch, and recalls organised in a timely and effective manner? Failures in product monitoring and recall organisation can constitute an independent ground for liability, even if the original design was free of defects (see question 5 for further details).

Regulatory requirements and product safety regulations are particularly significant for judicial assessment. In practice, courts rely heavily on relevant EU regulations, directives, national product safety laws, harmonised standards, as well as official guidelines and approvals. A breach of mandatory safety regulations is a strong indication of a product defect and a breach of duty. If a product fails to meet basic safety requirements or is placed on the market without the necessary conformity assessment or CE marking, courts frequently assume safety deficiencies. Product safety law also plays a role in contractual warranty: a product that infringes mandatory safety regulations is regularly also deemed to be defective under the contract.

Under the new Product Liability Directive and the planned new Product Liability Act, the significance of regulatory breaches is explicitly codified and strengthened by presumptions of evidence. According to the current draft bill, when checking for defects, particular account must be taken of product safety requirements, including cybersecurity provisions, as well as regulatory measures such as recall orders. A breach of mandatory safety requirements designed specifically to protect against the type of damage that has occurred gives rise to a legal presumption that the product is defective. Likewise, a defect is presumed if an obvious malfunction occurs during foreseeable use, or if a manufacturer fails to disclose essential documents despite a court order.

Under strict liability for defective products (Product Liability Act), the manufacturer of the defective product is liable in the first instance. A ‘manufacturer’ is not only the actual producer, but also anyone who ‘presents themselves’ as the manufacturer through a brand name or company logo, as well as an importer who brings a product into the EU from a third country. If the manufacturer cannot be identified, the supplier (eg a wholesaler) may be held liable in the same way as a manufacturer if they fail to identify the actual manufacturer to the injured party in good time. Furthermore, the manufacturer of a safety-relevant component (eg software module, part) that caused the defect may be liable in addition to the end-product manufacturer.

There is also the tort law liability of the producer. Here, in addition to the manufacturer, other companies involved in the production or placing on the market process may be held liable, such as contract manufacturers, system integrators or distributors acting on their own responsibility, if they breach their duty to ensure product safety (eg lack of instructions, inadequate final inspection or failure to recall). A distributor may also be liable in tort if they ignore apparent safety risks, continue to distribute products despite official warnings, or create their own safety hazards (eg improper storage or assembly). This liability requires a culpable breach of duty in each case.

Under warranty law, the buyer’s direct contractual partner (seller, supplier, contractor) is generally liable for defects in the goods delivered or the work performed. They may, in turn, seek recourse internally from their upstream supplier or the manufacturer. This creates levels of liability within the supply chain that are subject to recourse, which can be structured contractually – for example, through indemnity clauses, liability caps, shortened limitation periods or arrangements regarding the burden of proof.

If, under strict product liability and tort liability, more than one company is responsible for the same damage – for example, a manufacturer and a component manufacturer, or a manufacturer and an importer – they are jointly and severally liable to the injured party. The injured party may claim the full amount of damages from any of the parties involved; payment need only be made once in total. Internally, compensation is then apportioned according to the degree of causation and, where applicable, in accordance with contractual agreements. Typically, the party whose contribution to the defect and to the risk is greater bears the larger share; contractual recourse agreements (eg in framework supply contracts) may modify this statutory allocation.

The future legal situation under the new Product Liability Directive and the planned new Product Liability Act significantly broadens the group of potentially liable parties. Under the draft implementing legislation, under certain conditions, liability may extend beyond the original manufacturer to include (i) a party who has substantially altered a product, (ii) the importer, (iii) an EU representative appointed by the manufacturer, (iv) a fulfilment service provider, as well as (v) suppliers and certain providers of online platforms, for example, where the actual manufacturer is based outside the EU or cannot be located. Where more than one of these parties is involved, they are jointly and severally liable; the internal allocation of liability is based on their respective contribution to causing the damage. Furthermore, component manufacturers and providers of related digital services are more closely involved if their component or service has contributed to the defect.

