Business Contracts

Since the reform of contract law, damages resulting from the non-performance of a contractual obligation are now dealt with in a sub-section devoted to reparation of harm resulting from the non-performance of the contract, which is a restatement of the provisions of the former Civil Code.
Article 1217, which governs the relationship between the various sanctions available to the creditor of a non- …

Damages

Since the reform of contract law, damages resulting from the non-performance of a contractual obligation are now dealt with in a sub-section devoted to reparation of harm resulting from the non-performance of the contract, which is a restatement of the provisions of the former Civil Code.

Article 1217, which governs the relationship between the various sanctions available to the creditor of a non-performed obligation, specifies that these remedies may be combined if they are not incompatible, while adding that damages may be awarded in all cases. In the event of non-performance of a contract for services, the award of damages may therefore be combined with one or other of the sanctions for maintaining or rescinding the contract . Thus, a contractor who fails to deliver the work within a reasonable time may be ordered to pay the project owner a sum to remedy the harm resulting from the delay in completion of the work, as well as damages for loss of rental income, without the same harm having been made good twice .

Article 1231 reproduces the provisions of former Article 1146, taking into account the abolition of the distinction between an obligation to do and an obligation to provide: “Unless the non-performance is definitive , damages are due only if the debtor has first been given notice to perform within a reasonable time” . If the debtor does not prove that performance was prevented by force majeure, he may be ordered to pay damages, either for the non-performance of the obligation, or for the delay in performance (Art. 1231-1) .  

As a result, for example, a contractor who installed a heating insert without requesting  sufficiently clear information on the project owner's expectations regarding the performance of the proposed heating system must be ordered to pay damages to the latter, since the lack of heating in the dwelling resulting from this inadequate performance caused material damage and humidity problems for a period of five years, while at the same time the plaintiff was suffering from asthma attacks  Similarly, delay in performance can be sanctioned by an award of damages. However, project owners who, after having requested modifications to the work initially planned, contributed to the delay in delivery of the work by delaying approval of the corresponding amendments and by involving subcontractors on site, can only claim partial compensation . 

Subject to certain exceptions, the creditor of an unfulfilled obligation is entitled to claim damages “for the loss he has suffered and the gain of which he has been deprived” (Art. 1231-2) . A contractor who empties a septic tank under inappropriate conditions must therefore be ordered to pay damages corresponding to the harm caused by the resulting loss of rent . However, compensation for the loss suffered is limited to the replacement value of the item. Thus, when a garage owner breaches his result-based obligation under a contract for services, the customer's right to recover the cost of repairing the damaged vehicle is limited to its replacement value, since the purpose of civil liability is to restore as accurately as possible the equilibrium destroyed by the damage, and to put the victim back in the situation he would have been in had the harmful act not occurred . Furthermore, according to the Court of Cassation, the damage resulting from a loss of opportunity corresponds to a fraction of the various types of harm suffered, determined by measuring the opportunity lost .  With regard to recoverable lost profits, the courts have held that a project owner who unilaterally terminates a contract on the basis of abandonment of the site, a delay of more than 15 days and failure to comply with the written orders of the project manager, which it does not establish, commits a fault that justifies his being ordered to compensate the contractor for the profit that the contract would have brought him if it had been performed in full . Similarly, where a contractor has not performed its contract for services in accordance with the rules of the art, such that the extent of the defects and non-conformities has prevented the project owner from carrying out its professional activity as planned, the latter is entitled to damages corresponding to the amount of the work invoiced and the costs unnecessarily incurred for the start-up of its business .

Unlike liability in tort, the type of harm that can be made good in contract corresponds in principle to harm that was foreseen or foreseeable at the time the contract was entered into, except in cases of fraud . In this case, Article 1232-4  stipulates that “damages shall only include what is an immediate and direct consequence of the failure to perform”. In application of these provisions, the contractor's liability cannot be incurred in the absence of a link of causation between his contractual non-performance and the harm caused to the project owner. This was the case when water infiltration was caused, not by the lack of effective protection of the site during its construction by the undertaking in question, but by the impossibility of installing the supporting structure due to its non-conformity with the contractual specifications, attributable to another company .

Finally, contracts for services are also subject to Article 1231-6 , which reproduces former Article 1153, minus paragraph 3, and governs the case of damages due solely as a result of a delay in the performance of an obligation to pay a sum of money, known as “intérêts moratoires” (interest on late payments), as well as those of Article 1231-7, which covers interest generated by court rulings i.e. principal damages, provisions and any sums due under Article 700 of the Code of Civil Procedure.

See CA Aix-en-Provence, 23 September 2021, LawLex202200006732JBJ.

Cass. 3e civ, 10 February 2009, LawLex202200003878JBJ.

Cass. 3e civ., 4 April 2024, LawLex202400002834JBJ.

CA Toulouse, 27 June 2022, LawLex202200010689JBJ.

CA Douai, 27 June 2024, LawLex202400004910JBJ.

Art. 1231-3 (former Art. 1150), Civil Code: "The debtor is only liable for the damages which were foreseen or which could have been foreseen at the time of the conclusion of the contract, except where the non-performance is due to gross negligence or wilful misconduct.

CA Riom, 22 September 2020, LawLex202200006734JBJ, noting that the damage caused to the project owner could not be attributed to the lack of effective protection of the site during its operation by the undertaking in question, since the water infiltrations that may have occurred were due to the impossibility of installing the structural framework, due to its non-conformity with the contractual stipulations, attributable to another company.

"Damages and interest due for late payment of an obligation to pay a sum of money consist of interest at the legal rate from the formal notice of defualt was served. Such damages are due without the creditor being required to justify any loss. A creditor whose debtor is in arrears and whose bad faith has caused harm independent of the delay may obtain damages distinct from interest on arrears.

In this case, rescission is by operation of law, without prior formal notice, the formalities for which are governed by new Article 1344, which reproduces the provisions of former Article 1146.

See CA Lyon, 30 November 2020, LawLex202200004141JBJ, issued under former article 1146 of the Civil Code, stating that damages are only due under a contract for services when the debtor is in default of fulfilling his obligation, except however when the thing which the debtor was obliged to to provide or to do could only be provided or done within a certain period of time, which he has allowed to lapse.

Cass. 3e civ., 20 April 2022, LawLex202200010336JBJ, issued under former Article 1147 of the Civil Code, holding that even when no time-limit or schedule has been set in the specifications, the contractor is under an obligation to deliver the work within a reasonable time where appropriate, must be ordered to pay damages, either for the non-performance of the obligation, or for the delay in performance, whenever he fails to justify that the failure to perform is due to an extraneous cause for which he cannot be held liable and where there is no bad faith on his part.

CA Limoges, 25 November 2010, LawLex202200006750JBJ.

Cass. 3e civ, 12 October 2005, LawLex202200004419JBJ.

CA Bordeaux, 6 June 2024, LawLex202400007525JBJ.

CA Bordeaux, 16 September 2021, LawLex202200004527JBJ; CA Douai, 19 September 2024, LawLex202400006906JBJ.

Business Contracts

322. Damages

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

322. Damages

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise