Written commercial agreement

Significant imbalance

Sudden termination of established relationships

Competition investigation – French law

Civil competition action

French competition law

Competition investigation – European law

European competition law

Vertical restraints

Distribution law

Liability for defective products

Consumer law

Prohibition of measures having equivalent effect

European business law

Corruption

Compliance

Economic law

Shareholders' agreements

Removal of company directors

Abuse of voting rights

Companies

Action for infringement (counterfeiting)

Rights conferred by the trademark

Patentability

Industrial property

Commercial rent review

Renewal of the commercial lease

Despecialization (change of use)

Commercial leases

Reform of contract law

Reform of the law of special contracts

Preliminary sales agreement

Obligation to deliver goods in conformity

Classification of the contract for services (contrat d'entreprise)

Effects of the agency agreement with respect to third parties

Business contracts

Ongoing contracts

Recovery claims

Court-approved transfer plan

Bankruptcy proceedings

Personal data breaches

White collar crime

Commercial law

500 Questions - Business Law

The Civil Code mentions the transfer of ownership effect (l'effet translatif) of the sale only in Articles 1583 and 1585 of the Civil Code. The draft reform of the law on special contracts aims to address this deficiency by dedicating Articles 1609 to 1616 to it.

The draft reiterates the rule of immediate transfer of ownership in Article 1609, para. 1: “The ownership of the sold good is legally a …

What rules govern the transfer of ownership effect in a contract of sale?

The preliminary draft reform of the law on special contracts by the Chancellery  adopts a more precise definition of the sales contract than that of Article 1582, which states that “the sales contract is an agreement by which one party undertakes to deliver an item, and the other to pay for it.”

Article 1582 of the draft proposal offers the following definition:

“The sale is a contract by which, in exchange for a price, the seller transfers to the buyer the ownership of a tangible or intangible asset.”

The price consists of a sum of money. It may be supplemented by the provision of a good or service.

Contracts whose purpose is the transfer of rights are, as appropriate, subject to the provisions of this title.

It is important to know the elements of classification of the sales contract as they determine the application of its regime. The proposed definition highlights the essential obligations of the sale: the transfer of ownership in exchange for the payment of a price.

In addition, it provides several clarifications.

First, the law defines what is meant by “price.” It refers to a sum of money as opposed to the provision of a good or service. Otherwise, the contract could be reclassified as a barter contract. However, the draft does not exclude the classification of a sales contract, as long as the provision of a good or service is included in addition to the price.

Next, the subject matter of the sales contract is specified: the contract may concern a tangible or intangible asset. The third paragraph further adds that the transfer of rights is subject, as appropriate, to the provisions relating to sales law. Although the Civil Code does not formally specify this, case law already acknowledges that a sale may involve an intangible asset and provides numerous examples of such contracts. Thus, the transfer of intellectual works, receivables, clientele, etc., is accepted.

Preliminary draft reform of the law of special contracts, Commission chaired by Professor Philippe Stoffel-Munck, July 2022.

What is the definition of the sales contract adopted by the draft bill?

Like the Civil Code, the draft reform of the law on special contracts provides for provisions relating to the conclusion of the sales contract found in Articles 1583 to 1594.

Mention is made of the formal requirements for this contract, as well as preliminary contracts for sale and purchase.

First of all, the principle of consensualism is reaffirmed . The mere agreement on the subject matter and the price is sufficient to form the contract, which becomes enforceable from that moment.

The Reform Commission did not wish, at this stage, to take a position on the issue of the formalization of real estate sales. The rule could, however, be debated soon.

Then three preliminary sales contracts are addressed: the right of first refusal, the bilateral promise, and the unilateral promise of sale and purchase.

The preliminary draft reform of the law on special contracts incorporates the rules from Ordinance No 2016-131 of 10 February 2016 on the reform of contract law, the general regime, and proof of obligations, while providing clarifications that had not been considered by its drafters.

The pacte de préférence (pre-emption agreement)is defined by Article 1123 of the Civil Code, para. 1:

“The pre-emption agreement is the contract by which one party undertakes to offer its beneficiary the priority to negotiate with them in the event that it decides to contract.”

