Business Contracts

Rescission of the sale raises the question of the scope of restitution. Can the seller deduct from the sale price an indemnity for the use made of the item by the buyer which is likely to have diminished its value? Should the restitution of the item include its accessories?
1) Compensation for occupation or wear and tear
Article 1644 of the Civil Code allows the buyer of a defective product to ret …

Effects

Rescission of the sale raises the question of the scope of restitution. Can the seller deduct from the sale price an indemnity for the use made of the item by the buyer which is likely to have diminished its value? Should the restitution of the item include its accessories?

1) Compensation for occupation or wear and tear

Article 1644 of the Civil Code allows the buyer of a defective product to return the product to the seller and recover the price paid at the time of purchase. While the seller risks recovering a thing whose value is altered or diminished by its use, the buyer, by receiving back the full amount paid, has ultimately enjoyed possession of the thing free of charge. For this reason, when bringing an action for rescission, the seller frequently seeks compensation for occupation or wear and tear of the item during the period in which the buyer was using it. In the past, such claims were considered legitimate , provided that the seller had, in good faith, been unaware of the defects  and was not a professional who was presumed to be aware of them .

The Court of Cassation has since abandoned this approach, refusing to grant the seller any compensation for wear and tear  even on the grounds of unjust enrichment. The courts consider that there is a legal cause for the restitution of the price, which is the rescission of the sale resulting from the implementation of the warranty for latent defects  and that the buyer cannot eliminate the use he has made of the thing in good faith . The seller is therefore not entitled to claim a set-off of the price due to the reduction in the market value of the item . In the case of vehicle sales, the seller's obligation to refund the price cannot be limited to the current market value of the vehicle . This is only different if the depreciation of the item results not from its age, but from the abnormal use made of it by the buyer .

Since the reform of contract law, Article 1352-3, paragraph 1 of the Civil Code stipulates that restitution includes the benefits and value of the enjoyment that the thing has provided, so that the case law of the Court of Cassation concerning the granting of compensation for wear and tear or occupation in the case of latent defects will have to evolve.

A contract of sale may relate not to a single item but to a composite good made up of several components. If the defective element is divisible from the other constituent elements of the thing, the rescission of the sale will relate only to said element. If, on the other hand, it forms an indivisible whole with the other elements, the sale will be rescinded in respect of the whole item.

To determine the reach of the action for rescission, the courts refer to the will of the parties and to the common purpose of the elements that make up the property, or to their interdependence. It has thus been ruled that the sale of equipment intended for the same activity must be rescinded in its entirety, even if the defects concern only some of its components . The courts consider that the sale forms a whole, and that the accessory must follow the principal. In the case of the sale of a vehicle, rescission implies not only the return of the vehicle itself, but also of any accessories incorporated into it at the buyer's request . Sometimes, the rescission of the contract of sale in all its components is justified by the requirement to preserve the homogeneity of the property. This is the case for the sale of a piece of fitted furniture  or a fitted kitchen , where the replacement of part of the defective elements would break the desired uniformity. On the other hand, the separability of a property is essential when it is clear. This is the case for a parking space, an accessory to the sale of an apartment unfit for its intended use, which constitutes a unit detachable from the rest of the property sold .

Cass. 3e civ, 26 January 1994, LawLex200600001743JBJ; CA Lyon, 10 November 2005, LawLex200600001699JBJ.

Cass. 3e civ, 12 January 1988, LawLex200700000661JBJ, holding that the cancellation of the sale of a building by effect of the action for rescission entailed the obligation for the purchaser to pay an indemnity for occupation to the seller in good faith who was unaware of the defects affecting the property.

CA Lyon, 14 January 2011, LawLex201200001708JBJ. See also. Cass. 1re civ, 6 February 1996, LawLex200500004351JBJ, upholding CA Caen, 22 February 1993, LawLex200400001846JBJ: the rescission of the sale of a tractor-trailer combination should not be limited to the defective vehicle alone, since the buyer has chosen to return the whole combination.

CA Rennes, 7 September 1995, LawLex200700000665JBJ: the rescission of the sale of a set of furnishings must be ordered for the whole, since the simple replacement of the defective elements would lead to the set, which forms a whole, being out of sync in terms of color.

CA Paris, 9 February 1990, LawLex200700000675JBJ: a kitchen having been purchased as an indivisible whole, defects affecting only certain elements may give rise to an action for rescission, leading to the cancellation of the sale as a whole.

CA Paris, 8 December 1998, LawLex200700000666JBJ.

Cass. 3e civ., 7 October 1997, LawLex200500005033JBJ, acknowledging that while, in principle, the seller could claim an indemnity for occupation from the purchaser following rescission of the sale for latent defects, the situation was different when, in his capacity as a professional, he was deemed to be aware of the defects.

Cass. 1re civ, 21 March 2006, 2 cases, LawLex200600000932JBJ and LawLex200600000933JBJ; 30 September 2008, LawLex201200001465JBJ; 19 February 2014, LawLex201400000332JBJ. See earlier, Cass. 1re civ, 11 March 2003, LawLex200400003428JBJ. See also CA Rouen, 21 March 2007, LawLex201200001868JBJ; CA Lyon, 22 September 2011, LawLex201200001690JBJ; 17 November 2011, LawLex201200001892JBJ; 14 October 2014, LawLex201400001158JBJ; CA Angers, 24 January 2012, LawLex201200001671JBJ; CA Colmar, 7 May 2012, LawLex201200001549JBJ.

CA Rouen, 28 January 2009, LawLex201200001830JBJ; CA Limoges, 14 February 2012, LawLex201200001598JBJ.

CA Versailles, 12 January 2012, LawLex201200001614JBJ.

CA Bourges, 29 January 2009, LawLex201200001884JBJ; CA Riom, 8 April 2013, LawLex201400001650JBJ; CA Rennes, 26 February 2016, LawLex201600000528JBJ.

CA Metz, 20 November 2013, LawLex201400000318JBJ; CA Rouen, 20 September 2017, LawLex201700001551JBJ, noting that rescission of the contract for latent defect obliges the seller to return the whole of the sale price even though the legal appraiser reported that the vehicle's residual value was half that and that it had travelled 64,000 km.

CA Rennes, 10 October 2008, LawLex201200001881JBJ; CA Pau, 31 May 2011, LawLex201200001695JBJ, concerning the buyer's negligence and failure to preserve a defective vehicle; CA Riom, June 16, 2011, LawLex201200001693JBJ, specifying that it is up to the seller to prove the existence and extent of the depreciation suffered by the item due to the use made of it by the buyer, to the exclusion of that due to obsolescence.

CA Grenoble, 28 February 2001, LawLex200300003632JBJ.

Business Contracts

213. Effects

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213. Effects

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