Note on Cass. com., 10 June 2026, no. 25-14.312, F-B

The intricacies of the law of limitation are reputed to be unfathomable. From the “thicket”[1] to the “sea serpent”[2] by way of the “chaos”[3], from the “dual time-limit” to the long-stop period, complexities abound.

One of them — and not the least — concerns the starting point of the extinctive limitation period. While the reform of 17 June 2008 considerably simplified matters by abolishing most of the special limitation periods, it opted for a “floating” starting point[4], which is not without raising certain questions.

In matters of civil liability, the starting point of the limitation period has, since 2008, been not the day of the damage, but the day on which the victim “knew or ought to have known” the facts enabling them to act, as provided by Article 2224 of the Code.

The rule is simple. Its application is sometimes less so, particularly where the damage manifests itself progressively. A recent decision bears witness to this, handed down by the Commercial Chamber of the Cour de cassation on 10 June 2026 and destined for the honours of the Bulletin.

In the case at hand, investors acquired, on the advice of two investment and wealth-management firms, several residential rental properties giving rise to tax reductions.

As is often the case, the expected profitability failed to materialise[5]. The rents did not cover the charges, and the resale of one of the properties was made at a loss.

In August 2020, the investors brought liability proceedings against their advisers for breach of their duty to advise.

The Aix-en-Provence Court of Appeal declared the action inadmissible as time-barred. In the view of the Aix judges, the investors were in a position to ascertain, “by comparing the income generated by the lettings with the charges they bore”, the impossibility of achieving the promised profitability, from the very first year of letting.

Yet the action had been brought in 2020, whereas the properties had been let as early as 2011. Accordingly, in the view of the lower courts, the action was time-barred, regardless of the fact that the deficits had subsequently worsened. The lower courts likewise treated the resale of the property at a loss as irrelevant.

Before the Cour de cassation, the investors challenged the time-barring of their action, arguing that, at the end of the first year of letting, they were not in a position to know the facts enabling them to act.

The Commercial Chamber, presided over by Vincent Vigneau, quashed the lower courts’ decision on the basis of Articles 2222 and 2224 of the Civil Code and Article L. 110-4 of the Commercial Code.

In the view of the High Court, “the investors’ awareness of a probable loss-making profitability of the operation at the end of the first year of letting did not characterise the materialisation of the damage for which compensation was sought”.

The focal point of the decision appears to lie in a single word: “probable”.

Indeed, at the end of the first year of letting, the damage was not established, but merely probable, so that the claimants could not be reproached for having remained inactive.

Since three decisions of 26 October 2022, the Third Civil Chamber has held that “in the case of tax-incentivised rental property investment, the manifestation of the damage for the purchaser can only result from facts liable to reveal to them the impossibility of obtaining the profitability anticipated at the time the contract was concluded”[6].

To the same effect, the Third Civil Chamber held, on 1 February 2024, that “in a tax-incentivised rental property investment operation involving a loan whose capital repayment was deferred for ten years, the starting point of the liability action brought by the purchaser against professionals for breach of their respective duties of information, advice or warning is the day on which the risk materialised, namely the day on which the purchaser learned that they would be unable to resell the property at a price enabling them to repay the borrowed capital”[7].

The decision of 10 June 2026 falls within this line of case law, the Commercial Chamber in turn aligning itself with the position established by the Third Civil Chamber. The starting point of the limitation period is neither the day the contract was concluded, nor the day of letting, nor even the day of the first loss-making financial year. It is the day on which the investor becomes aware of the impossibility of obtaining what was promised to them.

The solution appears well-founded: profitability is an elusive datum, and what is not profitable in the short term may become so in the long term. The investment in dispute, aimed at tax relief over several years, is set within the long run. Accordingly, a deficit at the end of a first year of letting reflects no more than a hazard. It reveals neither an “impossibility” nor any certain loss. Only the test of time will make it possible to become aware of that impossibility — unless the contract sets annual profitability thresholds.

It will be observed that, prudently, the Cour de cassation — which rules only on the law and not on the facts — leaves the fixing of this starting point in suspense. It will fall to the lower courts to determine from what moment the investors were aware of the loss-making character of their investment.

There is, then, no use in running: one must still set out at the right point.

Takeaways

In matters of tax-incentivised rental property investment, the starting point of the limitation period for an action based on breach of the duty to advise is not set at the first loss-making year of letting: a merely “probable” deficit does not constitute a certain loss.

The decision confirms the case law on the “floating” starting point, but leaves that starting point undetermined — a matter for the court of remittal to fix.

[1]Senate information report no. 338.

[2]A. Bouscavert, note on Cass. com., 10 June 2026, no. 25-14.312, Dalloz actualité, 24 June 2026.

[3]A. Bénabent, “Le chaos du droit de la prescription extinctive”, Mélanges Louis Boyer, PU Toulouse, 1996, p. 123.

[4]Ph. Malaurie, La réforme de la prescription civile, Defrénois 30 Oct. 2008, p. 2029.

[5]Cf. L. Thibierge, “De la rentabilité économique”, Revue des contrats 2023, no. 1, p. 59; “Défiscalisation : du miroir aux alouettes”, Revue des contrats 2023, no. 3, p. 37; “Quand l’investissement locatif s’avère déceptif”, Revue des contrats 2026, no. 2.

[6]Cass. civ. 3^e, 26 October 2022, no. 21-19.898; Cass. civ. 3^e, 19 February 2026, no. 24-11.109.

[7]Cass. civ. 3^e, 1^er February 2024, no. 22-13.446.

L’article Limitation No Use Running — One Must Set Out at the Right Point est apparu en premier sur Louis Thibierge.

Note on Cass. com., 17 June 2026, no. 24-13.306, FP-B+R

In a decision delivered by the full bench of the Chamber and destined for the honours of both the Bulletin and the Annual Report, the Commercial Chamber of the Cour de cassation, presided over by Vincent Vigneau, last Wednesday answered a question of considerable practical importance.

Where a fake-IBAN scam has occurred, whom should the law favour — the debtor who has paid the fraudster, or the creditor who has received nothing?

Faced with this question, some thought to invoke the doctrine of the apparent creditor under Article 1342-3 of the French Civil Code, which provides that « payment made in good faith to an apparent creditor is valid ».

Applied to the letter, the rule would make payment to the fraudster a discharging payment. The debtor could not be compelled to pay a second time. The creditor, however, would be sorely aggrieved, having delivered goods or rendered services without receiving any payment.

This dilemma called for a clear answer from the Cour de cassation, so divided was the case law of the lower courts.

On 17 June 2026, the Commercial Chamber of the supreme court held that « a third party who usurps the creditor’s identity is not an apparent creditor, within the meaning [of Article 1342-3 of the Civil Code] ».

It follows that the victim of the « fake-IBAN scam » is not discharged. Our deceived debtor will have to pay its true creditor a second time.

On the facts, the case was of a regrettable banality — and will no doubt stir a few memories among the participants in the 2025 Willem C. Vis Moot.

In May 2018, Petrogarde, a company specialising in the supply of combustible products, was approached by Eazybunker, a commercial intermediary, to supply gas oil to the vessel Afthonia, on behalf of a third company, Sea Fleurs, during a port call at Marseille. Delivery took place on 19 May 2018; an invoice for EUR 103,375.64 was issued.

On 22 May 2018, Eazybunker, the intermediary, received an email from an address « differing by only a single letter » from Petrogarde’s genuine address, together with an invoice and bank account details (a RIB).

The intermediary forwarded these documents to Sea Fleurs on 23 May and 4 June.

On 8 June 2018, Sea Fleurs complied and transferred the funds to a fraudster’s account.

The funds could never be recovered.

Petrogarde, the unpaid creditor, then sued Sea Fleurs for payment of the price and, in the alternative, Eazybunker for damages.

At first instance, the Marseille Commercial Court ordered Sea Fleurs to pay.

That decision was reversed on appeal, the Aix-en-Provence Court of Appeal preferring to discharge the debtor. On the basis of Articles 1342-2 and 1342-3 of the Civil Code, the Aix court held that Sea Fleurs « could legitimately believe, when making payment on 8 June 2018 […], that it was dealing with its creditor Petrogarde, having regard to the circumstances of the transaction ».

This is the focal point of the appellate decision: the immaculate innocence of the solvens.

Since Sea Fleurs had never been in direct contact with Petrogarde, everything passing through Eazybunker, « it was not for it to verify the validity of the email address ». Moreover, examining the bank details alone, associated with the account holder (« SAS Petrogarde »), could not have enabled our victim to « detect a fraud ».

Hence the Court of Appeal’s conclusion: since the debtor could be charged with neither negligence nor disloyalty, its payment was discharging.

On its face, the lower courts’ reasoning rested on Article 1342-3 of the Civil Code, which stems from the Ordinance of 10 February 2016. That provision, which carries forward the former Article 1240 (which already validated payment made in good faith « to the person in possession of the claim […], even though that possessor is subsequently evicted »), is one embodiment of the doctrine of appearance — a doctrine that gives effect to certain irregular acts because the counterparty could not legitimately know that it was dealing with an unauthorised person, whether the apparent agent (Article 1156 of the Civil Code: « An act performed by a representative without authority or beyond his authority is unenforceable against the represented person, unless the third party contracting with him legitimately believed in the reality of the representative’s powers, in particular by reason of the conduct or statements of the represented person ») or the apparent creditor.