Under the current Product Liability Act, manufacturers may, in particular, rely on statutory defences. Possible defences include, for example, arguing that the product was not placed on the market by them at all (for instance, in cases of theft, product piracy or counterfeiting), that the alleged defect did not exist at the time the product was placed on the market, or that the product was not manufactured or distributed in the course of a commercial activity. In addition, there is the so-called ‘development risk defence’, whereby a defect was objectively unforeseeable given the state of science and technology at the time, as well as defences available to component manufacturers if the defect stems from the design of the end product or from instructions provided by the end manufacturer. Distributors and importers may – within tight limits – rely on the fact that they merely act as intermediaries and avoid their own liability, for example by naming the manufacturer or supplier. Furthermore, in the case of property damage, a deductible of EUR 500 applies, and a maximum liability limit of EUR 85 million for personal injury. In addition, general defences such as contributory negligence on the part of the injured party, serious misuse, unauthorised modifications to the product, third-party causes and the statute of limitations can play a significant role.

Under the future legal framework based on the new Product Liability Directive and the implementing legislation, the basic structures of strict liability for product liability will remain in place, but will be significantly refined, particularly regarding digital products. Defences may still be based on the absence of placing the product on the market, compliance with mandatory legal provisions, or development risk. At the same time, the assessment of the relevant point in time is shifting: if the manufacturer retains control over the product after it has been placed on the market – for example, through updates, associated services or remote access – they will no longer be able to rely on the defence that the defect was not yet present at that time for defects that fall within this control. For digital components, software updates, omitted safety-related updates or significant subsequent product changes under the manufacturer’s control, traditional defences are partially no longer available. Furthermore, there will no longer be any self-retentions or liability limits. In addition, disclosure obligations and legal presumptions in favour of the injured party are being introduced: If a court order for disclosure is not complied with, or if breaches of binding product safety requirements or obvious malfunctions are established, a product defect may be presumed to exist; under certain conditions, defects and causality are also presumed if the technical complexity makes it almost impossible to provide full proof. Defences can only be effective if the company documents its development, testing, update and product monitoring processes and discloses this documentation in a limited but nevertheless sufficient manner during the proceedings.

For defences in torts claims and warranty, see questions 17 and 24.

Across all grounds for claims, companies can ultimately always assess whether they can rely on contractual or statutory exclusions, liability caps, deductibles, lack of causation, contributory negligence, limitation periods or lack of capacity to be sued. At the same time, they should keep an eye on the internal chain of recourse: even if defences and means of defence do not hold up in external relations, suppliers, component manufacturers or service providers, for example, may be held liable in internal relations under warranty, indemnity or liability rules.

Under the Product Liability Act, claims become time-barred three years after the injured party becomes aware of the damage, the defect and the identity of the party liable for compensation. In addition, there is an absolute limitation period of ten years from the date the product was placed on the market. After this period, the claim is forfeited, even if the injured party only becomes aware of the damage at a later date.

Liability in tort on the part of the manufacturer is subject to the standard three-year limitation period starting at the end of the year in which knowledge was acquired. In addition, the tortious long-stop period of up to 30 years applies, particularly in cases of injury to life, limb or health (see question 18 for further details).

The liability under warranty law generally expires after two years; for buildings and certain building materials, the period is five years. In the law governing contracts for work and services, the corresponding periods are two and five years respectively; otherwise, the standard three-year period applies. In the B2B sector, these periods may be shortened by contract.

The government draft for the new Product Liability Act implementing the new Product Liability Directive, retains the three-year period from the date of discovery, but extends the absolute limitation period to 25 years for certain delayed health effects if proceedings could not be initiated within the 10-year period due to latency.

The same limitation and exclusion periods apply to claims brought on behalf of deceased persons (eg heirs); there is no separate, ‘special’ limitation regime for fatalities.

