Compensation for fraud: Is Parsys burning?

When the injury resulting from fraud is no longer reduced to a loss of chance

Note on Cass. civ. 3e, 28 May 2026, no. 24-20.821, FS-B

A thunderclap in a clear sky.

Yesterday, 28 May 2026, by a decision destined for publication in the Bulletin, the Third Civil Chamber of the Cour de cassation overhauled the rules governing compensation for fraud.

It is well known that the victim of fraud is offered a choice. She may seek to annul the contract, since fraud is a defect of consent; or she may keep the contract and seek damages, since fraud is also a wrong.

The principle has been settled for decades: the deceived party may, at her choice, “have the loss caused by her co-contractant’s manoeuvres repaired by the annulment of the convention and, where appropriate, by an award of damages”(Cass. com., 27 May 1997, no. 95-15.930; Cass. com., 27 January 1998, no. 96-13.253; Cass. civ. 1re, 12 October 2004, no. 01-14.704).

The debate lies elsewhere. It concerns the measure of compensation: where the victim prefers to keep the contract, what is her loss?

Since 2012, the answer seemed settled. Departing from its earlier case law (Cass. com., 27 May 1997, no. 95-15.930), the Commercial Chamber held in its famous Parsys decision that this loss does not lie in the excess price paid, but is limited solely to the “loss of a chance to have contracted on more favourable terms” (Cass. com., 10 July 2012, no. 11-21.954, Bull. IV, no. 149).

To take a simple example: the purchaser of a house discovers that he has been deceived by his seller, who declared that the roof was sound. The cost of repair amounts to EUR 30,000. Under the Parsys case law, our purchaser cannot obtain EUR 30,000. He may only obtain compensation for the loss of the chance he had to negotiate better terms had he known the truth. Accordingly, if he can establish that, better informed, he would have managed to negotiate more favourably, he will be awarded a percentage of those EUR 30,000.

The solution had a certain orthodoxy to commend it. One who chooses to keep the contract cannot be compensated as if he had not entered into it. If the fraud is so grave that one would not have contracted at all, one must pursue the matter to its conclusion and seek annulment. It is only where the fraud is slightly less serious (so-called “incidental” fraud) that the choice to keep the contract makes sense.

One must nevertheless underline the evidentiary difficulty borne by the victim, who is asked to prove the chances she had of avoiding a harmful event (the contract). As we have already noted (see “Perte de chance et office du juge”, Rencontres aixoises de la Cour de cassation, 7 November 2025; adde L. Thibierge, “Perte de chance: un peu de sérieux?”, RJDA 6/23, p. 7), the exercise is particularly delicate. While mathematical reasoning is at ease with positive loss of chance (what were one’s chances of qualifying for the Olympic Games?), it breaks down in matters of negative loss of chance, where one must search the heart and soul to divine whether, better informed, the victim would have foregone surgery or been in a position to negotiate better terms.

This Parsys case law has just been struck — head on — by the Third Civil Chamber of the Cour de cassation. While one cannot speak of a reversal, since the two chambers are distinct, the opposition is glaring, deliberate, published, and presages the need for a Mixed Chamber ruling.

In the case at hand: a property sale, and a most singular neighbour.

In 2011, a couple acquires an apartment in Paris for EUR 615,000. Five years later, the apartment is resold for EUR 710,000.

A fine deal.

And a well-kept secret.

While the sellers pleaded the birth of their third child to explain the sale of the apartment, they had knowingly concealed that their next-door neighbour suffered from severe psychiatric disorders, of which they had endured the bitter experience for a year.

The Court of Appeal decision (Paris, 12 July 2024) tells us that the sellers had filed a police record for insults, had complained of the insecurity prevailing in the building and of the impossibility for their son to leave the apartment alone. They had also filed a criminal complaint against the irascible neighbour for damage to their vehicle (slashed tyres) and then for death threats. Upon arrest, the neighbour was found to be carrying a buckshot cartridge, a dismantled gun barrel with two cartridges loaded, and an electroshock weapon.

So many elements concealed from the purchasers. A textbook case of fraudulent concealment.

They themselves will discover the joys of neighbourly life. Police records, criminal complaints… The climax: the wife is attacked at the door of her apartment by her neighbour, who points a weapon to her temple.

That was enough for the purchasers. Yet, against all expectations, they do not seek annulment of the sale. They intend to stay, but seek compensation for their loss.