It remains to be agreed what an « apparent creditor » is.

The Court of Appeal had adopted a broad understanding of it. In its eyes, the apparent creditor was the fraudster. Why? Because, apparently, he was the creditor. His email address was, give or take a single letter, that of the true creditor. His bank details read « SAS Petrogarde ». To all appearances, he was the creditor.

This is not inaccurate. The appearances were plainly deceptive for the debtor.

Indeed, some lower courts have already invoked this doctrine of the apparent creditor to discharge the deceived solvens(see in particular Créteil Commercial Court, 22 July 2025, no. 2024F00526; Montauban Commercial Court, 28 May 2025, no. 2024005963). Conversely, other lower courts have refused to recognise the fraudster as an apparent creditor (Strasbourg Judicial Court, summary proceedings, 27 Nov. 2024, no. 24/00409), so that the question called for an answer from the Cour de cassation.

In equity, the solution adopted by the Aix-en-Provence judges is understandable. Since one must choose between two evils, some may be tempted to prefer the solvens to the unpaid creditor. It is true that condemning the solvens to pay a second time, with no real prospect of ever recovering from the fraudster, may seem harsh.

Conversely, it is just as iniquitous to deprive the creditor of any recourse against the debtor. A business that performs without receiving payment may suffer drastic consequences.

Beyond these ethical considerations, it is the rule of law itself that appears to condemn the Court of Appeal’s position of discharging the solvens deceived by appearances.

Now, Article 1342-3 of the Civil Code, a provision concerning payment, succeeds the former Article 1240 of the Civil Code, which provided: « payment made in good faith to the person in possession of the claim is valid, even though that possessor is subsequently evicted ».

One then understands that the apparent creditor is the person who is « in possession of the claim ». The formula is perhaps not entirely limpid, but the idea underlying it is clear. The apparent creditor exists only by comparison with the true creditor. The notion of apparent creditor is meaningful only where two persons could lay claim to the status of creditor. Such is the case, in particular, with the assignment of a claim. If the debtor has not been notified of the assignment, it may validly discharge its debt into the hands of the assignor, even though the latter is no longer the creditor (Article 1324 of the Civil Code).

In short, the notion of apparent creditor is intended to operate only where several persons could claim the status of creditor and the debtor, in good faith, mistakes one for another.

It is not intended, a contrario, to produce its effects where a person having no right to the claim, never having been in possession of it, succeeds by unlawful means in passing himself off as the creditor.

This is the meaning of the Cour de cassation‘s holding: « a third party who usurps the creditor’s identity is not an apparent creditor within the meaning of this provision ».

The Court went on to make clear that Sea Fleurs, « which knew that its creditor was Petrogarde, had not paid the sum due to an apparent creditor, but to a person fraudulently passing himself off as Petrogarde ».

In holding otherwise, the Court of Appeal misapplied the provision, hence the quashing on the basis of Article 1342-3 of the Civil Code.

Two situations must therefore be distinguished: error as to the person of the creditor; and error as to the creditor’s bank details.

In the first case — the only one covered by Article 1342-3 of the Civil Code — the debtor faces several putative creditors and discharges into the hands of the wrong one.

In the second, the debtor has only one creditor, is not mistaken as to the person of that creditor, but is deceived by someone passing himself off as the creditor.

Our cheated debtor was not mistaken as to its creditor.

The Court of Appeal’s error was to focus on a single criterion: the debtor’s good faith. Plainly, Sea Fleurs had committed no fault. It was never mistaken as to the identity of its creditor. It knew full well that it owed the price to Petrogarde. It was mistaken, following a fraudulent scheme, as to the payment details — which led it to transfer the funds to a third party.

Article 1342-3 governs error as to the person of the creditor, not error as to the payment details. The fraudster who usurps the creditor’s identity gives rise to no distinct apparent creditor: he merges into the true creditor. There are not, here, two creditors — one real, the other apparent — between whom the debtor might be mistaken; there is only a single, perfectly known creditor, and a fraudster who diverts payment away from him.

The solution thus appears technically sound.

It also aligns with the case law of the Conseil d’État which, faced with the same fraud committed to the detriment of a public purchaser, had refused the public entity the benefit of the apparent creditor (CE, 21 Oct. 2024, no. 487929).

Finally, if the solution may seem harsh on the debtor who committed no fault, it must be stressed that the creditor committed none either. It would be no fairer to deprive the innocent creditor of its right to payment.

The debtor so ordered is not, however, without recourse: beyond the (often illusory) action against the fraudster, it may seek to hold the negligent intermediary liable, just as the Conseil d’État allows against a contracting party that contributed to the fraud.

Takeaways

• A debtor who falls victim to a fake-IBAN scam cannot rely on the doctrine of the apparent creditor.
• He who pays badly — even under a fraudster’s influence — pays twice.

L’article The fake-IBAN scam: « He who pays badly, pays twice » est apparu en premier sur Louis Thibierge.

Note on Cass. com., 13 May 2026, no. 25-10.491

The oxymoron drawn from Rodrigue’s monologue in Corneille’s Le Cid is a perennial delight for students sitting their baccalauréat.

It also captures rather well a decision handed down on 13 May by the Commercial Chamber of the Cour de cassation, presided over by Vincent Vigneau, and destined for publication in the Bulletin.

At stake: the interpretation of contracts, and more particularly the maxim interpretatio cessat in claris, enshrined since 2016 in Article 1192 of the French Civil Code — here inapplicable ratione temporis, the contract having been concluded before 2016.

That text, which merely codifies a time-honoured rule the Court had notably restated in the famous Veuve Foucaulddecision of 1872, provides: « On ne peut interpréter les clauses claires et précises à peine de dénaturation » (clear and precise clauses may not be interpreted, on pain of distortion).

In other words, it forbids the judge from interpreting what is clear and precise.

The point seems settled, and stamped with common sense.

To interpret what is clear and precise is to betray the parties’ will and to substitute for it the judge’s own sense of equity.

So be it: what is clear and precise admits of no interpretation. Conversely (a contrario), once a clause is ambiguous, the door opens and the judge may interpret it.

This binary reasoning may seem reassuring.

Yet, put to the test, the rule is not always so easy to apply. At what point is ambiguity sufficient for the judge to interpret the contract?

Scholarship sometimes defines this ambiguity in the negative: a clause is clear when it is « susceptible d’un seul sens » (capable of a single meaning); it becomes open to interpretation when it is « susceptible de plusieurs sens » (capable of several meanings) (J. and L. Boré, La cassation en matière civile, Dalloz Action, 6th ed. 2023/2024).

But here too the question lingers. Is it enough for one party to argue, without patent bad faith, that it understands the clause in a sense different from its opponent’s, for the clause to be “capable of several meanings” and therefore open to interpretation? In other words, is ambiguity to be assessed objectively or subjectively?

The underlying question proves awkward: can one know whether a clause is clear and precise without first having interpreted it? Indeed, to determine whether a clause is open to interpretation, must the judge not first interpret it, in order to establish whether it is capable of one or of several meanings? (compare J. Monéger, « De la dénaturation d’une clause contractuelle ou de l’art du clair-obscur », Loyers et copr. 2019, no. 11, repère 10).

In the present case, the difficulty lay in how the ambiguity was characterised.

An economic interest grouping (GIE) entrusted a service provider with running its telephone-reception service. A 2014 amendment set a three-year term. A handwritten note was added in the margin, stipulating « reconduction tacite par période de 1 an » (tacit renewal for one-year periods) and coupling it with a right of termination.

The GIE terminated the contract at the end of the first year. The provider considered itself the victim of an early termination. In short, the dispute turned on a single question: was the contract for a fixed three-year term (as the provider argued), or could it be freely terminated (as the GIE contended)?

The Lyon Court of Appeal (10 October 2024) began by conceding that the wording of Article 6 of the amendment, supplemented by the handwritten note, « paraît signifier que le contrat est conclu pour une durée ferme de trois années » (appears to mean that the contract was concluded for a firm three-year term) — and that this reading « donne foi, de prime abord, à la lecture retenue » (lends credence, at first sight, to the reading) put forward by the provider.

However, taking into account an email sent more than six months after the amendment, the Lyon court ultimately (in fine) adopted the opposite position.

That email of 21 May 2015, from the provider, read as follows: « Bonjour, voici l’avenant signé et modifié. Je vous confirme que nous avions intégré un engagement de 12 mois au lieu des 36 initiaux… » (Hello, here is the signed and amended document. I confirm that we had built in a 12-month commitment instead of the original 36…).

According to the GIE, it left « aucun doute quant à la volonté des parties, nonobstant le caractère ambigu de la mention manuscrite » (no doubt as to the parties’ intention, notwithstanding the ambiguous character of the handwritten note).

The Lyon court held that this email « démontre sans la moindre ambiguïté que la commune intention des parties a été de substituer à la durée initialement convenue de 3 ans, des périodes annuelles successives… » (demonstrates, beyond the slightest ambiguity, that the parties’ common intention was to substitute successive yearly periods for the initially agreed three-year term, with a right of unilateral termination at the end of each).