In Germany, there are very limited ways for companies to completely ‘exclude’ their liability, but they can manage and limit it contractually in many areas. Liability under the Product Liability Act cannot be excluded or reduced vis-à-vis the injured party through general terms and conditions or contracts, not even in B2B relationships. However, the internal allocation of economic risk within the supply chain is permissible, for example through indemnity and recourse agreements between the manufacturer, importer and distributor. With the new Product Liability Directive and the planned new Product Liability Act, the mandatory liability area is being expanded rather than reduced. The draft expressly provides that no deviation from the statutory claims arising from product liability vis-à-vis the injured party may be made to their detriment (mandatory nature).

For tort liability of producers, see Question 19; for warranty claims, see Question 23.

Under German law, claims relating to product liability and warranty law do not have a ‘purely national’ scope: It is not decisive whether the product is sold only in Germany, but rather whether German law and German courts are applicable or have jurisdiction under the rules of private international law and European rules on jurisdiction.

Under conflict of laws rules, for strict liability in product liability and tort liability, what matters is where the damage occurred, where the product was placed on the market, and where the parties have their habitual residence or registered office. Within the EU, this is essentially governed by Regulation (EC) 864/2007 on the law applicable to non-contractual obligations (‘Rome II’). Accordingly, German law may be applicable, for example, if the damage occurs in Germany or if the injured party and the party causing the damage are based in Germany, even if the product originates from abroad. Vice versa, in the case of damage occurring abroad caused by a product manufactured in Germany, foreign law may be applicable, even if the action is brought in Germany; the German court will then apply foreign product liability law.

International jurisdiction, in turn, is generally governed by Regulation (EU) 1215/2012 (‘Brussels I’, often also referred to as Brussels Ia) within the internal market. In product liability cases, the injured party can often bring a claim at the place of action (eg the manufacturer’s registered office) or the place of occurrence (where the damage occurred). This means that German courts are certainly able to rule on product liability cases with a foreign element, and conversely, foreign courts can rule on damage attributable to products manufactured in Germany.

For a successful claim under tort liability based on negligence, the claimant must, in principle, prove five points: Firstly, a protected legal interest must have been infringed, typically life, physical integrity, health or property (eg personal injury caused by the product, fire damage or damage to other property). Secondly, there must be an actual product defect, ie a safety deficiency. Thirdly, a breach of duty is required: the claimant must demonstrate that the manufacturer failed to take reasonable safety measures. This largely depends on the state of science and technology at the time the product was placed on the market. Fourthly, there must be a causal link between the product defect/breach of duty and the damage. The claimant must, in principle, prove that the damage was caused specifically by the defective product or the breach of duty, with only few exceptions, depending on the circumstances. Fifthly, fault is required, at least negligence. In the context of product liability, courts make it easier for the claimant to prove their case: if the product defect is established, it is presumed that the manufacturer has not adequately organised their operations and controls; the manufacturer must exonerate themselves by demonstrating that they have organised and monitored their operations with due care (reversal of the burden of proof regarding fault).

See questions 5, 7 and 13.

Under tort liability, the injured party is generally eligible for traditional damages, ie compensation for all reasonably incurred losses, but not ‘punitive damages’; tort liability is primarily aimed at protecting the injured party’s integrity interest. On the one hand, all material damages are recoverable: medical treatment costs, rehabilitation and care costs, loss of earnings, additional household expenses, damage to other affected items, necessary conversion costs, etc. These damages may also be claimed in respect of future losses; in the case of permanent injuries, a capitalised lump-sum compensation or a regular annuity is often an option. Secondly, non-material damages (in particular pain, impairment of the enjoyment of life, disfiguring injuries) can be compensated by means of compensation for pain and suffering. The extent of this compensation is based on the severity of the injury, the duration of the impairment, the degree of fault and the financial circumstances of the parties involved. However, it is typically significantly lower than US levels and can be predicted relatively accurately based on previous court decisions. Other possible positions include, for example, legal costs (insofar as not covered by procedural costs regulations) and pre-trial expert costs, as well as the costs of a necessary product recall or precautionary measures vis-à-vis third parties, provided these had to be borne by the injured party and are attributable to the liable party. In individual cases, liability may also include an obligation to take injunctive or remedial measures, such as the removal or securing of dangerous products. Financial losses are not recoverable, unless there has been a breach of a protective statute whose purpose is to protect the specific financial interest in question and, consequently, a claim under Section 823(2) of the German Civil Code (BGB) (see question 4).