The vast majority of pre-emption agreements are concluded in preparation for a sales contract. The Reform Commission therefore sought to provide clarifications on their regime when the projected contract is a sale. Thus, in addition to the reference to Article 1123 of the Civil Code, which governs the ordinary law pre-emption agreement, Article 1585 of the draft specifies that preference may be granted for consideration and may be stipulated for a fixed or indefinite duration. In the latter case, the agreement can only be unilaterally terminated after notice and a reasonable period.

Advice: Provide for a deadline in the contract because the reasonable period, defined by professional practices, is often long.

Finally, Article 1586 of the draft specifies that the priority granted to the beneficiary is reflected in the obligation for the promisor to notify their offer of sale to the beneficiary. This notification triggers the period during which the beneficiary may decide whether or not to conclude the sale. In the event of the beneficiary's refusal of the offer, the article then enshrines the judicial solution whereby the promisor can only sell their property to a third party under the same conditions or less advantageous conditions .

The draft bill provides several provisions dedicated to the bilateral promise of sale. In the Civil Code, only paragraph 1 of Article 1589 of the Civil Code addresses it. As already distinguished by case law, there are promises of sale equivalent to a sale because there was an agreement on the item and the price without making the reiteration of the contract a constitutive element of the parties' commitment, and those not equivalent to a sale because the parties have subjected their commitment to the subsequent reiteration of their consent  or have made any element of the contract other than the item and the price an essential element of their agreement. Failing this, the bilateral promise not equivalent to a sale is void (Art. 1587-1 of the draft bill). This is a recognition of case law . The draft bill introduces an innovation in this regard. Thus, when the commitment is subject to the reiteration of consent or a supplementary agreement, the text provides that these must occur within the year following the conclusion of the promise or any other period agreed upon by the parties.

Finally, any bilateral promise of sale of real estate is void if it is not reiterated before a notary within one year from its conclusion, unless another period is agreed upon by the parties and in the absence of a legal action aimed at confirming the sale (Art. 1658 of the draft bill).

The unilateral promise is defined in Article 1124 of the Civil Code as “the contract by which one party, the promisor, grants the other, the beneficiary, the right to opt for the conclusion of a contract whose essential elements are determined, and for the formation of which only the beneficiary's consent is lacking.”

This article applies to unilateral promises of sale or purchase in addition to the provisions proposed by the Reform Commission. Several of them reflect solutions established by case law:

the exercise of the option must be carried out in the forms agreed upon in the contract  (Art. 1588, para. 1, of the draft bill);

when the promise has been made without a time limit, its author can only withdraw from it after having given formal notice to the beneficiary to accept it within a reasonable time (Art. 1589 of the draft bill);

a sum may be provided in consideration of the exclusivity granted by the promisor to the beneficiary (referred to as an immobilization indemnity in notarial practice); unless otherwise stipulated, it is acquired by the promisor if the beneficiary does not exercise the option (Art. 1590 of the draft bill);

when the amount of the agreed sum causes a manifestly excessive infringement on the beneficiary's freedom not to become a purchaser, the unilateral promise is reclassified as a sale with a withdrawal clause (Art. 1590, para. 2, of the preliminary draft).

Finally, the formality provided for in Article 1589-2 of the Civil Code could be abandoned. This Article states that “any unilateral promise of sale relating to a building, a real estate right, a business, a lease right concerning all or part of a building, or the shares of companies referred to in Articles 728 and 1655 ter of the General Tax Code, is null and void if it is not recorded by an authentic deed or by a private deed registered within ten days from the date of its acceptance by the beneficiary.” The Reform Commission believes it is not necessary to retain it.

Since the consent of the parties to a sale is not subject to any formal condition, a court of appeal cannot hold that the agreement of the parties could only be fully realized at the time of the signing of the deed by the purchaser with living persons, without investigating whether the purchaser had given their consent before the death of the sellers.

Cass. 3e civ., 27 November 1990, LawLex202100006405JBJ.

The sale of a hangar to third parties not bound by the right of first refusal, several years after the offer was made to the beneficiary, is valid and does not violate the right of first refusal, as long as the sale to the third parties occurred at the same price that was offered to the beneficiary, the fact that changes in the real estate market and economic conditions provide more advantageous terms to the third parties being irrelevant.