It inferred that, « en dépit des termes inappropriés et trompeurs de la mention manuscrite marginale » (despite the inappropriate and misleading terms of the marginal handwritten note, supposed to embody their common intention), the parties had agreed:

— that the amendment was concluded for an overall three-year term, divided into successive yearly periods;

— that either party could terminate the contract at the end of any such yearly period, subject to three months’ notice.

And, sensing full well that it was venturing into murky waters, the Court of Appeal denied engaging in any interpretation of the contract.

It put it thus: « la cour n’interprète pas le contrat, mais détermine quelle a été la substance de l’accord des parties, constitutive du negotium, au-delà de l’instrumentum défaillant… » (the court is not interpreting the contract, but determining the substance of the parties’ agreement — the negotium — beyond the defective instrumentum, owing to a marginal handwritten note that did not faithfully reflect their common intention).

One feels a certain unease on reading the Court of Appeal’s decision.

The lower-court judges do not appear to own up to the interpretive exercise they are performing.

Why?

No doubt because there was nothing to interpret. Since Article 6 of the amendment contained no intrinsic ambiguity, and no extrinsic ambiguity could be drawn from reading the clause together with the handwritten note, the clause — clear and precise — could not be interpreted.

Plainly, ambiguity cannot arise from setting the wording of the contract against an email sent six months later. Were it otherwise, it would suffice to write an email months or years after the contract to manufacture an ambiguity between the two, allowing the judge to interpret what, at the moment the parties’ wills met, was clear and precise.

Magritte’s « Ceci n’est pas une pipe » is not far off.

Yet this is what the Lyon court seemed to hold when it asserted that « la contestation de la portée de l’engagement commandait la recherche de la commune intention des parties » (the challenge to the scope of the undertaking called for a search for the parties’ common intention). On that view, it would be enough to go back on one’s word in a later letter to summon up the obscurity propitious to judicial interpretation.

As for the elegant but contrived distinction between interpreting and determining the « substance de l’accord des parties» (substance of the parties’ agreement), it scarcely holds. For what is interpreting a contract, if not revealing the parties’ will?

Like Molière’s Monsieur Jourdain, who spoke prose without knowing it, the Court of Appeal interpreted without knowing it — or under cover.

Hence the provider’s appeal to the Cour de cassation, arguing that the handwritten marginal note to Article 6 « complétait nécessairement, sans la contredire, la stipulation d’une durée ferme de trois ans… » (necessarily supplemented, without contradicting, the stipulation of a firm three-year term; the two provisions did not overlap, the first fixing the irrevocable term, the second governing the conditions of any later renewal).

Accordingly, absent any contradiction between the handwritten note (concerning tacit renewal) and the contract (which fixed the three-year term), no ambiguity — so the appeal ran — justified opening up a power of interpretation.

On the sole basis of former Article 1134 — the contract predating 2016 — the Commercial Chamber held that « les juges du fond ne peuvent interpréter les conventions que si celles-ci sont obscures ou ambiguës » (the lower courts may interpret agreements only where these are obscure or ambiguous).

Yet, the Court of Appeal had itself found the instrument to be unambiguous. By searching for the common intention where the wording sufficed, it violated the text. Never mind the vessel: to label the search for the parties’ common intention a « détermination du negotium » is, beyond the words, an act of interpretation all the same.

The articulation of the provisions confirms the analysis. While Article 1188 invites the judge to seek the common intention « plutôt qu’en s’arrêtant au sens littéral » (rather than stopping at the literal meaning of the terms), Article 1192 bars access to it so long as the terms remain clear and precise. In other words, the search for intention begins only once ambiguity is established.

The Cour de cassation’s decision to quash thus appears justified. One cannot manufacture a doubt the better to resolve it. Otherwise every contract would become ambiguous — through the force of an email, a witness statement, a circumstance — and its binding force would hang on nothing more than the judge’s goodwill.

Even though the natural inclination of a judge — or of an arbitrator — might lead him to prefer the interpretation he finds just over the one the contract’s terms command, Article 1192 of the Civil Code remains a dyke. Where the terms are clear and precise, interpretation is excluded.

The dyke still holds — at least in appearance. For must we not accept that « lorsque la Cour de cassation censure l’interprétation d’un contrat prétendument dénué de toute ambiguïté, elle fait prévaloir sa propre interprétation » (where the Cour de cassation quashes the interpretation of a contract supposedly free of any ambiguity, it imposes its own interpretation) (G. Chantepie and M. Latina, Le nouveau droit des obligations, Dalloz, 3rd ed. 2024, no. 511)?

In sum, interpretation remains a delicate art, and the little guide-âne (rule-of-thumb crib) dear to Carbonnier does not solve everything.

To be continued!

TAKEAWAYS

• A judge may not interpret a clear and precise clause;
• Where a clause carries no intrinsic ambiguity and acquires no extrinsic ambiguity when read together with another clause, it must be regarded as clear and precise;
• A judge may not rely on later exchanges to create, a posteriori, an ambiguity about what was clear a priori.

L’article This Obscure Light, Falling from the Stars est apparu en premier sur Louis Thibierge.

Abstract

For the first time, it seems, the Cour de cassation has upheld the annulment of a contract for violence par abus de dépendance — duress arising from the abuse of a state of dependence — on the basis of article 1143 of the Civil Code. But at the cost of a highly idiosyncratic conception of duress, one that appears contra legem.

Introduced into the Civil Code by the Ordinance of 10 February 2016, article 1143 provides that “there is also violence where one party, abusing the state of dependence in which the other party stands towards it, obtains from the latter an undertaking to which it would not have agreed in the absence of such constraint, and derives from it a manifestly excessive advantage”.

This provision enshrines a variant of the defect of consent known as violence (duress), wrongly labelled “economic duress”. For our part, we shall avoid that misleading name, for article 1143 — contrary to the Senate’s attempted rewriting on the occasion of the ratification statute of 20 April 2018 — can capture every kind of duress, be it economic, emotional, corporate or any other.

We shall therefore call it, even if conceptual precision suffers for it, violence par abus de dépendance — duress by abuse of dependence.

This particular form of duress, doubtless less crude than physical violence but no less effective, is the fruit of a long judicial sequence.

Its starting point may be set in the year 2000, when the Court, without recognising the existence of such duress, confined itself to stating that “economic constraint relates to violence and not to lésion” (substantive unfairness of price).

The landmark decision was the Larousse-Bordas judgment of 2002, whose restrictive formula has passed into posterity: “only the abusive exploitation of a situation of economic dependence, carried out so as to take advantage of the fear of an evil directly threatening the legitimate interests of the person, can vitiate consent by violence”.

It will be recalled that, in Larousse-Bordas, the employee — who claimed she had been compelled to assign to her employer, at a low price, her rights in the collection of pocket dictionaries she had created — was unsuccessful, for want of proof. The diffuse fear of being part of the next “batch” of collective redundancies on economic grounds was not enough to establish so-called economic duress. The employer would have had to threaten the employee explicitly with dismissal for such duress to be made out.

And then? Then, next to nothing. Between Larousse-Bordas in 2002 and the reform of the law of obligations in 2016, so-called economic duress seems to have generated more academic commentary than case law.

Then came the reform, which enshrined violence par abus de dépendance in two stages.

First stage: the wording of article 1143 resulting from the Ordinance of 10 February 2016 provided that “there is also violence where one party, abusing the state of dependence in which the other party stands, obtains from the latter an undertaking to which it would not have agreed in the absence of such constraint, and derives from it a manifestly excessive advantage”.

Second stage: the ratification statute. Let us say so without mincing words: the senators were hostile to the text, which they sought to muzzle. First, by appending the epithet “economic” to “dependence”, so that only the abusive exploitation of an economic situation could be sanctioned. That proposal did not secure the assent of the deputies.

The senators did, however, obtain the addition of the words “towards it” (à son égard), the text now providing: “There is also violence where one party, abusing the state of dependence in which the other party stands towards it, obtains from the latter an undertaking to which it would not have agreed in the absence of such constraint, and derives from it a manifestly excessive advantage”.

The addition is anything but anecdotal. It considerably narrows the scope of the text. Henceforth, only the exploitation of a situation of dependence pre-existing between the parties can be taken into account.

The text thereby removes any risk of confusion between dependence and vulnerability.

Take a simple example: a company is in dire straits, owing a substantial debt to URSSAF or the DGFIP (the French social-security and tax authorities). A competitor, scenting a bargain, offers to buy its land or its machinery for 50% of their value. Predation, no doubt, but not violence within the meaning of article 1143, for the weaker party was not, before the contract, dependent upon the stronger.

Matters seemed clear, then… until this judgment delivered on 4 June 2026 by the Third Civil Chamber, which may appear contra legem.

In the case at hand, a couple of elderly and infirm Corsican wine-growers (the husband having suffered a stroke in 2017, the wife afflicted since the same year by neurocognitive disorders and Alzheimer’s disease) granted, on 26 August 2019, a rural lease (bail rural) to one of their sons and to the EARL (an agricultural limited-liability company) which he manages.

The lease covered 72 hectares of vines and orchards.

