Business Contracts

Article 1993 of the Civil Code states: “Every agent is bound to render an account of his management, and to justify to the principal all that he has received by virtue of his power of attorney, even if what he has received was not due to the principal”. 
Under the terms of this article, the agent must justify the use of the funds he has drawn down or received during the performance of his agency . …

Rendering accounts

Article 1993 of the Civil Code states: “Every agent is bound to render an account of his management, and to justify to the principal all that he has received by virtue of his power of attorney, even if what he has received was not due to the principal”. 

Under the terms of this article, the agent must justify the use of the funds he has drawn down or received during the performance of his agency . According to the Court of Cassation, an agent who withdraws funds from an account by virtue of a power of attorney given to him or her is deemed, by virtue of the presumption laid down in Article 2231 of the Civil Code, to hold the funds for another person, in the absence of proof to the contrary . Thus, sums remitted to the agent on behalf of the principal, and discharged by the agent in the principal's name, must be deemed to have been received by virtue of the agency agreement, and not on the occasion of the agency agreement, so that the agent is obliged to account to the principal for all such sums, unless the principal has accepted the agent's use of them . 

The agent's obligation to render accounts presupposes the return of the sums remitted by the principal for the performance of the agency agreement. A power of attorney over a bank account does not entail the principal's renunciation of ownership of the funds withdrawn using it, nor does it execute a transfer and it is therefore up to the person who has obtained the sums from the account under these conditions to establish the generous intention which may have animated the principal . Secondly, the agent's obligation of rendering an account implies that he must return any sums received from third parties, on behalf of his principal, during the performance of the agency agreement, even if they are undue or unlawful . An agent ad litem may therefore not, on his own authority, withhold a sum from the compensation received on behalf of his principal without the latter's prior agreement, since this would breach the principle that fees are mutually agreed between the parties . 

In addition, the agent must not only return the sums received, but also their interest, in accordance with Article 1996 of the Civil Code, which stipulates that “the agent shall owe interest on the sums he has used for his own purposes from the date of such use; and on those for which he is in arrears, from the date on which he is put in default”. According to the Court of Cassation, the application of this provision does not preclude the award of additional damages against an agent acting in bad faith, provided that the principal has suffered harm independent of that caused by mere delay . Finally, where the agent has received goods on behalf of the principal, he must return them in kind, as well as any documents or writings received during the performance of the agency agreement.

The obligation to render account applies to the agent and to that person alone, whatever the scope of the agency agreement . A court-appointed receiver representing a minority shareholder may not invoke the professional secrecy arising from his status as a court-appointed receiver as a reason for refusing to report to him on the execution of his mandate . Furthermore, the fact that the scope of the agency agreement has not been respected does not release the agent from his obligation to render accounts . Thus, even if there are no circumstances to suggest that he has exceeded the limits of the power of attorney given, the agent has an obligation of accountability to the principal or his heirs, which, in the event of his death, passes to his own heirs . On the other hand, the issuance of a discharge may release a managing agent  from liability for acts of management of which the general meeting of co-owners was aware and which it was in a position to assess . 

The rendering of accounts is free of form. Thus, the parties may stipulate that the agent responsible for the rental management of a property is obliged to forward to his principal, on a monthly basis, the sums received in respect of rents and provisions for charges, and to report to him at least once a year on his overall management . 

Pursuant to Article 2224 of the Civil Code , an action seeking the rendering of accounts is time-barred after five years  on the understanding that the limitation period runs not from the day on which each transaction based on the agency agreement was implemented, but from the day on which the agency agreement came to an end . 

An action seeking the rendering of accounts does not have the same object as the action for liability for insufficiency of assets provided for in Article L. 651-2 of the Commercial Code. Consequently, a court of appeal cannot declare inadmissible the liquidator's action, on the basis of the obligation of the corporate officer to render accounts, for payment of a sum which the latter acknowledges having misappropriated to the undertaking's harm, on the grounds that the liquidator should have based himself not on Article 1993 of the Civil Code, but on Art. L. 651-2 of the Commercial Code, to sanction a management error that contributed to the undertaking's shortfall in assets, whereas the liquidator, without referring to any shortfall in assets, was only claiming reimbursement of a sum paid by a customer of the undertaking, which the executive had kept in his hands .

The draft reform of special contract law specifies the obligation to render accounts, providing that: “The agent is required to render an account of his performance, in particular by producing the relevant accounts, either during the course of the agency agreement or at its conclusion, depending on the purpose of the assignment entrusted to him. When the agent is left free to manage the business entrusted to him, he must also periodically inform the principal of the progress of his mission”  . 

Cass. 1re civ, 12 November 2015, LawLex202200008386JBJ; CA Rennes, 30 June 2020, LawLex202300007734JBJ.

Cass. 1re civ, 3 March 1987, LawLex202300012524JBJ.

CA Montpellier, 19 April 2021, LawLex202300007736JBJ.

Cass. 3e civ, 18 December 1996, LawLex202300012896JBJ.

Cass. 3e civ, 23 June 1999, LawLex202300012524JBJ. 

CA Douai, 4 May 2023, LawLex202300012895JBJ.

Civil Code, Art. 2224: “Personal or movable actions are prescribed by five years from the day when the proprietor of a right knew or should have known the facts enabling him to exercise it. He owes interest on sums due to him, from the day on which he is put in default”.

Cass. 1re civ. 24 November  2021, LawLex202300012539JBJ, noting that an action for restitution based on a bailment, loan or agency agreement constitutes a movable action, distinct from an action for reclaim of ownership, so that it is subject to the ordinary civil law limitation period relating to personal actions or actions relating to personal property.

CA Rennes, 30 June 2020, LawLex202300007734JBJ.

Cass. com, 15 November 2016, LawLex202300007594JBJ.

Preliminary draft, Art. 2000, para. 1. Article 2004 adds, in its first paragraph, that “The agent, at the end of his mission, returns to the principal everything he has received in his capacity as agent”.

Cass. 1re civ. 8 July 1975, LawLex202200009400JBJ.

Cass. 1re civ, 3 May 2006, LawLex202300012525JBJ.

Cass. com. 14 May 2013, LawLex201300000833JBJ, for payment of concealed commissions received from a supplier by the agent. 

Cass. 1re civil, 11 July 1983, LawLex202300012427JBJ.

Cass. 1re civ. 9 May 1990, LawLex202300012535JBJ.

Cass. 1re civ. 2 February 1999, LawLex202200008453JBJ, adding that when an heir has made withdrawals from his mother's bank accounts, by virtue of a power of attorney granted by the latter, he must account for the use of the funds, without prejudice to the possibility for the trial courts, using their sovereign power of assessment, to determine, after deduction of the estimated expenses for the deceased's needs, the amount of unjustified withdrawals to be reported to the estate.

Cass. com. 18 November 2014, LawLex202200009401JBJ.

Cass. 1re civ, 16 May 2006, LawLex202200009403J, specifying that all agents are required to render an account of their acts of management and to account to the principal for everything they have received by virtue of their power of attorney, so that a court of appeal cannot dismiss, on the basis of Article 1993 of the Civil Code, an heir's claim for the rendering of accounts on the sole ground that there is no evidence to suggest that the other heirs exceeded their agency agreement by abusing the power of attorney granted to them.

Business Contracts

481. Rendering accounts

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Les notions juridiques connexes

481. Rendering accounts

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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