‘Punitive damages’ or punitive compensation in the Anglo-American sense – ie payments exceeding the actual damage and serving primarily a punitive and deterrent function – are not recognised under German tort law. German courts cannot award such damages in proceedings under German law.

Nor does the new Product Liability Directive or the planned new Product Liability Act provide for a genuine system of punitive damages. Rather, the reform focuses on expanding the scope of compensable damages (in particular non-material damages, including acknowledged psychological impairments and certain data-related damages) and on easing the burden of proof in favour of injured parties, not on ´punitive damages´. Companies must therefore expect a broader and more easily enforceable liability for damages, but not US-style punitive damages awards.

When there are multiple parties liable for damage, they are generally jointly and severally liable to the injured party under tort liability. This means that each individual party may be held liable for the full amount of the damage, but the injured party may only be fully compensated once in total. Typical scenarios include, for example, the interaction between a manufacturer and a component manufacturer, a manufacturer and an importer, or a manufacturer and a company that breaches its independent instruction or warning obligations.

Internally – that is, when settling claims amongst the parties responsible – liability is then apportioned according to the contribution to the damage and the degree of fault. It is decisive to what extent the respective contribution was responsible for the damage incurred and how serious the misconduct was. The party who predominantly caused the damage or who has breached safety or organisational obligations in a particularly serious manner (such as through gross negligence) ultimately bears a larger share, up to and including full liability for the damage. In the absence of special circumstances, equal shares are often assumed.

Contractual agreements between the parties – for example, in supply or development contracts – may modify this internal allocation, for instance through indemnity clauses, liability quotas or limitations on recourse. However, such agreements have no effect vis-à-vis the injured party: they may still bring a claim against any of the jointly and severally liable parties and claim the full amount from them. The injured party has the choice of whether to bring a claim in court against only one or several of the jointly and severally liable parties. If they take legal action against all of them, they will be held jointly and severally liable; in other words, the injured party may then, at their discretion, claim the full amount of damages from any one of them. A claim against several liable parties for partial liability – for example, based on the respective degrees of causation in their internal relationship – is not possible or, given the possibility of claiming the full amount, is not reasonable.

In tort liability, the manufacturer can defend itself primarily by raising the following defences: It may dispute that there is a product defect. It will then argue that the design, manufacture, instructions and product monitoring complied with the state of the art and relevant standards, and that the product met legitimate safety expectations. Secondly, they may dispute a breach of duty and thus negligence by disclosing details of their organisation and quality management or by demonstrating that a development risk applied, ie a defect was objectively unforeseeable given the state of science and technology at the time of placing the product on the market. Thirdly, they may challenge causation, for example by arguing that the damage is attributable to other causes (improper assembly or modification, other third-party causes). Fourthly, they may invoke contributory negligence or grossly improper use by the injured party, in particular the disregard of clear warnings, operating or maintenance instructions; this leads to a reduction or, in extreme cases, the exclusion of the claim. Finally, they may raise the defence of limitation if the standard limitation period for tort claims has expired (more on this below).

In principle, claims become time-barred three years after the end of the year in which the injured party becomes aware of the damage, the material facts of the breach of duty and the identity of the (alleged) liable party or should have become aware of them had it not been for gross negligence. This period is knowledge-dependent: if the damage or the manufacturer’s liability is not reasonably apparent to the injured party, the three-year period does not begin to run. In addition, there are maximum limitation periods that are independent of knowledge. For tortious claims for damages arising from injury to life, limb, health or liberty, an absolute 30-year limitation period applies from the date of the harmful event (in this case, the placing on the market). Once this period has expired, the claim is invalidated, even if the damage is only discovered later or only becomes fully apparent later.

