Business Contracts

The warranty against latent defects, governed by Articles 1641 et seq. of the Civil Code, applies first and foremost to contracts of sale, as attested by its place in the Civil Code, even if it is also applicable to other contracts, such as exchanges or leases. The warranty against latent defects extends not only to the thing sold, but also to its accessories. It cannot therefore be limited to the …

Scope of application

The warranty against latent defects, governed by Articles 1641 et seq. of the Civil Code, applies first and foremost to contracts of sale, as attested by its place in the Civil Code, even if it is also applicable to other contracts, such as exchanges or leases. The warranty against latent defects extends not only to the thing sold, but also to its accessories. It cannot therefore be limited to the frame of a machine, but must also apply to its accessories, such as pressure transmission screws , or to the virus-contaminated diskette supplied with a magazine, from which it cannot be separated .

However, a warranty against latent defects is not intended to apply to all sales contracts. In effect, certain sales are excluded from its scope, while others are subject to a derogatory regime by virtue of their object.

Under Article 1649 of the Civil Code, the warranty against latent defects “does not apply to sales made by court order” . Thus, the sale of the real estate of an undertaking undergoing insolvency proceedings, organized by the authorities of the proceedings, constitutes a sale by authority of justice, which is not subject to the warranty for latent defects . However, when the parties have voluntarily decided to implement the sale in a court of law , or by public auction  , the warranty against latent defects remains applicable.

Case law recognizes two exceptions to the exclusion provided for in Article 1649. Firstly, a property developer must deliver premises and equipment free of defects, even in the event of a forced sale . This solution is explained by the special system applicable to developers, set out in Article 1831-1 of the Civil Code, which requires them to guarantee performance of the obligations incumbent on persons with whom they have dealt on behalf of the project owner, and in particular those resulting from Articles 1792, 1792-1, 1792-2 and 1792-3 of the Civil Code. On the other hand, the protection of the seized debtor does not preclude the sub-purchaser's direct action against the manufacturer for warranty against latent defects .

The sale of buildings under construction, covered by Articles 1601-1 to 1601-4 of the Civil Code, which is similar to an contract for services (contrat d'entreprise), is covered by special provisions in the legislation governing the warranty against latent defects . Under Article 1642-1, builders are guaranteed against defects, even those that are apparent, for up to one month after the purchaser has taken possession of the property, and the contract may not be rescinded or the price reduced if the seller undertakes to repair the defect. Under Article 1646-1, the seller of a building under construction is bound, from the date of acceptance of the work, by the obligations which architects, contractors and other persons bound to the client by a contract for works are themselves bound to under Articles 1792, 1792-1, 1792-2 and 1792-3 of the Civil Code . The provision reiterates the rule that the sale may not be rescinded or the price reduced if the seller undertakes to repair the damage defined in Articles 1792, 1792-1 and 1792-2, and to assume the warranty provided for in Article 1792-3. Lastly, Article 1648, paragraph 2, stipulates that in the case provided for in Article 1642-1, the action must be brought, on pain of forfeiture, within a year of the date on which the seller can be discharged of the apparent defects or lack of conformity.

Ordinary civil law on the warranty against latent defects does not apply to the sale of domestic animals either, which are subject to a specific warranty provided for in Articles L. 213-1 et seq. of the Rural and Maritime Fishing Code (Code rural et de la pêche maritime), which applies in supplement . Initially, the courts looked for the existence of tacit agreements to bring such sales under the general regime of the Civil Code , before reverting to a stricter application of the texts, requiring proof of an express agreement . This special system, applicable to livestock and companion animals suffering from the diseases or defects strictly listed in Articles R. 213-1  and R. 213-2 , allows the buyer to bring an action for rescission or for reduction of the price within the extremely short time-limits stipulated in Articles R. 213-5  and R. 213-6 .

Finally, although no legal rule seems to prevent the application of warranty against latent defects to the transfer of shares, the courts are relatively reluctant to do so. In effect, the Court of Cassation distinguishes between defects which affect the use of the shares (voting rights and right to attend meetings) or prevent the undertaking from implementing its corporate purpose, and those which only affect the value of the shares, in order to exclude the latter from the benefit of the warranty . On the other hand, in the case of the transfer of a business, the courts are quick to apply Articles 1641 et seq. of the Civil Code to defects affecting the business itself , without even referring to Article L. 141-3 of the Commercial Code, which expressly refers to the provisions of the Civil Code for the warranty of defects affecting the accuracy of the deed .

Cass. com. 22 October 1968, LawLex200600002121JBJ.

Cass. com. 25 November 1997, LawLex200500005029JBJ.

Art. L. 213-1, Rural Code. The action in warranty in sales or exchanges of domestic animals is governed, in the absence of agreements to the contrary, by the provisions of the present section, without prejudice to any damages which may be due in the event of fraud".

See notably. Cass. 1re civ, 26 November 1981, LawLex200600002117JBJ ; 11 January 1989, LawLex200600002116JBJ ; 9 January 1996, LawLex200600002118JBJ : Cf. CA. Amiens, 29 avril 2003, LawLex200300003563JBJ, noting the absence of appearance of defect to justify linking the warranty to the general regime.

