Business Contracts

At first glance, contracts for services and contracts of sale may seem quite dissimilar: while the former are limited to work performed for a fee, and presuppose an obligation to do something, the latter involve the delivery of a thing, and therefore an obligation to provide something. Thus, where the object of the contract is not the performance of work but the supply of a thing of a kind, the co …

Contract of sale

At first glance, contracts for services and contracts of sale may seem quite dissimilar: while the former are limited to work performed for a fee, and presuppose an obligation to do something, the latter involve the delivery of a thing, and therefore an obligation to provide something. Thus, where the object of the contract is not the performance of work but the supply of a thing of a kind, the contract will be characterized as a contract of sale, and not a contract for services .

However clear this distinction may seem, there is a real risk of confusion between these two contracts. In effect, a transfer of ownership may result from the conclusion of a contract for services, particularly when the contractor supplies the material in addition to his work . The question then arises as to whether the contract in question is a simple sale, or whether it should be classified as a contract for services. Faced with these difficulties, case law has developed criteria for distinguishing contracts for services from contracts of sale.

Relying on the accessory doctrine (the accessory follows the principal) the Court of Cassation began by weighing up the work performed against the material supplied, with the classification as a contract of sale prevailing over that of a contract for services, if the “material” element outweighs the “manner” element, and vice versa . In other words, a contract by which a person supplies both his work and movable objects must be legally construed as a sale if the work constitutes its accessory . When one does not prevail over the other, the Court of Cassation has characterized the contract as a complex agreement comprising both a contract for work and a sale of supplies . A contract by which ownership of a film is transferred to the purchaser before the film is submitted to the professional for development  is therefore partly in the nature of a sale, and cannot in its entirety be classified as a contract for works (contrat de louage d'ouvrage).

Gradually phased out under case law, the economic criterion of the respective value of labor and material was replaced by the criterion of “specificity”, which consists in determining whether the good has been manufactured specifically for the customer, and in deeming the existence of a contract for services in such a case. The approach based on specificity has since been confirmed on several occasions by the Commercial Chamber of the Court of Cassation . 

Thus, included in the definition of a contract for services and not a contract of sale, is a contract for the supply and installation of engines on a fishing vessel, insofar as it relates to specific work intended to meet the particular needs of the principal, and not to things determined in advance . The same applies to an order for spotlights, with precise, predetermined requirements, intended to meet specific needs . A contract for the supply and installation of parquet flooring constitutes a contract for services rather than a contract of sale, since a significant part of the work consists of cutting and adapting the parquet floor of each room to conform with the customer's requirements, thus establishing that a specific job has been commissioned, designed to meet particular needs, which is characteristic of a contract for works . The following also constitutes a contract for services and not a contract of sale: an agreement whereby a project owner entrusts a contractor with the manufacture and installation of kitchen and bathroom furniture, provided that the work has been designed and manufactured by the contractor himself to meet the specific needs of the project owner on the basis of layout plans, so that the items are not standard items, the furniture must be adapted to the dimensions and particular configuration of the rooms of the dwelling . Similarly, a service entrusted to a company, consisting in the supply and installation of a heat pump - a complex operation which responds to a particular need, requires prior study and is performed in several phases, without being limited to the simple delivery of a thing - is characteristic of a contract for services and not of a contract of sale .

On the other hand, the fact that a company supplies specific work at the request of another, in line with market requirements, is not sufficient to deduce that it acted as a contractor, and not as a seller of batch goods . In effect, if the good has been manufactured in series or in advance, in a standardized way, case law considers that there is a sale. Thus, the status of seller applies to one who supplies products that required the consideration of specific criteria for their manufacture, but whose customization for each order based on precise measurements does not necessarily involve a manufacturing technique specific to that order that would make it impossible to substitute an equivalent product or would be incompatible with standardized mass production . A contract for the manufacture and supply of a new rotor does not therefore constitute a contract for services but a contract of sale, provided that the information supplied by the purchaser was only the minimum essential for examining the request, and did not reflect specific requirements involving particular manufacture, that the price fixed and agreed between the parties with reference to the seller's general terms and conditions of sale did not include installation of the rotor, and that the contract therefore did not relate to specific work intended to meet the particular needs of a principal, but to things determined in advance . The same applies to a contract by which an undertaking supplies a reinforcement kit with a drawing produced by an undertaking, which is a contract of sale and not a contract for work, since the undertaking is not entrusted with any specific work . A contract by which a purchaser orders professional kitchen equipment for the fitting out of his restaurant, without entrusting the seller with the design of the kitchens, the equipment having been chosen from a catalog and not being items of equipment designed to meet specific, precise and contractually predetermined requirements, must also be classified as a contract of sale and not as a contract for services .

The distinction is not without implications for the parties, as the two types of contract are governed by very different rules.