Liability under tort law is based on fault. It is practically impossible to completely exclude this non-contractual liability towards third parties. Even extensive liability disclaimers in B2B contracts are binding only on the contracting parties, not on third parties who have suffered loss. Internally, however, the parties may agree on who is ultimately to bear the loss, for example through indemnity clauses, liability caps or graduated recourse mechanisms (see question 16); however, this is in particular limited by the rather strict statutory provisions on general terms and conditions, which eg exclude the limitation of liability for gross negligence in standard terms. In addition, liability for intentional conduct cannot be released in advance at all, whether by standard terms or by individual agreement.

Yes. German warranty law essentially operates based on statutory ‘implied terms’, ie automatically applicable quality requirements that give rise to liability even if the contract contains no provisions to that effect. In a contract of sale, it is implicitly assumed that the goods delivered are free from material defects and defects of title. It must be of the agreed quality; in the absence of an express agreement, it must in any case be fit for its ordinary purpose and possess the quality customary for goods of this kind and which the buyer may reasonably expect. This includes, for example, functionality, a reasonable lifespan, compliance with statutory or reasonable safety requirements, adherence to advertised characteristics, suitable packaging and necessary instructions. If the goods do not meet these expectations, a defect exists – even without an express quality assurance. There is also a further ‘implied’ requirement: if the goods are not suitable for the specific intended use recognisably assumed by the buyer, they are defective if the seller was aware of this purpose and, in any event, impliedly agreed to it. The same applies under the law governing contracts for work and services: the obligation is not merely to deliver a specific design, but a functional work that fulfils the agreed or customary function. If the actual condition deviates from this, a defect exists.

In the event of a product defect, the buyer is entitled to several statutory warranty claims, which are generally asserted in sequence (‘step-by-step model’). Firstly, the buyer has a claim for subsequent performance against their direct contractual partner, ie the seller or contractor. The buyer can choose whether the defect is to be remedied (repair) or whether a defect-free item is to be supplied or a new item is to be manufactured. The seller bears the necessary costs, including transport costs and, typically, removal and installation costs. If subsequent performance fails, is refused or is unreasonable, the buyer may reduce the purchase price or withdraw from the contract. Withdrawal leads to rescission: return of the goods in exchange for a refund of the price, with compensation for any benefit derived where applicable. In the case of only minor defects, withdrawal is excluded, but a reduction in price remains possible. In addition, the buyer may claim damages provided the seller is at fault. In B2B contracts, this liability is often contractually limited; however, where such limitations are contained in standard terms, the strict statutory provisions on general terms and conditions apply, which ensure that a core area of liability generally remains, particularly for gross negligence. The claims are directed against the immediate contractual partner in the supply chain. This party may, in turn, seek recourse against its supplier or manufacturer. Separate, statutory recourse claims exist within the supply chain for this purpose.

In the event of a breach of contractual obligations (delivery of defective products or defective work under the law governing contracts for work and services), both consumers and businesses have the right to claim damages if the seller or contractor is at fault. The same basic principles apply in substance; differences exist primarily in relation to the control of general terms and conditions and, in some cases, mandatory consumer protection rules. A key principle is that the injured party should be placed in the position they would have been in had the contract been properly performed (compensation for ‘positive interest’). This includes, in particular: compensation ‘instead of performance’ – covering the loss incurred as a result of the final failure to provide a defect-free service (eg additional costs of a substitute purchase or alternative production of the work, reduction in the value of the goods, rescission plus additional financial loss). The prerequisite – with some exceptions – is an unsuccessful period for subsequent performance or the impossibility of such performance. Here, the buyer may choose between ‘minor’ (retention of the product, compensation for the difference in value) and ‘major’ damages (return of the product and compensation for the entire interest in performance). Compensation ‘in addition to performance’: Covers consequential damages and other incidental damages that cannot be remedied by subsequent performance, such as business interruption, loss of profit, damage to other items, expert and transport costs. These may generally be claimed independently of a withdrawal or ‘compensation instead of performance’. Finally, instead of damages, the creditor (eg the buyer) may also claim reimbursement of wasted expenses, such as worthless investments made in reliance on the performance of the contract.

