Law on Contracts and Torts

Indemnity for Damage to Property

The basic rules applicable to indemnity for damage to property are regulated by the provisions of the Law on Contracts and Torts (Articles from 185 to 198).

By the provisions of Articel 185 of the Law on Contracts and Torts indemnity for damage to property is defined as re-establishing of the previous situation and an indemnity in money. A responsible person shall be liable to re-establish the situation existing prior to the occurence of damage. Indemnity for damage to property in money shall be paid to the person suffering loss in following cases:

  • Should re-establishing of the previous situation fail to eliminate the damage entirely, the responsible person shall be liable to pay an indemnity in money to cover for the rest of the damage.
  • Should restitution be impossible, or should the court find it necessary for the responsible person to do that, the court shall order such person to pay to the person suffering loss an adequate amount of money as compensation for loss.
  • At the request of the person suffering loss, the court shall award compensation in money to him, unless the circumstances of the specific case justify the restitution.

Compensation for damage to property shall be due from the moment of the damage taking place.

Scope of Indemnity for Damage to Property

Common Damage and Profit Lost

A person sustaining damage shall be entitled both to indemnity of common damage and compensation of profit lost.

The amount of damages shall be determined according to prices at the time of the rendering court’s decision, unless something else be ordered by law.

In assessing the amount of the profit lost the profit which was reasondably expected according to the regular course of events or particular circumstances, and whose realization has been prevented by an act or omission of the tortfeasor shall be taken into account.

Where an object is lost or damaged by a criminal offence committed wilfully, the court may determine the amount of indemnity according to the value the object had for the person sustaining damage.

Complete Recovery

While also taking into account the circumstances after the occurence of damage, the court shall determine damages in the amount necessary to restore the material state of the person sustaining damage into the state it would have been without the damaging act or omission.

Reducing Indemnity

The court may, while taking into account the material situation of the person sustaining loss, order the person liable to pay an indemnity which is lower than the amount of damages if it was not caused either wilfully or by gross negligence, and if the liable person is in poor material situation, so that payment of full indemnity would bring him into poverty.

If the tort-feasor has caused damage while doing something to the benefit of the person sustaining loss, the court may order a lower indemnity, while taking into account the degree of care the tort-feasor was otherwise applying in his own affairs.

Divided Liability

A person sustaining loss who has contributed to the occurence of loss or to its becoming larger than otherwise, shall only be entitled to a proportionally reduced indemnity.

Should it be impossible to establish which part of damage comes from an act of the person sustaining it, the court shall award the indemnity while taking into account the circumstances of the case.

Cases in which Indemnity for Damage to Property shall be Paid

Indemnity for Damage to Property in the Form of an Annuity

In case of death, bodily injury or damage to health, indemnity shall, as a rule, be determined in the form of an annuity, either for the life of the injured person or for a definite period. An awarded annuity as a form of damages shall be paid in advance in monthly installments, unless the court provide otherwise.

The judgment-creditor shall be entitled to demand necessary guarantees for payment of annuities, unless according to circumstances of the case, this would be not justified.

Should the judgment-debtor fail to supply guarantee ordered by the court, the judgement-creditor shall be entitled to demand payment of a lump sum instead of annuities, of an amount established according to the amount of annuities and probable duration of the judgment-creditor’s life, after deducting corresponding interest. The judgment-creditor may also, in other justified cases, demand – immediately or subsequently – to be paid a lump sum instead of annuities.

Indemnity for Damage to Property in Case of Loss of Object Being Unlawfully Taken Away

After an object of property, otherwise unlawfully taken away from the owner, is lost due to Act of God, the person responsible shall be liable to provide compensation in money.

Indemnity for Damage to Property in Case of Death, Bodily Injury and Harm to Health

Salary Lost and Expenses of Medical Treatment and Funeral

Whoever causes another person’s death shall be liable to reimbures the usual expenses of that person’s funeral. He shall be also liable to reimburse expenses of that person’s medical treatment for injuries inflicted, as well as other expenses relating to medical treatment, including the salary lost due to disability for work.

Right of a Dependent of the Deceased

A person who was supported or regularly assisted by the deceased, as well as the one entitled by law to request maintenance from the deceased, shall be entitled to damages for loss sustained by the loss of support, or assistance. Such loss shall be redressed by paying annuities the amount of which shall be established by taking in consideration all the circumstances of the case, but which shall not be higher than the amount which would have been received by the person sustaining damage from the deceased if he were alive.

Indemnity for Damage to Property In Case of Bodily Injury or Damage to Health

One who inflicts to another bodily injury or impairs his health, shall be liable to reimburse his medical expenses, as well as other related necessary expenses, including recovery of the salary lost due to inability to work during medical treatment.

Should the injured person due to total or partial disability lose his salary, or should his needs become permanently increased, or should possibilities of his further development and advancement be destroyed or reduced, the person liable shall pay to the injured one specific annuities as damages for such loss.

Altering the Indemnity Awarded

At the request by the person sustaining loss the court may raise the amount of annuities for the future, and it may, at the request by the tort-feasor, reduce or cancel it, should the circumstances be considerably changed which had otherwise been considered by the court in rendering the previous decision.

Non-Transferability of Right

The right to indemnity in the form of annuities, due to death of a close relative or due to bodily injury or harm to health, shall not be transferred to another person. The amounts of damages due may be transferred to another person should the amount of indemnity be determined by written agreement between the parties, or by final court decision.

Indemnity for Damage to Property in Case of Insult to One’s Honour and Spreading False Statements

Whoever insults another person’s honour, or whoever utters or conveys false statements concerning another person’s past, knowledge and ability, or concerning anything else of the kind, although being aware, or should have to be aware, that these are untrue, thus causing material damage to such person, shall be liable for damages. However, one shall not be liable for the loss caused who makes the false statement concerning another without knowing that it is not true, should he or the one acknowledging the statement have a serious interest in the matter.

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