What is striking is the rent, extremely modest: about €10,000 per year for the vines and orchards alone (to which are added €300 per month for the buildings, the cellar and the wine-making equipment, and so on), whereas the average rent for the vines alone was assessed at between €72,000 and €86,400.

A good deal, or an abuse of weakness?

The father died on 4 October 2019, the mother on 17 January 2022.

Between those two dates, by writs of 28 and 29 December 2021 — the mother then still being alive and herself a defendant — their other son, acting in his capacity as heir and as a member of the lessor EARL, sued his brother for annulment of the lease.

The Rural Leases Joint Tribunal (tribunal paritaire des baux ruraux) of Bastia annulled the agreement on 20 October 2022. The Bastia Court of Appeal confirmed this on 28 February 2024, citing article 1143 of the Civil Code, but referring to “the abuse of dependence provided for by the civil law”.

An appeal on a point of law was brought by the brother who benefited from the so-favourable lease.

In substance, the ground of appeal levelled two complaints at the appellate judgment.

The first concerned the characterisation of “dependence” as required by article 1143. The ground argued that a state of dependence presupposes a situation of “subjection” of one person towards another — a situation that cannot be inferred merely from the fact that the faculties of the lessors, two elderly persons, were impaired.

Put differently, the first complaint lay in the Court of Appeal’s conflation of two concepts: vulnerability and dependence. It is true that the Court of Appeal had held that “the impaired faculties of the two elderly persons, one of whom was a party to the rural lease at issue, are deemed, at the decisive stage, to constitute a state of dependence”.

As for the second complaint, it concerned the requirement of threats. The appeal contended that “the abusive conduct of the contracting party who imposes its domination and proceeds to take advantage of the established state of dependence must manifest itself through threats or pressure on its part”. Yet, in the case at hand, the Court of Appeal had not been especially demanding as to the characterisation of duress. Under the guise of “objectivising a defect of consent” (in its own words), the Bastia court had essentially inferred duress from the mere finding of lésion. Judge for yourselves: “as regards the abuse of that state of dependence, the relatively derisory consideration, in the light of the usages prevailing in the wine-growing sector in Corsica, suffices on its own to demonstrate the abuse of the dependence of Mr and Mrs [I]/[J]”.

In fact, the Court of Appeal had required no demonstration of duress whatsoever. Neither threat, nor fear, nor pressure. It had performed a kind of logical short cut, inferring duress from dependence (if one may put it that way) and from the imbalance affecting the contract. In other words, the Bastia court holds that, where the contract concluded is imbalanced, it is the product of duress.

The Third Civil Chamber of the Cour de cassation answers in two sentences.

At paragraph 12, it states that “it is not necessary to establish the existence of positive acts of threat or pressure in order to characterise a defect of consent through violence within the meaning of [article 1143 of the Civil Code]”.

At paragraph 13, it holds that “the state of dependence towards the other contracting party, required by that last provision, may result from a state of vulnerability, known to that party, of which it takes advantage when concluding the contract in order to obtain a manifestly excessive advantage”.

Having laid down these new rules, the Court applies them to the case.

First step: the lessor parents were markedly impaired, so much so that “the impaired faculties of these two elderly persons did not allow them to grasp the extent and the import of the rural lease concluded on 26 August 2019”.

Second step: the son “maintained regular relations with his parents”, so that he could not be unaware of the state they were in.

Third step: the lease was heavily imbalanced, the rent being extremely modest (seven times less than the average rent, considering the vines alone).

Conclusion: “having thus shown that Mr [E] [Y] was aware of the general impairment of his parents’ discernment and thus of their state of vulnerability, the Court of Appeal was entitled to infer that, having regard to the circumstances in which the lease was signed, the lessors were in a state of dependence towards their son, and that he had abused it in order to obtain an advantage which it, in its sovereign assessment, held to be manifestly excessive, and it therefore rightly annulled the lease”.

The Court accordingly dismisses the appeal.

Admittedly, the judgment is one of dismissal, and the level of review is limited (the Court of Appeal “was entitled to infer”), which invites the commentator to caution.

But the solution adopted by the Third Civil Chamber may come as a surprise, on several counts.

First, because the Court conflates dependence and vulnerability. Article 1143 of the Civil Code sanctions only the abuse of dependence — not the exploitation of vulnerability. The clarification added in 2018, to the effect that the dependence must pre-exist between the parties, dispels the slightest doubt, if any there could ever have been: only the exploitation of the victim’s dependence towards the perpetrator is sanctioned. The legislature was, moreover, careful to specify that this amendment has an “interpretative character” (article 16, I, of the statute of 20 April 2018): deemed to have been part of the text from the outset, the requirement of a dependence between the parties was already binding from 2016. Dependence is assessed in the relationship binding the parties, and not in the contracting party considered in isolation.

Whether or not one agrees with article 1143 of the Civil Code, and whether or not one would have wished it more protective of the weak, is immaterial. The text permits annulment of the contract only where the perpetrator of the duress has exploited the dependence in which the victim stood towards it.

To assert, as the Court does, that “the state of dependence towards the other contracting party […] may result from a state of vulnerability, known to that party”, is a misreading and is contra legem.

Second, because the Court adopts an expansive conception of abuse. Once again it extends the scope of article 1143, by not requiring proof of pressure or threats. Once the abuse of dependence is inferred from the mere fact that the perpetrator obtained an imbalanced contract and was aware of the victim’s weakness, the burden of proof is greatly eased… but legal certainty is weakened.

If, on the moral plane, the result is understandable, legal orthodoxy suffers for it, and one may ask whether other mechanisms could not have been called upon, without any need thus to distort article 1143 of the Civil Code.

For, in truth, what remains of duress if one requires neither fear, nor threat, nor pressure? Is one not, in reality, sanctioning a qualified form of lésion?

Finally, the solution runs counter to the policy adopted by the Commercial Chamber, which has of late tended to promote legal certainty by restricting the scope of certain provisions of the “new” law of contract (contracts of adhesion, the pre-contractual duty to inform, and so on). On the very terrain of article 1143, the Commercial Chamber has indeed recently refused to characterise an abuse of dependence, the assignors having retained the freedom not to comply with the assignee’s demands.

To our knowledge, violence par abus de dépendance had until now remained largely theoretical. It had drawn more ink in the columns of the law reviews than in the judgments of the Cour de cassation. Setting aside a well-known decision concerning a lawyer compelled by his near-sole client to accept a reduction in his fees — a decision rendered under the former law — it seems to us that the Cour de cassation had never recognised the existence of violence par abus de dépendance.

The case law of the lower courts is scarcely more favourable to article 1143 of the Civil Code.

One will therefore remain wary of this judgment of the Third Civil Chamber, which appears to widen the scope of the text considerably, to the detriment of legal certainty.

L’article Violence par abus de dépendance (economic duress): A First — and a Misfire est apparu en premier sur Louis Thibierge.

Note on Cass. com., 3 June 2026, no. 24-19.612

Since 2016, Article 1225 of the French Civil Code has required the resolutory clause to “specify the undertakings whose non-performance will result in the termination of the contract”. One question has divided French legal scholarship for the past ten years: in order to satisfy that requirement, must each of the undertakings concerned be listed[1], or is it enough that they be identifiable[2]?

As a precaution, many contract drafters had taken to avoiding so-called “sweep” clauses altogether.

Was the precaution warranted?

That is the question just settled, in a decision of major importance — slated for publication in the Bulletin, in the Annual Report and in the Chamber Letters (FS-B+R) — by the Commercial Chamber of the Cour de cassation, sitting under the presidency of Vincent Vigneau.

A word on the facts. In 2018, beIN Sports was awarded by the LFP the right to broadcast certain Ligue 1 football matches, for a price of EUR 332 million. The contract is the same as the one giving rise to the much-discussed decision of the Paris Court of Appeal of 14 January 2026 on loss of profitability (see L. Thibierge, “Caducité, rentabilité, imprévision : et un, et deux, et trois zéro”, Lexbase Contrats, Responsabilité, Immobilier, May 2026).

This time, the dispute concerned another contract: the sub-licence concluded in 2020 between beIN Sports and Canal +, for an amount of EUR 330 million. More precisely, it concerned Article 3 (e) thereof, drafted in English, which provided for a resolutory clause to operate in the event of breach of a “material obligation” (translated as “obligation importante”or “substantielle”) that had not been remedied within thirty days.

The contract specified that “such immediate and automatic termination shall not be subject to any formality other than those mentioned in this clause, notwithstanding the provisions of Article 1225 of the Civil Code” — a formulation whose meaning is not entirely transparent.

Invoking a breach attributable to beIN Sports, Canal + triggered the clause and terminated the contract.

beIN Sports challenged not the operation of the resolutory clause but its very validity. According to it, because the clause failed to list the obligations whose breach would result in automatic termination, it lacked the requisite specificity and was therefore invalid.

BeIN Sports consequently asked the Paris Court of Appeal to declare the contract un-terminated, and sought specific performance.