‘Punitive damages’ in the Anglo-American sense – ie payments exceeding the actual loss and serving primarily as a penalty and deterrent – are not recognised under German warranty law. German courts cannot award such sums in proceedings under German law.

Under the law governing sales contracts or contracts for work and services, exclusions of liability in relation to consumers are strictly limited. Consumers’ statutory rights in respect of defects are, for the most part, mandatory. A general contractual exclusion or a far-reaching limitation of the warranty in general terms and conditions is usually invalid. Even a shortening of the statutory limitation period for defect claims is permissible in consumer sales only for used goods and may not result in a period of less than one year; for new goods, any shortening is void. Where permissible, the shortening must be expressly and separately agreed, with the consumer specifically informed in advance. The same formal requirements apply to any agreed deviation from the objective quality requirements for goods. Furthermore, any advance exclusion or waiver of liability for intentional conduct is void under any circumstances, whether in standard terms or by individual agreement. In standard terms, any exclusion or limitation of liability for grossly negligent conduct or for bodily injury and damage to health, regardless of the degree of fault, is equally void, as are clauses restricting certain mandatory consumer protection rights.

In a purely B2B relationship, however, there is significantly more freedom to shape the contract. Companies can limit their contractual partners’ rights in respect of defects in terms of both time and content; for example, they can agree on shortened limitation periods, limit compensation for simple negligence to typical, foreseeable damages and specific amounts, or stipulate that claims for subsequent performance are the first-line remedy. Nevertheless, also in B2B relationships, liability for intentional conduct can never be excluded in advance, and in standard terms, any exclusion or limitation of liability for gross negligence or for personal injury is void. Beyond this, standard terms cannot validly exclude or limit liability for breaches of so-called cardinal obligations, ie duties whose performance is essential to the proper execution of the contract and on which the other party may legitimately rely. The obligation to deliver products free from defects regularly qualifies as such a cardinal obligation. Accordingly, liability for breaches of such obligations may, at most, be limited – and only for simple negligence – to compensation for typical, foreseeable damages (see above); any further exclusion or limitation is invalid.

In warranty law (liability for defects under sales law and contracts for work and materials), companies may, in particular, dispute that a material defect or a defect in the work exists at all, that the defect was present at the time of the passing of risk, or that the defect is material. Defences may be raised against B2B customers if commercial law obligations to give notice of defects have not been met, for example due to late or improper notification of defects, which may result in the exclusion of warranty rights. Furthermore, companies may raise the defence of limitation and object to the disproportionate nature of certain claims for subsequent performance or damages, for instance where the customer demands only costly replacement solutions even though a more economical repair would be possible. In B2B relationships, companies may also rely on validly agreed limitations and exclusions of liability in general terms and conditions or individual contracts, such as shortened limitation periods, maximum liability limits, restrictions on rights arising from defects, or exclusions of certain consequential damages arising from defects, provided that such clauses comply with the legal limits, in particular under the provisions governing general terms and conditions.

In German civil proceedings, the disclosure of documents in product liability claims has so far been strictly limited. There is no comprehensive ‘discovery’ system. The court may only order the disclosure of specifically identified documents relevant to the decision; blanket requests for disclosure (‘all development documents from the last ten years’) are inadmissible. It is decisive what the parties substantiate in their submissions. The court must also protect trade and business secrets and may restrict the scope of disclosure accordingly (eg only extracts, redactions). In product liability proceedings, the documents that are most pertinent today are those that support or contradict the existence of defects, causality and organisational negligence: development and design documents, risk analyses, test and approval reports, QM documentation, production and traceability data, operating instructions and warnings, marketing documents, as well as materials relating to product monitoring, complaint analyses and recall documentation.

