Business Contracts

Mistake leads to invalidity of the agreement insofar as it relates to the essential qualities of the thing sold . When the buyer's mistake relates to the very subject of the sale, in this case the identification of the lots sold, the Court of Cassation even considers that it prevents the consent of both parties from being reached, and leads to the annulment of the sale , even if it is inexcusable  …

Sanctions

Mistake leads to invalidity of the agreement insofar as it relates to the essential qualities of the thing sold . When the buyer's mistake relates to the very subject of the sale, in this case the identification of the lots sold, the Court of Cassation even considers that it prevents the consent of both parties from being reached, and leads to the annulment of the sale , even if it is inexcusable . According to Article 1131 of the Civil Code, a mistake, as constituting vitiated consent, entails the relative invalidity of the agreement . A sales agreement whose formation has been vitiated by mistake is therefore deemed never to have been concluded , and the parties owe each other mutual restitution . Given its relative nature, invalidity can only be invoked by the mistaken party  and the vitiated agreement can, in principle, be confirmed . 

An action for invalidity must be brought within five years of the discovery of the mistake, pursuant to Article 1144 of the Civil Code, even if the mistake is the result of a latent defect. While for a time the Court of Cassation accepted that the errans could, in such a case, act on the basis of warranty against latent defects or on the basis of mistake, without being bound by the deadline set out in Article 1648 of the Civil Code , it has now reversed that position: when the item has a defect rendering it unfit for its intended use, the buyer does not have the right to bring an action for invalidity on the grounds of a mistake as to its essential qualities, but only an action under the warranty for latent defects , and if the action is ill-founded, it is up to the court to reinstate its proper basis .

Regardless of the possibility of annulling the agreement, the injured party may, pursuant to Article 1178 of the Civil Code, claim damages under the ordinary law of extra-contractual liability (torts) . To obtain damages under Article 1240 of the Civil Code, the erring party must prove damage distinct from that caused by the annulment . In effect, the victim of the mistake must prove that he or she has suffered a specific harm that restoration is not sufficient to remedy  . Purchasers of plots of land covered by a building permit cancelled after the sale, who, had they been informed of the risk of cancellation by the notaries, would have had a significant chance of not consenting to the sale, may claim compensation for the loss of opportunity not to contract . On the other hand, the professional purchaser who acquired the drawings in question with the certainty of their authenticity, is entitled to damages for the harm caused by their aborted resale, due to the apocryphal nature of the certificates of authenticity, but not for the loss of opportunity to implement a capital gain on resale, in the absence of relevant comparative information on the increase in the market value of similar works by the same authors between the time of acquisition of the works and the date of their aborted resale . The mistaken party invokes the liability of the contracting party  or third party  whose intentional or unintentional fault, prior to the conclusion of the sale, is at the origin of the mistake . 

Finally, case law has accepted that, where the mistake is deemed too minor to invalidate the agreement, the sale price may be reduced .

Mistake as to essential qualities constitutes a cause of invalidity of the agreement for vitiated consent, while partial or total non-performance of the latter is sanctioned by rescission, Cass. com., 22 May 2012, LawLex201200001835JBJ.

Cass. 3e civ. 21 May 2008, LawLex202300003433JBJ.

Cass. civ. 1re, 19 October 2004, LawLex200400003423JBJ. See for an earlier ruling , Cass. civ. 1re, 14 May 1996, LawLex200400003432JBJ, having considered, in the presence of a latent defect, that Article 1641 of the Civil Code constituted the sole basis of the action, as s the plaintiff could not, in addition, claim damages on the basis of mistake.

Cass. civ. 1re, 12 July 2001, LawLex200500004995JBJ. On the other hand, the combination of an action based on non-conformity of the thing sold and an action based on a mistake concerning an essential quality of the thing sold is admissible, See Cass. civ. 3e, 25 March 2003, LawLex201200000781JBJ.

