Business Contracts

While the project owner can hold the contractor liable for harm resulting from the non-performance of any of his obligations, sometimes his harm is the result of the action of a third party, such as a subcontractor, manufacturer or vendor, to the contract he has signed with the contractor. In the absence of a legal relationship between them and the project owner, the question arises as to the basi …

Third-party liability

While the project owner can hold the contractor liable for harm resulting from the non-performance of any of his obligations, sometimes his harm is the result of the action of a third party, such as a subcontractor, manufacturer or vendor, to the contract he has signed with the contractor. In the absence of a legal relationship between them and the project owner, the question arises as to the basis for the latter's liability action against them. To answer this question, case law has applied the theory of groups of contracts. 

First of all, a distinction must be made between the various chains of contracts, depending on whether they are homogeneous or heterogeneous, and whether or not they have at least a partial property transfer effect, since the project owner's action in contract or in tort depends on these distinctions.

A chain of contracts is a succession of contracts relating to the same subject matter. The chain is homogeneous if the contracts are of the same nature. Homogeneous chains of contracts thus include successive sales, or subcontracting, which is characterized by the conclusion of a contract for services followed by another contract for services, with the difference that in the former case the chain also transfers ownership, whereas in the latter it does not. 

A heterogeneous chain of contracts covers the situation where several contracts of different kinds - a contract for services, for example, followed by a contract transferring ownership, such as a contract for the supply of materials - are concluded. These contracts, insofar as they contribute to realizing the performance agreed in the initial contract and relate to the same subject matter, constitute a heterogeneous chain of contracts partially transferring ownership. In the case of a chain of contracts transferring ownership, case law confers on the end link in the chain - in this case, the project owner - the possibility of suing directly, in contract, those with whom he has not entered into any contract, for example, the manufacturer or seller of materials used by the contractor. On the other hand, the benefit of direct contractual action is denied to the project owner in non-transfer of ownership chains, who can only take action against the subcontractor in tort.

This solution is the result of several developments. Firstly, the first civil chamber of the Court of Cassation held that in the case of successive sales of the same item, any direct claim by the sub-purchaser against the manufacturer or an intermediary seller is automatically contractual in nature . It then extended the solution to project owners acting against the manufacturer of materials, who have a direct action, of a contractual nature by necessity, for warranty against latent defects in the item sold from the time of manufacture .

However, this reasoning was not adopted by the third civil chamber of the Court of Cassation, which, on the other hand, held that a manufacturer of roof tiles which, due to faulty design, have an undetectable defect, which is the sole cause of the damage to the roof of the dwelling, is liable in tort to the project owner, so that fault and a causal link to the damage are established outside the scope of any contract .

This divergence in case law forced the Court of Cassation to convene a plenary session. In two rulings dated 7 February 1986, the Court of Cassation ruled in favor of the first civil chamber, noting that the project owner, like the sub-purchaser, enjoys all the rights and actions attached to the thing which belonged to its owner, and to this effect has a direct contractual action based on the non-conformity of the thing delivered against the manufacturer . Thus, the project owner of a building complex can bring a direct liability action against the manufacturer of the bricks that caused cracks in the walls of the complex, for breach of the obligation to deliver in conformity, since the bricks delivered did not conform to the contract due to poor workmanship . In contrast, the manufacturer of an item installed by a contractor for the benefit of a project owner is entitled to rely on all the defenses he could have asserted against his co-contractor  against the undertaking which is a subrogee in the latter's rights and is exercising a contractual right of action. Since then, the third chamber has endorsed this position, holding, as did the first civil chamber , that the project owner, who enjoys all the rights and actions attached to the thing that belonged to its owner, has a direct contractual claim against the supplier and the manufacturer for non-conformity of the item delivered  as well as a direct contractual claim against the manufacturer in the event of problems resulting from a latent defect in the manufactured product that could not be detected during installation by the undertaking . This solution is in line with the provisions applicable to construction  , the legislator having introduced a regime of contractual liability for claims brought by the project owner or purchaser of the work against builders  or manufacturers of components  . 

With a view to extending the scope of contractual claims beyond chains of contracts transferring ownership, the first civil chamber ruled - in a case where an undertaking had subcontracted the enlargement of slides to another undertaking which had subsequently lost the slides - that the project owner only has a claim against the subcontractor which is necessarily contractual, and which he can bring directly within the dual limits of his rights and the extent of the substituted debtor's obligation. To this end, the first chamber of the Court of Cassation stated, in a very general recital, that where the debtor of a contractual obligation has entrusted the performance of that obligation to another person, the creditor only has an action against that other person which is inevitably contractual in nature, which he can exercise directly within the twofold limit of his rights and the extent of the substituted debtor's commitment . Further emphasizing the point, the first chamber went on to note that, in a group of contracts, since the debtor must have foreseen the consequences of his default in accordance with the relevant contractual rules, the victim can only bring a claim in contract against him, even if there is no contract between them .