The new Product Liability Directive and the German draft implementation bill will introduce a separate disclosure regime for statutory product liability from December 2026, which goes significantly further. In future, if the claimant presents a ‘plausible’ case, the court must, upon application, order the disclosure of ‘relevant evidence’ from the manufacturer (and, conversely, from the claimant). ‘Relevant evidence’ comprises all documents – including those in electronic form – relating to defects, causation, damage, safety requirements, software updates, cybersecurity, product monitoring or recall measures. This also covers documents that must first be compiled from existing data (eg specific analyses or overviews). This disclosure is subject to the principles of necessity and proportionality. On the one hand, courts must avoid mere ‘fishing expeditions’; on the other hand, they must balance the real information asymmetry between the manufacturer and the injured party. Trade and business secrets require special protection; to this end, the court may, for example, restrict access to specific individuals, provide redacted versions, or issue confidentiality orders. Conversely, the manufacturer may also request access to documents relevant to the evidence held by the claimant. The key change lies in the sanction: If the manufacturer fails to comply with a court order for disclosure without justification, it is presumed by law that the product was defective. In cases of high technical or scientific complexity, further presumptions in favour of the claimant may also apply. This significantly shifts the procedural starting point: shortcomings in documentation and compliance will in future have a direct impact as a risk to the evidence.

In Germany, product liability and warranty litigation is typically funded on the claimant’s side through a combination of self-financing, insurance and – increasingly – external litigation funding. Companies usually finance their claims from their own resources. Commercial legal expenses insurance may also be considered, but this often leaves gaps, particularly in complex international product liability cases or where the amounts in dispute are very high. On the defendant’s side (manufacturers, importers, distributors), general liability and product liability insurance play a central role: they regularly cover both defence costs and – within the scope of the cover – the damages themselves. Consumers rely primarily on private legal expenses insurance or – where they are in need – on state legal aid. In mass litigation cases, claims are increasingly being bundled (assignment/collection models, class actions), thereby reducing the individual cost risk. Third-party funding by professional litigation funders is generally permitted and well-established in Germany. Apart from specific scenarios in collective legal protection, it is not regulated separately but is subject to general civil law rules and the code of conduct for lawyers. The financier covers court, legal and expert costs, as well as the risk of having to reimburse the opposing party’s costs; in the event of a successful outcome, they receive a percentage share of the proceeds. However, strategic and legal control of the proceedings must remain with the client or their attorney; the financing party must not effectively become the ‘master of the proceedings’. Special rules apply to collective actions brought by consumer associations: third-party funding is expressly permitted in such cases but strictly limited (eg no funding by competitors of the defendant, caps on success fees, disclosure of the funding structure to the court). The aim is to avoid conflicts of interest and abusive litigation.

In German civil proceedings, the ‘loser pays’ principle generally applies: the losing party must bear the costs of the legal proceedings, ie court costs and the necessary legal fees of the winning party. ‘Necessary’ refers in particular to the statutory lawyers’ fees under the Lawyers’ Fees Act. If a party is only partially successful, the costs are apportioned in proportion to the extent of their success and failure, or in certain circumstances are set off against each other, ie both parties bear their own costs in full. Lawyers may agree fee arrangements with their clients that exceed the statutory fees (eg hourly rates, flat fees or surcharges). However, this additional remuneration is generally not recoverable from the opposing party; as a rule, only the statutory fees are recoverable. Purely success-based or percentage-based models (‘quota litis’) are only permissible in limited, legally defined exceptional cases, such as in minor monetary claims or where the client would reasonably be deterred from pursuing legal action without a success fee.