See notably. Cass. 1re civ, 22 October 2002, LawLex200600002114JBJ; 15 November 2005, LawLex200600002113JBJ.

Under Article R. 213-1 of the Rural and Maritime Fishing Code, the diseases or defects deemed to be critical defects vices are : immobility, pulmonary emphysema, chronic horning, tic proper (with or without tooth erosion), old intermittent lameness, isolated uveitis and infectious anemia, for horses, donkeys and mules;  tuberculosis, infectious rhinotracheitis and enzootic leukosis, for the bovine species; brucellosis, for the bovine, ovine and caprine species.

Under Article R. 213-2 of the Rural and Maritime Fishing Code, the diseases or defects deemed to be critical defects (vice rédhibitoire) are :  canine distemper, contagious hepatitis (Rubarth's disease), canine parvovirus, coxofemoral dysplasia, testicular ectopy for animals over six months of age, retinal atrophy, for dogs; infectious leukopenia, feline infectious peritonitis, feline leukemogenic virus infection and immunodepression virus infection, for cats.

Art. R. 213-5, Rural Code. : "The time-limit given to the buyer of an animal both to bring one of the actions opened by the existence of a critical defect (vice rédhibitoire) as defined in articles L. 213-1 to L. 213-9 and to bring about the appointment of experts to draw up a report is ten days, except in the cases designated below:

1° Fifteen days for bovine tuberculosis ;

2° Thirty days for isolated uveitis and infectious anemia in the equine species, for brucellosis, enzootic leucosis and infectious rhinotracheitis in the bovine species, for brucellosis in the caprine species, as well as for the diseases or defects of the canine or feline species mentioned in Article L. 213-3".

Art. R. 213-6, Rural Code. : "In the case of transmissible diseases of the canine or feline species, an action in warranty may only be brought if a diagnosis of suspicion signed by a veterinarian has been established in accordance with the criteria defined by order of the Minister of Agriculture and within the following time-limits:

2° For contagious canine hepatitis: six days;

4° For feline infectious leukopenia: five days;

5° For feline infectious peritonitis: twenty-one days;

6° For feline leukemogenic virus infection: fifteen days.

Cass. com, 23 January 1990, LawLex200500005435JBJ; 12 December 1995, LawLex200500004348JBJ; 4 June 1996, LawLex200500003957JBJ; 16 November 2004, LawLex200400003417JBJ. See also Cass. 3e civ, 12 January 2000, LawLex200400003430JBJ.

Cass. com. 24 November 1992, LawLex200500004341JBJ, concerning the need to carry out major works to avoid the downgrading of a hotel business. Cf. Cass. com. 18 June 1996, LawLex200500005018JBJ, holding that the closure of a restaurant does not constitute a latent defect in goodwill, when the purchasers were aware of it and the closure did not prevent the subsequent opening of a new establishment. See also. Cass. com. 17 November 1998, LawLex200500005034JBJ, deception regarding the extent of the clientele by concealing the disloyal actions of a former employee; 19 October 1999, LawLex200500003964JBJ, non-transmission of approval for the repair of a make of car when selling a garage business.

See for an application, Cass. 1re civ. 3 July 1996.

CA Grenoble, 2 July 2002, LawLex200600002296JBJ.

Cass. com, 10 December 1974, LawLex200600002115JBJ; CA Paris, October 13, 2006, LawLex200700000529JBJ; CA Douai, 24 September 2012, LawLex201600000429JBJ, holding that under Article L. 642-18 of the Commercial Code, the sale of a property in liquidation, even if by mutual agreement, can only be made by judicial authority, and therefore falls within the scope of Article 1649 of the Civil Code, which excludes the warranty for critical defects. See also. CA Orléans, 14 March 2013, LawLex201600000426JBJ.

CA Bordeaux, 1 December 2003, LawLex201600000418JBJ.

Cass. 1re civ, 16 February 1983, LawLex202300008145JBJ, stating that the provisions of Article 1641 of the Civil Code relating to warranty against latent defects by sellers apply, in principle, to the sale of all goods and objects, so that when a piano has been presented at an auction as being in a condition to be used provided it is re-tuned, whereas in reality it is irreparable, there is a latent defect for which the auctioneers owe warranty to the buyer.  See also CA Orléans, 22 March 2004, LawLex201600000425JBJ. Contra : CA Versailles, 29 March 2012, LawLex201200001639JBJ.

Cass. 3e civ, 21 November 1990, LawLex200600002101JBJ.

Cass. 1re civ. 3 March 1992, LawLex200500004976JBJ.

See Cass. 3e civ, 11 December 1991, LawLex200500004339JB; 25 January 1995, LawLex200600002111JBJ.

See, for an application, Cass. 3e civ, 7 April 2004, LawLex200500003831JBJ.

Business Contracts

191. Scope of application

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

191. Scope of application

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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