The Court of Appeal (Paris, 31 May 2024, no. 22/14546) granted the application, holding that the resolutory clause was “null and void for want of determined object”. In the eyes of the Parisian judges, the resolutory clause — which allowed termination upon any breach of “a material obligation under the Sub-Licence Agreement (including the provisions of the Call for Tenders applicable to the present Sub-Licence Agreement)” — was excessively imprecise, having regard in particular to the fact that “interdependent contracts place upon the parties multiple and complex obligations”.

Canal + appealed to the Cour de cassation, arguing that the resolutory clause was perfectly valid notwithstanding its “sweep” formulation.

The appeal was upheld by the Commercial Chamber, on the basis of Articles 1224 and 1225, first paragraph, of the Civil Code. The decision below was quashed for failure to provide a legal basis, but only as regards the declaration of nullity of the resolutory clause and the costs ruling. The case was remitted to the Versailles Court of Appeal.

The reasoning unfolds in two stages.

The Commercial Chamber first recalls the position of the various chambers of the Cour de cassation under the pre-reform law of contract. It had been held that:

• the resolutory clause must be expressly provided for in the contract;
• the resolutory clause must express in unequivocal terms the parties’ shared intention to terminate the contract automatically;
• the resolutory clause may sanction only the breach of an obligation expressly stipulated in the contract;
• where the resolutory clause targets the breach of a specific obligation, it cannot apply to a distinct obligation.

By contrast, the pre-reform case-law did not require “that the resolutory clause list the obligations whose non-performance it sanctions; it merely requires that the parties to the contract be able to identify those obligations clearly”.

Noted. One might however wonder what to make of the last part of the sentence. What does it mean for the parties to be able to identify the obligations “clearly” when the clause itself does not do so clearly? Is not every interpretation, by its very nature, subjective?

In any event, the assertion does not exhaust the debate, since the sub-licence was concluded in 2020 — that is, under the new law of contract.

Now, the new Article 1225 of the Civil Code provides that “the resolutory clause specifies the undertakings whose non-performance will result in the termination of the contract”.

At first sight, the new rule, set in stone in statute, departs from the old rule, which was purely jurisprudential. One might therefore have expected the Cour de cassation to abandon its earlier case-law and hold that the next-generation resolutory clause must, on pain of nullity, list the undertakings whose breach will entail termination of the contract.

Yet that is not the option chosen by the Commercial Chamber.

The Chamber observes that “neither the preparatory works of Ordinance no. 2016-131 of 10 February 2016, nor the parliamentary debates leading to the adoption of Law no. 2018-287 of 20 April 2018 ratifying that Ordinance, reveal any intention on the part of the legislature to depart, as regards the conditions of validity of resolutory clauses, from the prior state of the law”.

This is a familiar piece of teleological reasoning, which consists in probing the preparatory works in order to infer the will of the “legislature”. The same reasoning had prevailed in the Green Day decision of 26 January 2022, to set aside Article 1171 of the Civil Code, and again in a recent Comuto decision of the Commercial Chamber (Cass. com., 13 May 2026, no. 24-17.137; see further L. Thibierge, “Requiem pour un contrat d’adhésion”, https://www.thibierge.law/requiem-pour-un-contrat-dadhesion/).

We had previously underlined the artificiality of probing the parliamentary debates of the ratification Law of 20 April 2018, given that the parliamentarians of 2018 are not the authors of the 2016 provisions, which were adopted by Ordinance. Probing their will is therefore no absolute guarantee. Moreover, even though the Senate Law Commission had, in 2018, taken the view that “sweep” clauses remained admissible under the new text[3], that was but one voice.

One notes that, this time around, the Commercial Chamber casts its net more widely, since it also probes the “preparatory works of the Ordinance of 10 February 2016”, without however specifying the scope of the corpus thus referred to.

In the Court’s view, if the new text did not intend to disturb the earlier solutions — if the “legislature” of 2016 codified at constant law — then sweep resolutory clauses remain valid.

For the Court, the verb “to specify”, in Article 1225, is to be understood as follows: “the requirement of specificity tends … to enable the debtor to identify, in a clear and unambiguous manner, the undertakings whose non-performance will entail automatic termination of the contract”.

Hence the rule set out in paragraph 11 of the decision: “This requirement is satisfied by a clause providing that any non-performance of certain obligations expressly stipulated in the contract will entail its termination, where the obligations concerned can be identified in a clear and unambiguous manner — it being immaterial that they are not listed in the said clause”.

And the Commercial Chamber adds: “A clause providing that any non-performance of any one of the obligations expressly stipulated in the contract will entail its termination is therefore valid, subject to that condition”.

The sweep clause, then, is not dead.

What matters is not that the clause itself list the obligations whose breach will trigger termination, but that those obligations be expressly stipulated in the contract and be identifiable without ambiguity within it.

The solution thus upholds the bulk of resolutory clauses currently in use — much to the relief of those who value contractual certainty.

The reach of the sole reservation of “clear and unambiguous identification” is, however, open to debate. If all it means is that the obligations must, in order to be sanctioned by the resolutory clause, be clearly and unambiguously identified in the contract, such that the debtor knows what it is bound to perform, then the requirement is not particularly demanding. And one cannot but wonder about the fate of certain obligations drafted in imprecise terms. Where the contract provides both that any breach of any one of the obligations may be sanctioned through the resolutory clause (a sweep clause) and that the debtor “shall develop synergies for the development of development opportunities” — or some equivalent piece of corporate newspeak — will it be held that the debtor can clearly and unambiguously identify the obligations whose breach will entail termination?

To be continued.

Takeaways

• Article 1225 of the French Civil Code does not require the resolutory clause to list the obligations whose non-performance justifies termination.
• It is enough that those obligations can be identified in a clear and unambiguous manner in the contract.
• “Sweep” clauses, which target any non-performance of an obligation expressly stipulated in the contract, remain valid — provided that the relevant obligation is identifiable.

[1]L. Andreu and L. Thibierge, “Présentation générale”, in “La réforme du droit des obligations”, special issue, AJ contrat 2018, p. 252, esp. p. 254: the requirement of precision set out in Article 1225 “does not preclude sweep resolutory clauses targeting any contractual breach” (our translation). To the same effect: F. Chénedé, “Interprétation et amélioration du nouveau droit des contrats”, D. 2017. 2214, esp. no. 35.

[2]Contra: M. Mekki, JCl. Contrats et obligations, Fasc. 70, “Effets du contrat”, § 41; Ph. Stoffel-Munck, “Réforme du droit des contrats : apports et incertitudes”, Justice et Cassation 2017, p. 264, taking the view that “the requirement that the clause specify the undertakings appears to exclude the validity of so-called ‘sweep’ clauses” (our translation). See also, in a more tentative tone, S. Guérin and N. Genty, “L’exception d’inexécution et les différentes formes de résolution du contrat”, AJ contrat 2017, p. 17.

[3]Report no. 22 by Senator F. Pillet, on behalf of the Senate Law Commission, filed on 11 October 2017, on the bill ratifying Ordinance no. 2016-131 of 10 February 2016: “The provision allows for the survival of so-called ‘sweep’ clauses. It merely requires that the clause express the circumstances in which it will operate, and therefore does not preclude the insertion of a clause providing that it will operate in the event of breach of any obligation set out in the contract. The earlier case-law upholding such clauses is therefore intended to survive” (our translation).

L’article A Resolution on Terminations est apparu en premier sur Louis Thibierge.

Note on Cass., ass. plén., 29 May 2026, no. 23-20.005, B+R

On 29 May 2026, the Plenary Assembly (assemblée plénière) of the Cour de cassation handed down an eagerly awaited decision on personal injury.

The facts were of a sad banality: during a summer camp, a fifteen-year-old adolescent suddenly dived into shallow water and was injured. He would be left with severe after-effects — tetraplegia. One notes the considerable length of the proceedings, the accident dating back to 2006.

The victim and his parents sued the organising association and its insurer for compensation.

The Court of Appeal (Douai, 11 May 2023) held the association liable, but apportioned liability. It attributed a 60% share to the victim, for having dived « suddenly and without any precaution ».

Compensation was therefore limited to 40% of the loss sustained.

A simple but crucial question was put to the Cour de cassation: can the mere imprudence of the victim of a personal injury reduce her right to compensation?

Under the general law of liability, the answer admits of little doubt. The victim’s fault reduces her right to compensation in proportion to its causal role. It may even wholly exonerate the defendant where it displays the characteristics of force majeure.

This the Cour de cassation takes care to recall at the outset: « according to settled case law, unless it displays the characteristics of force majeure, the victim’s fault which has contributed to the occurrence of her loss constitutes a ground for partial exoneration of liability, whatever the nature of the liability incurred and of the loss sustained ».

Note the generality of the statement: the rule applies whatever the nature of the liability and of the loss sustained. This holds broadly true, setting aside certain special regimes such as the loi Badinter (the Act of 5 July 1985 on road-traffic accidents), which affords the non-driver victim a protection exceeding the ordinary law.

Having laid down this general reminder, the Cour de cassation initiates a significant shift.

It stresses the specificity of personal injury, « characterised by an impairment of the physical or psychological integrity of the person ». For now, that specificity remains modest, being embodied, in the general law, in Article 2226 of the French Civil Code — which removes the action arising from personal injury from the ordinary five-year limitation period and from the long-stop period of Article 2232 — and, in special law, in Article 3 of the loi Badinter referred to above.

