The following case drastically illustrates the difficulties and procedural risks involved in a claim for damages when the damage has to be based on hypothetical facts:

Prior to Twitter’s IPO in November 2013, a client instructed his bank to buy 25,000 shares at a price of USD 25 per share. The bank confirmed on 6 November 2013 that it had bought the shares at USD 25.

Twitter’s IPO took place the following day, on 7 November 2013, with the price set at USD 26.

On 11 November 2013, the bank informed the client that it had been mistaken and had in fact not been able to buy any shares in Twitter. The confirmation in the email of 6 November 2013 had been made in error. The bank had forwarded the order to a broker in good time. However, the broker had not been allocated a single share because demand had exceeded supply by a factor of 30. By 11 November 2013, Twitter’s stock price had risen to USD 42.90.

The client sued the bank for payment of USD 447,500, claiming that on 11 November 2013, when he learned of the failed purchase, he could have bought the shares for USD 1,072,500 instead of USD 625,000. Nota bene, the client had not placed an order for a new purchase on 11 November 2013, so his representation was based on a hypothetical course of events. The presentation of the facts of the judgment does not reflect the details of the grounds for the action. However, the claim only makes sense if the client argued that – if he had not been misinformed on 7 November 2013 – he could still have bought the shares at a price of USD 25, he would have done so and he would then have been USD 447,500 richer on 11 November 2013.

As a result, the Federal Supreme Court found that the client had not suffered any loss in this constellation:

  • The client could not claim the difference between the price at which he had wanted to buy the shares (USD 25) and the price on 11 November 2013 (USD 42.90), as the shares had never been bought.
  • He could also not claim a loss from a sale of the shares at a lower price, as he had never given an order to sell the shares.
  • It was purely hypothetical that he would have given another order to buy the shares on 7 November 2013. On that day, it was not possible to determine how the share price would develop; it could not only rise, but also fall. Therefore, the client had not lost a certain profit and a mere hypothetical profit could not lead to a claim for damages.

The Federal Supreme Court therefore dismissed the claim.