Business Contracts

Article 1999 of the Civil Code states: “The principal must reimburse the agent for advances and expenses incurred by the latter in the performance of the agency agreement, and pay the agent's remuneration where this has been promised. If there is no fault attributable to the agent, the principal cannot avoid making these reimbursements and payments, even if the business has not been successful, no …

Reimbursement of expenses and advances

Article 1999 of the Civil Code states: “The principal must reimburse the agent for advances and expenses incurred by the latter in the performance of the agency agreement, and pay the agent's remuneration where this has been promised. If there is no fault attributable to the agent, the principal cannot avoid making these reimbursements and payments, even if the business has not been successful, nor can he reduce the amount of expenses and advances on the pretext that they could have been less”. 

In application of the above text, the delegated project owner, insofar as he is the project owner's agent, is entitled to claim reimbursement of the fees paid to a consultant concrete engineer to whom he had entrusted a design mission for the construction of two villages. Thus, a court of appeal cannot reject his claim on the grounds that the fact that he had to occupy one of the villas in return for his work as delegated project manager implied that he had signed the design contract in his own name, even though he was acting as the project manager's agent . Similarly, when a seller/shipper (the principal) entrusted goods “sold FOB” to a forwarder (the agent), who handed them over to an air carrier, and these goods could not be handed over to the buyer/consignee, in the absence of the completion by the latter of the customs formalities incumbent on him, a court of appeal cannot, in order to reject the claim for payment of the advances made by the forwarder in fulfilment of his agency agreement, hold that the latter was at fault in being debited with the transport costs, instead of inviting the air carrier to obtain payment from the consignee, when there is no legal relationship between the forwarder, the shipper's agent, and the consignee, and the facts for which the agent is liable are not such as to constitute a fault exonerating the shipper/customer from the obligation to pay the freight charges incurred by the forwarder, in the event of default by the consignee of goods shipped carriage forward .

The question arose as to whether the representative responsible for managing the co-owners' association (syndicat des copropriétaires) could request reimbursement of cash advances made to the association during his term of agreement. 

Even though Articles 18 of the Law of 10 July 1965 and 31 of the Decree of 17 March 1967, which define the powers of the co-owners' association representative, do not confer on him the power to advance funds “on behalf of the co-ownership”, the Court of Cassation initially accepted that the association representative derived from the rules of the agency agreement the right to reimbursement of advances made for the execution of his mandate , in particular when the general meeting of co-owners has approved the accounts for the financial year during which the disputed advance was granted, thus necessarily ratifying it , before denying him this possibility, except in special circumstances justifying the application of Article 1999 of the Civil Code , when an advance constitutes an anomaly in view of the powers at his disposal . Now that the Law of 10 July 1965 has been amended, it stipulates that “the representative of co-owners may not advance funds to the association” .

While, by virtue of the provisions of Article 1999 of the Civil Code, the principal must reimburse the agent for costs and advances incurred in the performance of the agency agreement, case law requires the agent to produce evidence in support of his claim, which is not the case for an agent who relies on an invoice, subsequent to the sale, of which he is the source .

In accordance with the provisions of Article 2001, interest on advances made by the agent is due to that agent by the principal “from the date of the advances ascertained”  and therefore the agent is entitled to claim interest from the end of his agency agreement and the capitalization of such interest from the date of the summons . Thus, according to the Court of Cassation, a judicial commissioner who has made an advance to the seller of the price at which the item he was commissioned to sell was auctioned, is the seller's agent, with the result that, after the sale is cancelled, Articles 1999 and 2001 of the Civil Code are applied and require the principal to reimburse the agent for costs and advances incurred in the course of performing the agency agreement, as well as interest on these sums, in the absence of any fault on the part of the agent, even if the transaction was unsuccessful . In addition, the fact that an agent's costs and disbursements have been settled by the courts is no obstacle to the application of article 2001 of the Civil Code .

Article 2012 of the preliminary draft reform of the law on special contracts essentially reproduces the wording of Article 1999 of the Civil Code, stating that: “The principal must reimburse the agent for the advances and expenses which the latter has disbursed for the purpose of performing the agency agreement, including, in the event of an emergency, those incurred on his own initiative in the interest of the principal. Even if the deed to be executed has not been executed, the principal may not avoid these reimbursements, nor reduce them on the pretext that they could have been lower”.

Cass. 3e civ, 15 September 2010, LawLex202200009282JBJ.

Cass. com. 20 February 1990, LawLex202300007767J.

Cass. 1re civ, 23 March 1982, LawLex202200008560JBJ.

Cass. 1re civ, 13 May 1981, LawLex202300013600JBJ.

Cass. 3e civ, 14 April 1999, LawLex202300007769JBJ, holding that a court of appeal cannot dismiss a managing agent's claim for reimbursement of advances made on behalf of the condominium syndicate during the financial year, on the grounds that the provisions of Articles 18 of the Law of 10 July 1965 and 31 of the Decree of 17 March 1967, which define the powers of the condominium managing agent, do not confer on him the power to make advances of funds “on behalf of the condominium”, nor to claim reimbursement, even though, under the terms of Article 1999 of the Civil Code, the principal must reimburse the agent for advances and expenses made by the latter for the execution of the agency agreement, and the agent provided proof of undisputed advances he had made on behalf of the association.

Cass. 3e civ, July 13, 1999, LawLex202300007768JBJ, specifying that since the general meeting of co-owners approved the accounts for the financial years during which the disputed advances were made by the managing agent, thus necessarily ratifying them, and since those advances were made under conditions of necessity, on behalf of and in the exclusive interest of the association, for expenses essential to the operation of the co-ownership, the agent is entitled under the rules of agency agreements, and in particular Article 1999 of the Civil Code, to reimbursement, under the conditions of said article, of advances made in the performance of his mandate.

Cass. 3e civ, 29 March 2000, LawLex202300007770JBJ.

Cass. 3e civ,14 March 2001, LawLex202300007771JBJ, ruling that since the managing agent of a co-ownership had at no time, prior to his resignation, indicated to the general meeting of co-owners that the association owed any sum whatsoever, that no legal provision obliged the agent to advance funds to the co-owners' association to make up for the default of certain among them co-owners, and that such an advance constitutes an anomaly given the powers available to the agent, the request for reimbursement of the disputed advances must be rejected. See also. Cass. 3e civ, 29 May 2002, LawLex202200009478JBJ, noting that as the managing agent had not informed the co-owners of the existence of advances granted on behalf of the co-owners' association, and had not made the necessary debt recovery commitments, despite a worsening cash flow deficit, it is appropriate to consider that said advances do not fall within the scope of special circumstances beyond the control of the managing agent, which would justify their repayment, in application of Article 1999 of the Civil Code, since the provisions of Articles 18, 18-1 and 18-2 of the Law of 10 July 1965 and 31 of the Decree of 17 March 1967 do not confer on the managing agent the power to advance funds on behalf of a co-owners' association.

CA Aix-en-Provence, 12 December 2019, LawLex202300007470JBJ.

CA Angers, 8 February 2022, LawLex202400008478JBJ.

Business Contracts

491. Reimbursement of expenses and advances

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491. Reimbursement of expenses and advances

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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