De lege ferenda, one could go further in addressing this specificity of personal injury. One bears in mind the exception to the principle of non-option (the ill-named rule of « non-cumul »): Article 1233-1 of the draft reform of civil liability anchors personal injury in the law of extra-contractual liability while allowing the victim to prefer contractual liability — retaining the benefit of the contract (a strict, result-based safety obligation) without bearing its limits (limitation-of-liability clause, clause shortening the limitation period, and so forth).

The text provides: « Loss resulting from personal injury is compensated on the basis of the rules of extra-contractual liability, even where it is caused in the course of performance of the contract. However, the victim may rely on the express stipulations of the contract that are more favourable to her than the application of the rules of extra-contractual liability».

One also thinks of Article 1254 of the same draft, which provides that « the victim’s breach of her contractual obligations, her fault, or that of a person for whom she is responsible, are partially exonerating where they have contributed to the occurrence of the loss. In the case of personal injury, only a gross fault can give rise to partial exoneration ».

In other words, only the victim’s gross fault could give rise to an apportionment of liability.

This shows how tempting the opportunity was for the Cour de cassation to take the step and to enshrine what the legislature has for years struggled to achieve: a change to the rules governing compensation for personal injury where the victim is at fault.

On this point, the decision will disappoint those who expected the Plenary Assembly to « anticipate » the reform of civil liability by confining apportionment of liability to situations in which the victim’s fault is « gross » or of particular gravity.

One notes here that the Douai Court of Appeal had taken care to characterise the young diver’s imprudence as « grave ». The Cour de cassation could have seized upon this.

It does not.

Yet the decision opens a new front.

To that end, the Plenary Assembly first takes up the concept of the duty to inform. At paragraph 7, the decision recalls that « in order to prevent the occurrence of such harm, duties to inform and to warn rest on the professional as regards the safety risks associated with the performance of its service, in particular in respect of sporting or leisure activities ».

The reasoning begins to show: had the professional informed the victim, she would (no doubt) not have exposed herself to the risk. Applied to the case, the reasoning means that, had the camp supervisors warned the youngsters that the water was too shallow to dive into, the victim would not have dived.

It is indeed this reasoning that the Court sketches at paragraph 8: « in the case of an imprudent fault of the victim, the professional’s breach of the aforementioned duties — compliance with which would have been such as to prevent the accident — does not permit a causal link to be found between that fault of the victim, who was not informed of the risks, and her personal injury ».

The reasoning, causal in nature, allows the judges to avoid opening a debate on the gravity of the fault, and to avoid setting a threshold below which the victim’s fault cannot be raised against her — much as the law provides in respect of road-traffic accidents.

It is thus causation, a flexible concept, that underpins the solution.

This causal reasoning is open to discussion. It seems to us that it does not escape a degree of artifice. Stricto sensu, the victim’s fault did contribute to her loss. Had she not dived, she would not have been injured.

This absorption of the victim’s fault (the victim being a minor, which the Court does not mention) by the organiser’s fault may be understood in light of the policy aims driving it. But on strictly causal ground, it does not wholly carry conviction.

Were one to reason, as under the general law, in terms of a (negative) loss of chance, one would reach a different solution — namely, assessing the chances that the victim, better informed, would have avoided the harm (by not diving). Here, the Cour de cassation short-circuits the loss-of-chance analysis, seemingly treating the victim’s active role as immaterial.

At paragraph 9, the Court states that there is « accordingly ground to rule henceforth that, since the professional organiser of a sporting or leisure activity is bound to give the safety instructions necessary for the practice of the activity and adapted to the public concerned, in the absence of such instructions it cannot, in the event of personal injury suffered by one of the participants, obtain an apportionment of liability by invoking imprudence on the part of the victim ».

The principle set out supra is here refined, hedged about with a number of conditions.

For apportionment of liability to be refused, the following are required:

• that the organiser of the sporting or leisure activity be a professional — which will no doubt exclude a number of cases of family or voluntary supervision;
• that the organiser have given no safety instruction whatsoever, since the decision refers to « the absence of such instructions ». This augurs interesting debates where the information was insufficient or piecemeal. What if the supervisors had said « be careful when diving! »? It should be noted that, in this case, the supervisors had allowed the children to bathe, but the question of diving had, it seems, not been addressed.

In short, the Plenary Assembly strengthens the rights of the personal-injury victim; but the road still appears long, and the need for a thorough reform of the law of civil liability is felt all the more keenly.

Takeaways

• The decision of 29 May 2026 is not a new Desmares — that 1982 provocation by the Court designed to prompt the legislature to react.
• Rather than seizing on the gravity of the fault to confine apportionment of liability, the Cour de cassation adopts a different technique: causation.
• Where the professional organiser of a sporting or leisure activity, bound by a duty to inform, gives no safety instruction, the victim’s imprudent fault cannot be raised against her, whatever its gravity.

L’article Personal injury — An uninformed victim, no apportionment of liability est apparu en premier sur Louis Thibierge.

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).

L’article Compensation for fraud: Is Parsys burning? est apparu en premier sur Louis Thibierge.

Note on Cass. civ. 3, 9 April 2026, no. 24-17.405, F-D

Audiard’s dialogues have this in common with great wine: they cross generations without suffering the insult of the years. In Le cave se rebiffe (Gilles Grangier, 1961) — a French crime classic where « cave » is slang for a sucker — Gabin and Blier trade quips, gibes and aphorisms. Blier, whom one had mistaken for a cave, a naïve fool, turns out to be far more cunning than expected.

In the judgment handed down on 9 April by the Third Civil Chamber of the French Cour de cassation, under the presidency of Mrs Teiller, there was indeed a cellar at stake — although, this time, of the architectural kind. And, plausibly, a touch of cunning too.

A property sale is concluded in 2018. After moving in, the buyers discover cracks. They learn that the seller had, in the years preceding the sale, commissioned major structural works on the building’s foundations. The notarial deed says not a word about these works — quite the contrary, in fact, since it states that « to the seller’s knowledge, no construction or renovation has been carried out in the last ten years ».

Fraud might seem self-evident, given the gap between the notarial declaration (no works) and the reality (significant structural works). Hence the action for nullity brought by the buyers, who considered themselves victims of deceit.

The Court of Appeal of Rouen (29 May 2024) accepts the action and annuls the sale. It orders the restitution, on the one hand, of the property and, on the other, of the sale price.

The seller then lodges an appeal to the Cour de cassation, raising two grievances: one on the characterisation of fraud, the other on the consequences of fraud.

1. The characterisation of fraud

As stated above, fraud seemed flagrant, since the notarial declaration was contradicted by the reality of the facts. As the Cour de cassation notes, « the notarial deed of sale of 28 February 2018 contained a declaration by the seller stating that to her knowledge no construction or renovation had been carried out in the last ten years, and that no element constituting a structure or equipment indissociable from the structure within the meaning of Article 1792 of the Civil Code had been carried out within that period, whereas the seller had been dealing for several years with disorders affecting the building’s structure, by having, in particular, structural works carried out in 2016 ».

Such a declaration is plainly inaccurate. For it to be qualified as deceitful, however, it must be deliberate. He who deceives himself commits no fraud. Thus, if our seller had herself been unaware of the works in question, her inaccurate declaration could not amount to fraud.

In the present case, however, it appears that the seller had commissioned the works herself, and could therefore hardly claim to be ignorant of them. The intentional element accordingly raised no doubt in the Court’s eyes.

Some points of difficulty remained. Two deserve highlighting.

The first lies in the existence of an attestation by witnesses, who stated that the buyers had gone down to the cellar and had been able to exchange with the neighbours about « the works of the Brochard company, a specialist firm that had carried out the works in the cellar and on the party wall ». The seller inferred that her buyers could not claim ignorance of the works that had preceded the sale.

The argument carries weight neither before the trial judges nor before the Cour de cassation, which defers to the trial judges’ sovereign appreciation: « the mere summary mention of works during the visits, in particular the rebuilding of the cellar staircase, was insufficient to enlighten the buyers about the actions undertaken on the foundations ».

In other words: a passing mention of cellar works will not suffice to inform the buyer’s consent as to the quality of the foundations.

The second point concerns the qualification of the material element of fraud. In our view, since the seller had made a false statement — uttered a « lie » within the meaning of Article 1137 of the French Civil Code — fraud in the classic sense, which presupposes an active behaviour, was made out. Why then mobilise the figure of fraudulent concealment, why hold that the seller had « knowingly omitted to disclose the interventions on the foundations »? Should one not see in it, on the contrary, not an omission but an action?

On the characterisation of fraud, the ruling breaks no new ground. It is of greater interest as to the consequences of fraud.

2. The consequences of fraud

Fraud being a defect of consent, it may lead to the annulment of the contract where it was determining of consent. That much is settled.

It is also a settled point that the nullity of a contract is always retroactive. As Article 1178, paragraph 3, of the French Civil Code provides: « The annulled contract is deemed never to have existed ».

A wondrous fiction, retroactivity, calling to mind Giraudoux’s aphorism that « law is the most powerful of all schools of imagination ». Has anyone ever seen retroactivity in the state of nature? Can one truly turn back, grow young again, resurrect, forget what has just happened? Plainly not. Yet French law continues to profess its attachment to retroactivity: what is null can produce no effect whatsoever.