Damages for harm suffered by a buyer who is the victim of a mistake concerning the essential qualities of the thing sold must be assessed taking into account the value of the object on the day of the judgment, See CA Pau, 30 November 1994, LawLex200600000739JBJ.

Cass. 3e civ. 30 September 2021, LawLex202100005512JBJ: when the buyer's mistake as to the substance of the item is confused with the (partial) breach of the seller's obligation to deliver in conformity, the buyer, who no longer seeks annulment of the sale, may, in the absence of any tort on the part of the seller, obtain compensation for the harm affecting the value of the item on the basis of non-conformity.

CA Amiens, 25 May 2010, LawLex201400000630JBJ.

Cass. civ. 3e, 24 November 2016, LawLex201600001999JBJ.

CA Paris, 19 October 2021, LawLex202100006013JBJ.

CA Amiens, 25 May 2010, LawLex201400000630JBJ: “the annulment of the sale cannot give rise to a claim for damages, except where the vitiation of consent was caused by the fault of the contracting party”.

For a certifying  expert, see CA Paris, 22 March 2005, LawLex200700000644JBJ; for an auctioneer, see Cass. civ. 1re, 15 November 2005, LawLex200600001327JBJ; CA Pau, 30 November 1994, LawLex200600000739JBJ, adding that the buyer's action against the auctioneer for quasi-delictual liability for a mistake as to the essential qualities of the item sold is in no way subordinate to the prior institution of an action against the seller for invalidity of the sale.

Cass. civ. 1re, 4 October 1988, LawLex200500008967JBJ.

Cass. 3e civ, 16 December 2014, LawLex201500000422JBJ.

CA Paris, 6 July 2001, LawLex200500009153JBJ: in this case, the reduction in the sale price had to take into account the cost of the necessary work and the reduction in value of the “mobile home”, whose national and independent water supply was not functioning, a quality or use normally expected of the thing sold, which was the basis of the mistake.

New Article 1179 classifies invalidity as relative “when the rule breached has as its sole object the safeguarding of a private interest” as opposed to absolute invalidity, which refers to the breach of a rule having as its object the safeguarding of the general interest.

Art. 1178, para. 3, Civil Code The theory of restitution, to which the Civil Code now devotes a chapter ( Art. 1352 to 1352-9), aims, in the event of annulment of the agreement, to restore the parties to the state they were in before the performance of the agreement, without profit or loss: this is known as “full” restitution. In principle, restitution is made in kind: in return for the sale price, the buyer must return the thing as it was on the day of delivery. In some cases, however, restitution in kind may prove difficult or even impossible, particularly in view of the time elapsed between performance and cancellation of the agreement. In such cases, restitution in value or “by equivalent” is substituted, with the value of the item being estimated on the day of restitution. In the event of theft of the thing to which the material mistake relates, making restitution impossible for the erring party/buyer, the seller cannot obtain a reduction in the sale price, which he must reimburse to the latter, since, in effect, “res perit domino”, the theft constitutes a fortuitous event, the risks of which are borne by the owner (who, through the retroactive effect of the invalidity, happens to be the seller). In addition, a person who has received the thing in good faith and sold it only owes restitution of the sale price, whereas if he has received it in bad faith, he owes restitution of its value on the day of restitution, where this is higher than the price (Art. 1352-2, Civil Code). Under the terms of article 1352-7, interest at the legal rate on sums ordered to be repaid following cancellation of the agreement normally accrues from the date of the legal demand, equivalent to the summons to pay. On the other hand, if the debtor was in bad faith at the time of payment of the undue sum, interest runs from the day of the sale, a more penalizing solution in practice. In addition to interest, Article 1352-7 provides that a person who has received in bad faith owes the fruits he has received or the value of enjoyment from the date of payment, whereas a person who has received in good faith owes them only from the date of the demand.

Cass. civ. 1re, 28 June 1988, LawLex200500004329JBJ, and 28 June 1989, LawLex200500005880JBJ.

Business Contracts

130. Sanctions

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Les décisions de justice citées dans ce paragraphe :

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130. Sanctions

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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