Hostile to such a broad recognition of the direct contractual claim, the third civil chamber has, on the contrary, ruled in favor of the tort basis of the project owner's claim against the subcontractor. The project owner, who is not a party to the subcontracting agreement, cannot plead the subcontractor's result-based obligation towards the main contractor to perform work free of defects, which is based solely on the contractual and personal relationship between them . In other words, there is no contractual relationship between the main contractor and the subcontractor of his subcontractor, so that the second-tier subcontractor can only be held liable against the main contractor for defects resulting from seepage after the construction of a building .

Forced once again to intervene in order to put an end to these irreconcilable positions, the Court of Cassation, sitting in plenary session, ruled in favor of the third civil chamber in the famous Besse ruling of 12 July 1991: a subcontractor is not contractually bound to the project owner, and therefore cannot raise against him all the defenses arising from the construction contract concluded between the latter and the main contractor, including the legal provisions applicable to that agreement .

Cass. 1re civ, 9 October 1979, LawLex202200003057JBJ; 4 March 1986, LawLex202200000336JBJ

Cass. 1re civ, 29 May 1984, LawLex200600001138JBJ

Civil Code, Art. 1792 para. 1: “Every builder of a structure is automatically liable to the project owner or purchaser of the structure for damage, even if resulting from a ground defect, which compromises the solidity of the structure or which, affecting one of its constituent parts or one of its equipment elements, renders it unfit for its intended use”.

Civil Code, Art. 1792-4: “The manufacturer of a work, part of a work or item of equipment designed and produced to satisfy, in service condition, precise and pre-determined requirements, is jointly and severally liable for the obligations imposed by Articles 1792, 1792-2 and 1792-3 on the sevice contractor of the work who has implemented, without modification and in accordance with the rules laid down by the manufacturer, the work, part of a work or item of equipment in question. For the purposes of this article, the following are deemed to be manufacturers: anyone who has imported a work, part of a work or item of equipment manufactured abroad; anyone who has presented it as his or her own work by displaying his or her name, trademark or any other distinctive mark on it”.

Cass. 1re civ, 8 March 1988, LawLex202300002467JBJ.

Cass. 1re civ, 21 June 1988, LawLex202200005036JBJ, adding that in a group of contracts, contractual liability necessarily governs the claim for redress of all those who suffered damage only because they had a connection with the original contract.

 Cass. 3e civ, 22 June 1988, LawLex202200010791JBJ.

Cass. 3e civ, 13 December 1989, LawLex202200005451JBJ.

Cass. Ass. plén. 12 July 1991, LawLex202200000745JBJ.

Cass. 3e civ, 19 June 1984, LawLex202200005248JBJ.

Cass. ass. plén. 7 February 1986, LawLex200500005433JBJ and LawLex200600001136JBJ.

Cass. Ass. plén. 7 February 1986, LawLex200600001136JBJ.

Cass. 3e civ, 26 May 1992, LawLex200500005479JBJ.

Cass. 1re civ. 23 June 1993, LawLex200500005483JBJ, holding that the project owner may bring a claim in contract against the manufacturer based on the non-conformity of the product he sold to the undertaking carrying out the work.

Cass. 3e civ, 16 November 2022, LawLex202300000927JBJ, overruled a court of appeal which, in rejecting the project owner's claims for damages against the supplier and manufacturer of the flooring delivered in breach of contract, held that in the absence of a direct contractual relationship between the project owner and these two parties, only the contractor should be ordered to pay damages, even though the non-conformity of the flooring installed by the builder was the cause of the stoppage of work, and the project owner, enjoying all the rights and actions attached to the thing belonging to its author, has a direct contractual right of action against the supplier and manufacturer based on the non-conformity of the thing delivered. See for an earlier ruling , Cass. 3e civ, 12 December 2001, LawLex200600001135JBJ.

Cass. 3e civ, 7 May 1997, LawLex202200005250JBJ.

In the past, the Court of Cassation considered that the ten-year warranty obligation borne by architects and contractors constituted legal protection, attached to ownership of the building, which could be relied upon, not only by the project owner, but also by all those who succeed him as successors in title, even in a special capacity, in this property, See Cass. 1re civ., 28 May 1967, LawLex202300000927JBJ.

Business Contracts

316. Third-party liability

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

316. Third-party liability

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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