So be it. But how can one act « as if » the contract had never existed? After all, if the sale is annulled several years after the event (the appellate judgment is six years later than the conclusion of the sale), one will have to act « as if » the contract had never produced any effect.

Yet, during those six years, the buyers will have lived in the premises. Our seller will have been separated from her property.

How should this intermediate period, between sale and annulment, be treated?

For the Court of Appeal of Rouen, nothing of what occurred occurred. The slate must be wiped clean. Each party restores what it received and goes its way.

Concretely, this means that our seller cannot receive any sum of money for the intermediate period, those six years during which the buyers occupied the property.

This may seem just, if one stresses that the annulment is attributable to the seller’s wrongdoing, she having committed fraud.

Accordingly, the trial judges reject the seller’s request to be awarded an occupation indemnity, on the ground that « because of the retroactive effect of the annulment of the sale, [the seller] could not benefit from an indemnity corresponding to the mere occupation of the property ».

One recognises here a position established by the Joint Chamber over twenty years ago in a similar case, the seller having committed fraud. The Cour de cassation had then held that « the seller is not entitled, owing to the retroactive effect of the annulment of the sale, to obtain an indemnity corresponding to the mere occupation of the property » (Cass. ch. mixte, 9 July 2004, no. 02-16.302).

The trial judges could therefore rely on a certain praetorian footing.

Their decision is nevertheless quashed.

And rightly so: it disregards the very letter of Article 1352-3, paragraph 1, of the Civil Code, which has provided since 2016 (and was therefore inapplicable at the time of the Joint Chamber’s ruling) that « restitution includes the fruits and the value of the enjoyment that the thing has provided ».

Accordingly, the restitution of the thing (the property) includes the fruits and the value of the enjoyment it has provided to the buyer.

One may be troubled by such a solution, denouncing it as a premium on bad faith. One cannot rule out seeing some commentators exhume the adage nemo auditur, to stigmatise the conduct of the bad-faith seller, who may now claim an indemnity from the good-faith buyer.

Yet emotion is a poor counsellor. The solution has the orthodoxy of the law of restitutions on its side — a regime that must be distinguished from that of compensation for damage (on the dividing line between restitutions and liability, see S. Pellet, « Des mystérieux liens entre restitutions et responsabilité », RDC 2025, no. 1). As the Cour de cassation held in 2024, « the restitution owed to sellers following the annulment of the sale of real property is not subordinated to the absence of fault on their part » (Cass. 3e civ., 5 December 2024, no. 23-16.270, FS-B).

In the judgment of 9 April 2026, no value judgment is passed on the seller’s conduct. The very word « fault », present in the 2024 ruling, is absent.

The quashing is curt: in holding that the retroactive effect of the contract’s annihilation barred the payment of an occupation indemnity, the Court of Appeal violated the law by refusing to apply it.

So no innocent is being punished: one merely touches with the finger the limits of the fiction of retroactivity.

Key takeaways

–  The annulment of the contract does not bar the restitution claim that includes the value of the enjoyment the thing has provided.

–  It follows that a seller who has committed fraud may obtain an occupation indemnity from the buyer who is the victim of that fraud.

L’article The Cellar Strikes Back est apparu en premier sur Louis Thibierge.

Note on Cass. com., 13 May 2026, no. 24-21.473, F-B

• • •

The labourer of the eleventh hour received a denarius. The same wages as the one of the first hour. The parable illustrates the supposed generosity of the master, who pays the same to the one who has worked since morning and the one who has given but a single hour of labour.

Is this justice?

Hardly so, in the eyes of the Commercial Chamber of the Cour de cassation, which, under the presidency of Vincent Vigneau, has just delivered a fine decision concerning the right to payment of services that have not been rendered.

In the case at hand, a dispute arose between Compagnie de gestion hôtelière (CGH) and W.R & S. The two were bound by a fixed-term contract entered into on 1 November 2020, for a duration of twenty-four months (until 31 October 2022).

W.R & S was to provide, on behalf of CGH, communication services at specific periods of the year, in consideration of fixed monthly fees of EUR 8,160. The services were intermittent; the remuneration, by contrast, was spread evenly over twelve equal monthly instalments.

On 3 October 2021, CGH terminated the contract, for a reason not disclosed by the decision.

W.R & S then brought proceedings against CGH seeking payment of two sums:

• the first, retrospective, corresponding to the services rendered between February and October 2021 (that is, the unpaid monthly instalments accrued prior to termination);
• the second, more prospective, corresponding to the ordinary instalments yet to fall due between the date of termination (alleged to have been wrongful) and the contractual term (31 October 2022).

The service provider thus sought payment both for services purportedly rendered before termination, and for those that ought to have been rendered after termination.

Before the Court of Appeal, our service provider prevailed on every count. The Paris Court (CA Paris, pôle 5, ch. 4, 18 Sept. 2024, no. 23/05911) granted relief on both fronts.

As regards the services rendered before termination, the Court of Appeal held that « it is apparent from the contractual stipulations that the agreed remuneration was not linked to the rendering of services, but rather corresponded to a monthly fixed-fee instalment of services that were planned on an annual basis ». In other words, the fixed fee being independent of the substance of the services — since billing occurred each month while services were rendered only at certain periods of the year — the monthly instalments were due.

As regards the services owed after termination, the Paris judges held, citing Article 1212 of the Civil Code, that « a contract entered into for a fixed term must be performed by the parties until its term, save for force majeure or imprévision ». Since the debtor failed to establish either force majeure or imprévision, it remained bound to pay the monthly instalments until the agreed term.

This bracket deserves more than a passing remark. Could the service provider invoke imprévision? Doubts arise, given the nature of its obligation. The Cour de cassation has long held that « the debtor of a contractual monetary obligation that has gone unperformed cannot be released from that obligation by invoking a case of force majeure » (Cass. com., 16 Sept. 2014, no. 13-20.306, Bull. IV, no. 118). We have, for our part, expressed serious reservations as to the questionable choice of the criterion of excessive onerousness within Article 1195 of the Civil Code (see L. Thibierge, Le contrat face à l’imprévu, foreword by L. Aynès, Economica, coll. « Recherches juridiques », 2011, passim; « La résistance de la force obligatoire du contrat à la révision pour imprévision », RDC 2024, no. 4, p. 116; « Force majeure — Rendre ou ne pas rendre, telle est la question », Lexbase Contrats Responsabilité Immobilier, April 2025; and more recently « Caducité, rentabilité, imprévision : et un, et deux, et trois zéro », Lexbase Contrats Responsabilité Immobilier, 20 May 2026), a criterion that does not appear capable of reaching monetary obligations. In that respect, the UNIDROIT Principles appear infinitely superior.

In any event, that is not the focal point for the Cour de cassation, which quashes the judgment of the merits on two grounds.

First, as regards the services owed before termination.

Citing Articles 1103 (binding force) and 1229 (termination) of the Civil Code, the Court reproaches the judges of the merits for having failed to ascertain, as they had been invited to do, « whether W.R & S had performed the services it was bound to provide before 3 October 2021, the date of termination at which one had to stand in order to assess the performance by the contracting parties of their respective obligations ». A cassation for lack of legal basis follows, the Court of Appeal having insufficiently reasoned its decision.

In other words, if every labour deserves its wages, every wage deserves its labour. If the promised services have not been performed (which may well be the very cause of the termination), the right to remuneration vanishes. The contractual smoothing of remuneration over time matters not in that respect. If nothing has been performed, nothing is owed.

Second, as regards the services owed after termination. To put an end to a fixed-term contract amounts, save for exceptions (among which termination for non-performance), to a wrongful act. The victim of an unfounded rupture is left no better off than before, deprived of the gains it had anticipated from the contract.

On this point, the decision is silent, and one will be careful not to make it say what it does not. The victim of the rupture was not seeking compensation for its loss (which presumably consisted in the lost contribution margin between the day of termination and the contractual term), but rather the price of the services owed.

In other words, this would amount to a form of specific performance: the debtor would be ordered to do that to which it had committed, namely to pay the agreed price.

Yet such an outcome is inconceivable where the counter-performance is not delivered. The parties’ intention was never that the price be paid without the services being rendered. One cannot be compelled to that which was not agreed.

The synallagma cannot be broken, and the victim of the rupture cannot be enriched by receiving the price without performing.

Hardly surprising, then, is the attendu (if we may still use so quaint a formula), which reads: « in the event of the early termination of a fixed-term contract, the price is owed only if the agreed services have been performed ». The formula echoes that already enshrined in the rulings handed down by the same Commercial Chamber on 26 January 2022 (nos. 20-15.474 and 20-17.441) and 7 September 2022 (no. 21-13.003), and recently confirmed by the same Commercial Chamber (Cass. com., 3 December 2025, no. 24-17.537, F-B, Valgo v. Recyclage de l’Épine).

The decision of 13 May 2026 is underpinned by an immanent logic: in a synallagmatic contract, the price is, by its very essence, the counter-performance of an actual performance. Whether such performance precedes or follows termination, the price can only be paid in exchange for services, past and/or future. The stipulation of a fixed fee changes nothing. It is but a method of calculation, not a challenge to the synallagma.