In Germany, product liability claims cannot be brought through a US-style ‘class action’ with an opt-out provision, but they can be pursued through various forms of collective litigation. For consumers (and small businesses), the representative action under the Consumer Rights Enforcement Act has been a key instrument since 2023. Qualified consumer associations can bring remedial actions through which similar warranty claims – such as those arising from product liability or defective products – are asserted collectively against a company. Those affected must register their claims in a public register; only those who register are covered by the judgment or settlement. It is therefore a pure opt-in model, not an opt-out one. In parallel, there is the (also opt-in-based) model declaratory action, which ‘only’ clarifies fundamental legal questions; the specific remedy must then be enforced individually. For mass product liability cases in the consumer sector, the remedial action is likely to be the most important tool for associations in future. In the B2B sector, there is no specific class action specifically for product liability. Here, claims are primarily bundled through simple joinder (multiple claimants in a single proceeding) or through assignment/collection models: numerous injured parties assign their claims to a company, which then pursues them collectively. This is also effectively an opt-in model, as each assignment requires active participation. In addition, a third variant has become established in practice, particularly in the diesel scandal: specialist law firms bring thousands of nearly identical individual claims based on the same facts. Here too, these are formally individual claims, but in practice they constitute a mass bundling. In product liability cases, the most common approach currently involves a combination of numerous parallel individual claims (often organised by specialist law firms) and – in the consumer sector – class actions under the Consumer Rights Enforcement Act, particularly the action for remedy as an opt-in collective procedure.

There are still very few landmark decisions by higher courts in Germany in the field of product liability law. This is because such disputes are often resolved out of court. There has been no ruling with broad implications in Germany over the past twelve months. However, a decision by the European Court of Justice (judgement of 19 December 2024, case number C-157/23, ‘Ford-Italia’) is of fundamental importance. This concerned the question of who is liable as a quasi-manufacturer under the Product Liability Directive. The court ruled that, contrary to the wording of the Directive, companies which are not expressly identified as the manufacturer on the product may also be liable if there is a name or brand identity with the actual manufacturer and this gives the impression that the company (also) assumes responsibility for the quality of the product. Specifically, the case concerned an Italian distribution partner who had sold a car manufactured in Germany on the Italian market and whose company name included that of the German manufacturer. This ruling is highly likely to be held applicable to the legal situation following the transposition of the Product Liability Directive in Germany.

Indeed, circular-economy policy and digitization, recently had strongly influenced EU acts: the General Product Safety Regulation applies in full since 13 December 2024 and tightens duties for manufacturers, importers, distributors and online marketplaces, including lifecycle risks and recall remedies. In parallel, as mentioned above, the new (modernized) Product Liability Directive has been adopted at EU level (see question 1). More is underway. The Right to Repair Directive (2024/1799) has been adopted and amends, among others, the Sale of Goods Directive (2019/771); member states must transpose – Germany is preparing national amendments (consumer sales/warranty and collective actions) within the EU deadlines. Under the Ecodesign for Sustainable Products Regulation, product‑specific delegated acts (including the Digital Product Passport) will phase in repairability, durability and information requirements. Adjacent regimes will also bite: the EU AI Regulation (Regulation (EU) 2024/1689) and the Cyber Resilience Act (Regulation (EU) 2024/2847) are entering into force in stages and require governance, documentation, update and vulnerability‑handling processes that intersect with product safety and liability; German authority designations and enforcement frameworks are being organized. In addition, discussions are currently taking place at EU level regarding amendments to the New Legislative Framework, which forms the basis for numerous regulatory provisions, with a view to tightening and extending the obligations of market participants (manufacturers, importers, distributors, etc.)

The implementation of the Product Liability Directive will have significant implications (see above).

Furthermore, it is to be expected that legal disputes relating to AI products and applications will increase. The regulatory framework for this has been fundamentally regulated by the creation of the EU AI Regulation (Regulation (EU) 2024/1689), which introduced significant obligations and resulting liability risks. In the case of infringements affecting mass-produced goods, an increase in class actions appears likely and realistic. A similar trend can currently be observed in relation to fundamental data protection infringements. There are already model declaratory actions in this area. As to the implementation of the Right to Repair rules (see also question 30), we expect more disputes over the scope and handling of the new manufacturer repair duty, as well as disputes eg regarding access to spare parts and tools. In addition, the 12‑month limitation extension when consumers choose repair will lengthen recourse chains and is expected to increase B2B recourse litigation.