Firstly, as regards the validity of the contract, the price is a decisive element of the sale, whereas this is not the case for a contract for services, which does not require the parties to determine the price at the outset of the contract. It has therefore been held that a contract by which one party undertakes to supply a certain quantity of untreated water to another in return for the payment of a sum of money at regular intervals is a contract of sale, and not a contract for services . The same applies to a contract in which the price has been agreed between the parties with reference to the seller's general terms and conditions of sale .

Furthermore, when the service entrusted to an undertaking is characterized by a contract for services rather than a contract of sale, neither breach of the obligation to deliver in conformity, nor the warranty for latent defects , nor the legal guarantee of conformity can be claimed. On this last point, the Court of Cassation recently clarified in a ruling dated 12 October 2022 that the project owner is not liable for the materials he supplies and installs under a contract for the hire of work, except in the case of a contract for the supply of movable property to be manufactured or produced. The legal guarantee of conformity provided for in Articles L. 217-1 et seq. of the Consumer Code cannot therefore be extended to such persons in the case of a contract for the supply and installation of a parquet floor, since the object of the contract is neither the sale of a tangible movable good, nor the supply of a movable good to be manufactured or produced .

Finally, while in a contract of sale, “the transfer of ownership entails the transfer of the risks of the thing ” , in a contract for services, when the contractor supplies the material, he must bear the risks of the thing in the event of destruction of the work .

Cass. com. 27 November 2001, LawLex202100006383JBJ.

Civil Code, Art. 1787: “When someone is commissioned to do a work, it may be agreed that he will supply only his labor or his industry, or that he will also supply the material”.

CA Grenoble, 13 June 2023, LawLex202400006324JB; see for recent examples: CA Chambéry, 2 April 2024, LawLex202400006037JBJ; CA Bastia, 26 June 2024, LawLex202400006323JBJ.

CA Angers, 8 April 2022, LawLex202200004134JBJ.

Cass. 3e civ, 11 May 2005, LawLex202100006401JBJ, striking down a Court of Appeal, on the grounds of lack of legal basis, for having adopted the classification of a contract for services by noting specific work in line with the requirements of the contract.

CA Versailles, 13 June 2024, LawLex202400004557JBJ.

Cass. com., 5 December 2018, LawLex201900002105JBJ.

Cass. 3e civ, 11 July 2012, LawLex202100006404JBJ.

CA Riom, 15 May 2024, LawLex202400003845JBJ.

Cass. com. 5 December 2018, LawLex201900002105JBJ.

CA Angers, 8 April 2022, LawLex202200004134JBJ; CA Aix-en-Provence, 23 September 2021, LawLex202200006732JBJ, holding that the plaintiff is not entitled to claim from the company that delivered and installed the litigious swimming pool a payment for its repair and bringing into conformity, since the obligation to deliver in conformity is only applicable in the context of a contract of sale, and not of the contract for services binding them in this case.

Cass. 1re civ., 27 April 1976, LawLex202100006400JBJ, concerning a contract by which one person placed an order with another for a decorative ensemble consisting of curtains, linings, valances and trimmings, the fabric for which was supplied by the latter, who had it cut and made up according to the measurements of the openings.

Cass. 3e civ, 12 October 2022, LawLex202200008903JBJ.

CA Angers, 11 February 2010, LawLex202200004590JBJ.

Cass. 1re civ, 27 April 1976, LawLex202100006400JBJ.

Cass. 3e civ, 16 mars 1977, LawLex202100006459JBJ, on the agreement by which one undertaking commissioned another to build a thermal power plant.

Cass. 1re civ, 6 June 1990, LawLex200400001312JB.

Cass. com. 4 July 1989, LawLex200600002119JBJ, 

for a contract by which a company ordered a distillation plant from another undertaking; 3 January 1995, LawLex202200003801JBJ, for a contract relating to the production of cereal bars; 7 November 2006, LawLex202100006382JBJ for a contract by which a wine merchant entrusted a distillery with the making of a product.

Cass. 1re civ., 14 December 1999, LawLex202100006380JBJ; See in similar vein: CA Versailles, 7 September 2021, LawLex202200004226JBJ, holding that a contract for the implementation of a token-cutting station which is not a standard machine, but a machine custom-built specifically for use in an innovative project by the client, in accordance with the criteria expressly specified by the latter, constitutes a contract for services, and not a contract of sale.

Cass. 3e civ, April 20, 2022, LawLex202200003797JBJ; see for an application: CA Angers, 11 February 2010, LawLex202200004590JBJ, holding that a contract by which an undertaking has ordered fixed installation stations for camper van roofs, meeting specific technical requirements in accordance with precise specifications. is a contract for services and not a contract of sale.

Business Contracts

284. Contract of sale

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Les décisions de justice citées dans ce paragraphe :

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284. Contract of sale

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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