Finally, the interpreter will bear in mind the need to proceed with modesty and caution: the decision deals only with the payment of the price, and leaves untouched the question of compensation for loss. A word to the wise…

• • •

The labourer is worthy of his hire; provided that he has laboured.

Takeaways

• Where a fixed-term contract is terminated early, the price is owed only if the agreed services have been performed (Articles 1103 and 1229 of the Civil Code).
• For the period before termination, a monthly fixed instalment is owed only where the services that were to be rendered during the corresponding period have actually been rendered. The fixed fee is a method of calculation, not a mode of existence of the price.
• For the period after termination, the creditor cannot obtain payment of the future monthly instalments. The contract having come to an end for the future, there is no longer any obligation to be performed.
• The question of compensation for loss remains in the blind spot.

L’article The labourer is worthy of his hire est apparu en premier sur Louis Thibierge.

Note on Cass. com., 13 May 2026, no. 24-20.159, F-B

No settlement without mutual concessions, says Article 2044 of the French Civil Code.

So far, so clear. But what is a concession? In technical terms, it is a waiver of a claim or the assumption of a new undertaking (e.g. paying a sum of money). In other words, an effort. Each party must move back from its initial position — agree to lower its ambitions, accept a sacrifice, undertake to pay a sum… all of these are concessions.

Yet how can one truly assess the reality of a concession when one is uncertain about what one is giving up? Take a simple example. Company A terminates its contract with Company B, alleging non-performance. B considers the termination unfounded and claims damages. Eventually, the parties draw closer and settle for EUR 50,000. Has B truly made a concession? If the termination was indeed unfounded and a court would have awarded B EUR 80,000, then yes, B has compromised. Conversely, if the termination was justified and B had no right to any compensation, can we still say B has made a concession?

This is the very salt of settlement: to settle is to give up knowing whether one was right or wrong. Since the dispute will never be adjudicated, the parties will never know what their rights truly were.

A recent decision of the Commercial Chamber of the French Cour de cassation, handed down under the chairmanship of Vincent Vigneau, illustrates the point.

On the facts, a company named Agence Champs Élysées (hereafter ACE), acting as a commercial agent, had entered into a verbal agency contract with the company Domaines Bonfils, a winegrowing estate. On 10 February 2020, after several years of collaboration, the parties signed a settlement agreement terminating the relationship and setting the amount of the indemnity due to the agent.

A year later, ACE sued Domaines Bonfils for nullity of the settlement, invoking two defects of consent.

First, duress, the manager of ACE having been ill at the time the agreement was signed.

Second, mistake: ACE argued that, at the time of the settlement, it was unaware of the amount of the statutory indemnity to which it was entitled. It contended that the indemnity actually agreed was below what it would have received had its commissions been indexed on the turnover generated for the principal through its services.

The Court of Appeal dismissed both grounds and rejected the action for nullity.

Before the Cour de cassation, ACE put forward two arguments stemming from one and the same fact: when settling, ACE was unaware of the statutory indemnity it could have claimed, the amount of which depended on the turnover achieved by the principal thanks to the agent’s activity — turnover that the principal had not disclosed.

From this, the appellant deduced, first, that the settlement was void on the ground that « in matters of public policy, parties may settle only on accrued rights whose value they know ». Since the provisions on the goodwill indemnity owed to a commercial agent upon termination are matters of public policy (and of European inspiration), no settlement could be reached, the argument ran, until the agent knew what indemnity could be claimed. ACE, being unaware of the extent of its rights of public policy, could not — so its counsel argued — have knowingly waived them.

The appellant further submitted, secondly, that the settlement was void under Article 1132 of the French Civil Code, the seat of mistake as to essential qualities. The argument was not entirely unambiguous, however, since it referred to Article 1132 (mistake) but described a « fraudulent concealment » — which properly belongs to Article 1137. ACE’s contention was that, by refusing to disclose its turnover (an essential input to compute the statutory indemnity), the principal had committed a fraudulent concealment.

To these arguments, the Commercial Chamber of the Cour de cassation responds in three steps.

First step

« Although it is forbidden to waive in advance the rules of protection established by a law of public policy, it is permissible to waive the accrued effects of such rules ». This rule, which rests on a chronological approach (see L. Thibierge, Rép. civ. Dalloz, V° «Transaction»), is not new. Any clause in a commercial-agency contract by which the agent would waive, in advance, its right to a termination indemnity is to be deemed unwritten (Cass. com., 21 October 2014, no. 13-18.370). Once the relationship has been terminated, however, and the right to indemnity has accrued, nothing prevents the agent from settling on the amount of the indemnity. In the same vein, settled case-law holds that «while Article L. 442-6, I, 5° (former) of the Commercial Code establishes a liability of public policy from which the parties cannot derogate in advance, it does not prevent them from agreeing on the modalities of the termination of their commercial relationship, or from settling on the indemnification of the damage caused by the abrupt nature of that termination » (Cass. com., 16 December 2014, no. 13-21.363). The same approach prevails in French employment law, where an employee may only settle after the termination of his or her employment contract.

So far, so familiar: nihil novi sub sole. Once the settlement was concluded after the termination of the contract, the right was available for disposal.

Second step

And here lies the heart of the ruling: « No principle requires that parties to a settlement — even in a field governed by a law of public policy — know in advance with precision the sums likely to be paid to them ».

The motivation (if one may still use the term « attendu ») is finely chiselled. The Commercial Chamber states, with the utmost clarity, a single rule: it is immaterial that the party waiving its right was ignorant of the quantum of the sums potentially due. Which brings us back to what we said at the outset: to settle is to give up knowing. It is to accept remaining in ignorance.

The rule seems sensible — and yet it remains slightly irritating. For if one has given up nothing, if one has made no concession, the protocol does not deserve the qualification of settlement. It therefore does not bar the action.

One may also wonder about the precise scope of the rule. The Court is in fact answering only the first branch of the ground, which contended that one cannot waive a right of public policy without knowing the extent of one’s waiver. The judgment is explicit: « The ground, in its first branch, which postulates the contrary, is not well-founded ».

In other words, the rule laid down by the Commercial Chamber should be read as an answer to the specific argument that it is impossible to settle on a right of public policy without knowing the value of the right being waived.

A contrario, what the ruling does not say is whether the waiving party’s ignorance of the value of the right being waived could ground a mistake constituting a cause of nullity.

It is well known that, under the law prior to the « J21 » Act of 18 November 2016, the settlement contract was governed by a derogatory regime, under which it could not be challenged « on grounds of mistake of law or on grounds of lesion » (former Article 2052), but could be challenged for « mistake on the object of the dispute » (former Article 2053). The boundary was decidedly porous, and courts sometimes took an expansive view of « mistake on the object of the dispute » in order to allow a settlement to be set aside for mistake as to the reality and extent of the rights being waived.

It is equally well known that since 2016, the settlement contract has returned to the general law of contract and is subject to the same grounds for nullity as any other contract.

Could the settlement at issue here be effectively challenged on the ground of mistake? The question is worth asking. Is the knowledge of the content of the right being waived not an essential quality within the meaning of Article 1132 of the Civil Code? Conversely, looking at Article 1136 of the Civil Code, a negative answer seems to impose itself: « a mistake as to value, by which a party, without making a mistake on the essential qualities of the performance, makes only an inaccurate economic assessment of it, is not a cause of nullity ».

This point not being decided in the ruling, one must await a subsequent decision before being able to assert that the rule according to which it is not necessary for the parties to « know in advance with precision the sums likely to be paid to them » is intended to bar any action in nullity grounded on a mistake as to the reality and content of the right being waived.

Third step

Nor does the ruling decide the question of fraud. The argument was an interesting one: the appellant submitted that, by refusing to disclose the turnover on which the statutory indemnity was to be calculated, the principal had committed a fraudulent concealment. This argument receives no true answer from the Court, which merely notes that « the court of appeal, which was not bound to undertake the inquiry referred to in the second branch of the ground — that inquiry not having been requested of it —, does not incur the grievance of the ground ».

In short: the fraud argument not having been raised before the lower courts (because it was only on appeal that ACE had received the turnover information and realised its error), the court of appeal cannot be reproached for not having ruled on the point.

Let us assume, for the sake of argument, that the fraud point had been raised before the trial judges. Would it have prevailed? Here too, doubt is permitted. Article 1137 of the Civil Code does not sanction fraudulent concealment when it bears on the value of the performance. But here, is it really only about value, or about something more essential — the reality of the right being waived — which would call into question the very validity of the settlement itself, for want of mutual concessions?

Decidedly, the law of settlement still harbours its share of mysteries.

Key takeaways

• The Commercial Chamber lays down a principle: a settlement is valid even if the waiving party is unaware of the precise amount of the rights being waived, even in a field governed by public policy.
• The classic distinction stands: waiving a public-policy protection in advance is not possible; waiving the accrued effects of such protection, however, is.
• A grey area remains: the defects of consent, where the determining information has been concealed in order to push a party towards settlement.

L’article To settle is to give up — knowing est apparu en premier sur Louis Thibierge.