Germany’s Federal Court of Justice has reaffirmed that the submission of an undertaking to cease and desist does not amount to the admission of liability.
Undertaking to cease and desist
Germany’s Federal Court of Justice (Bundesgerichtshof, BGH) has reaffirmed in a recent judgment that the submission of an undertaking to cease and desist does not amount to an admission of liability.
This is the case, even if the explanatory phrase “without acknowledgement of any legal obligation”, i.e. without admitting liability, is missing from the undertaking (case ref. I ZR 219/12).
Facts of the case
In the case, a chiropodist sent a warning letter to a business offering “medical foot care” (the defendant). The claimant disapproved of the fact that the defendant was offering services equivalent to “medical chiropody”, arguing that the defendant did not possess the relevant education and state examination.
The recipient of the warning letter reacted by submitting an undertaking to cease and desist which was linked to a contractual penalty should future breaches occur.
The defendant declared she was not prepared to carry the claimant’s legal costs for the warning letter.
As a result, the claimant brought a court action for the reimbursement of legal fees, arguing that the submission of the undertaking to cease and desist constituted an admission of liability.
No admission of liability
The BGH re-affirmed that the submission of an undertaking to cease and desist does not amount to an admission of liability, even if the phrase “without admission of liability” is missing from the undertaking.
The court clarified that the function of the undertaking to cease and desist is solely to settle the dispute between the parties and to eliminate the risk of the alleged breach in question occurring again.
If a party is to admit liability and therefore carry the legal costs of the action, then the admission must be express, the court stated.
No breach of German competition law
Turning to the substance of the dispute, the court held that the defendant had in fact not infringed German competition law.
The court differentiated between the advertising phrase used by the defendant, “medical foot care” and the phrase “medical chiropodist”. In the court’s view, the defendant in this case was not purporting to be a trained medical chiropodist.
The motive for submitting undertakings to cease and desist can vary. On the one hand a recipient of a warning letter may dispute the claim but believe that defending against it would be too costly. One the other hand, a recipient of warning letter may believe there is some substance to the claim and may wish to settle the issue quickly without admitting liability.
Either way, the judgment from the BGH is clear. Undertakings to cease and desist do not constitute an admission of liability.