By judgment of 29 April 2021, the Paris Judicial Court allows the claim. It qualifies the sellers’ silence as fraudulent concealment, holds that the disturbances affected “the security, habitability and enjoyment of the dwelling”, and considers that “any informed purchaser” would have acquired the apartment at a lower price had he been informed. It assesses this discount at 15% of the acquisition price, i.e. EUR 106,500, and adds EUR 7,205 in transfer taxes and emoluments levied on an excessive price.

On appeal, the sellers contested the fraud, arguing that the purchasers had “overreacted” to the “merely abnormal”behaviour of their neighbour. Make of that what you will.

More interestingly, the sellers relied expressly on the Parsys case law. They argued on that basis that the loss could only be assessed “in relation to the purchaser’s possible loss of chance to obtain a discount on the price”. Yet the apartment had been acquired at the average price per square metre for the area, which cast doubt on the purchasers’ ability to have negotiated a better price.

By decision of 12 July 2024, the Paris Court of Appeal confirms the first-instance judgment. On the fraud, it endorses the analysis of the trial judges: the evidence produced — police records, complaints, e-mails to the building manager, armed conduct of Mr L. upon his arrest — “call into question the security, habitability and enjoyment of the dwelling” and constituted information determinative of the purchasers’ consent. The court notes in passing that the sellers “themselves acknowledge (…) the facts that led them to file several complaints” and that they cannot “seriously argue” to have “overreacted”.

But it is on the loss that the appellate decision is striking. Taking the opposite stance from the Parsys decision, the Paris judges hold that “the loss for which compensation is sought corresponds to the depreciation of the value of the apartment at the time of its acquisition in 2016, owing to the insecurity associated with its neighbour, and not to a loss of chance of acquiring it at a lower price”.

The opposition is frontal. Depreciation, not loss of chance.

The cassation appeal expressly relied on the Parsys case law, contending that the victim of fraud who does not seek annulment can only obtain compensation for a loss of chance to have contracted on more favourable terms.

It followed up with a second, equally compelling argument: a loss of chance cannot be compensated up to the level of the benefit that the lost chance would have procured (Cass. civ. 1re, 9 December 2010, no. 09-69.490), failing which there would no longer be any loss of chance at all.

Hence the ground for cassation: by assessing the loss at 15% of the sale price, i.e. EUR 106,500, without enquiring into the probability that the purchasers could, absent the fraud, have concluded at that reduced price, the Court of Appeal allegedly violated Articles 1116 and 1382 of the Civil Code in their version prior to Ordinance no. 2016-131 of 10 February 2016 — applicable to the sale, concluded on 13 April 2016.

Cassation seemed inevitable.

And yet, at the cost of a frank opposition with the Commercial Chamber, the Third Civil Chamber holds that “the loss suffered by the purchasers corresponded to the depreciation of the value of the apartment owing to the insecurity resulting from the neighbour’s behaviour”, a loss which the Court of Appeal “sovereignly assessed at 15% of the acquisition price”.

So be it: the trial judges escape cassation, even though they did not reason on the ground of loss of chance.

The compensation here bears on a certain loss: the excess price, that is to say “the depreciation of the value of the apartment”.

The apartment was paid too dearly compared to what it was worth, in view of the irritating presence of the neighbour.

But where the Commercial Chamber operated a weighted reasoning, calculating the chance the purchaser would have had to negotiate a better sale price, the Third Civil Chamber recognises her right to claim the entirety of the excess price.

The fault line is clear.

If the property sold is real estate (the territory of the Third Civil Chamber), the victim of fraud will be able to obtain full reimbursement of the excess price.

Conversely, if the fraud bears on shares (the territory of the Commercial Chamber), the deceived transferee will only be entitled to a loss of chance to have negotiated more favourably.

This divide is hardly tenable. It makes the measure of the loss depend on the nature of the property transferred, without any reason of substance justifying it.

Roll on the Mixed Chamber!

Takeaways

• The purchaser of real estate, victim of fraud, may choose between seeking annulment of the sale and contenting himself with compensation.
• The decisive contribution of the decision lies in the measure of the loss. When the victim opts for compensation, his loss corresponds to the “excess price” — i.e. the difference between the price paid and the price he would have agreed to had he been honestly informed.
• The compensation is no longer framed as a loss of chance to have negotiated more favourably.
• The Third Civil Chamber now openly contradicts the Commercial Chamber, which maintains its Parsys case law (see e.g. Cass. com., 5 June 2019, no. 16-10.391; Cass. com., 15 January 2020, no. 18-12.115; adde com., 6 July 2022, no. 20-12.467, which softens the assessment without departing from the qualification as loss of chance).