• The principle of accurate consulting
• Duties in detail
• Responsibilities of the asset manager in principle
• Breach of contract
• Damage
• Causation
• Indicators of faulty asset management

Damage

The Swiss Federal Court defines damage as an involuntary loss of assets, which may present itself in a reduction of assets, in an increase of liability or in loss of profit. The damage equals the difference between the current status of assets and the status the assets would have enjoyed had the harmful event not happened.

To determine the damage, the assets delivered within the frame of the asset management contract are decisive. These will be compared to the asset status which has been caused by the breach of contract. Sometimes an unrealized profit has to be included into the damage calculation.

Further it has to be differentiated whether the damage was caused in pursuit of an investment strategy which was contrary to duty (careless management of the whole portfolio, unsuitable investment strategy) or by a single investment contrary to duty (careless attitude in connection with a single item of a portfolio, purchase of risky options which were not permitted in the contract).

The type of breach of contract therefore may have direct results on the type of damage calculation; hence this point is to be reviewed carefully.