Cass. 3e civ., 29 January 2003, LawLex202200001075JBJ.

A court of appeal cannot hold that by stipulating in the contested promise that the sale would only take effect on the date it was received by the designated notary, the parties intended to reserve the transfer of ownership to the beneficiary on the day of the signing of the authentic deed, so that, until that date, the promisor would only be bound, in the event of non-performance of his commitment, by a best-efforts obligation that could only result in a monetary claim in the form of damages, without specifying whether the formality of a notarial act was necessary to bind the seller and buyer in the terms of the final contract.

Cass. 3e civ., 5 January 1983, LawLex202100006437JBJ.

When the bilateral promise of sale stipulates that the completion of the sale and the transfer of ownership are subject to the execution of an authentic instrument, before a formal deadline binding on the parties, and the authentic instrument has not been executed within the set time limit, it must be concluded that the promise has lapsed.

Cass. 3e civ., 2 February 1983, LawLex202300002022JBJ.

If the acceptance of a promise of sale is, in principle, not subject to any form, this is only the case in the absence of contrary stipulations.

Cass. 3e civ. 7 January 1987, LawLex202300002028JBJ.

What are the new provisions envisaged regarding the formation of the sale?

To know the rules of legal capacity, which define the persons able to contract, one must refer to the ordinary law of contracts.

The provisions dedicated to the law of sale, in the chapter entitled “who can buy or sell,” merely reiterate the principle of the capacity of persons in Article 1594 of the Civil Code: “All those whom the law does not prohibit may buy or sell.”

The preliminary draft reform of the law on special contracts also affirms this principle in Article 1595.

Article 1596 of the current Civil Code provides a specific exception to sales contracts by listing the persons who cannot acquire a property, either by themselves or through intermediaries. It states that:

“Neither they themselves nor through intermediaries may become purchasers, under penalty of nullity:”

The guardians, of the property of those under their guardianship;

The agents, of the goods they are responsible for selling;

The administrators, of those of the municipalities or public institutions entrusted to their care;

Public officers, national assets whose sales are conducted through their ministry;

The trustees, the assets or rights comprising the fiduciary estate."

The preliminary draft reform adds two clarifications to this list. First, “intermediaries” are added for the goods they are responsible for selling or negotiating. It is further specified that the contract is not void if the person whom the buyer represented or the settlor of a trust authorizes or ratifies this contract. This provision thus reiterates the solution found in Article 1161 of the Civil Code.

Then, while the seller is generally free to choose their contracting party, exceptionally, the law grants certain individuals a right of preemption or withdrawal, allowing the beneficiary to acquire, in preference to any other buyer, a property that has been put up for sale.

To preserve the buyer's contractual freedom, Article 1597 of the draft specifies that the sale concluded in this context must be under the same conditions as those provided in the initial contract.

Who can sell or buy?

Positive law governing the content of sales contracts is set out in Articles 1598 and 1591.

Article 1591 states that “the price of the sale must be determined and designated by the parties,” and Article 1598 that “everything that is in commerce can be sold when specific laws have not prohibited its alienation.”

These provisions that define the content of the contract have proven insufficient to account for the law applicable to the content of sales contracts, in light of the numerous rules established by case law.

The ordinary law of contracts, which was reformed in 2016, and whose provisions apply to sales contracts, already provides certain clarifications.

The preliminary draft reform of the law on special contracts intends to adopt certain solutions that were retained on that occasion. For sales contracts, the classic conditions are stated: a service must exist at the time of the conclusion of the contract and be serious; this service must be lawful and determined or determinable.

First, the subject of the contract must be in commerce. The draft reform adopts the classic solution found in Article 1598 of the Civil Code.

Furthermore, the draft specifies in Article 1599 the regime for goods that are sold when the seller was not the owner (what is called the “sale of another's property"): "The sale of another's property is void. Only the purchaser may invoke this nullity. In any case, the owner may claim the property from the hands of the purchaser.”

If the Civil Code has always established the sanction of nullity, the draft specifies that it is relative. This means, in accordance with classic case law, that only the purchaser can act to annul the sale . The owner of the property is protected by a claim for recovery . The sale escapes nullity as soon as the parties agree to delay the transfer of ownership and the seller commits to acquiring the property before the agreed time for this transfer (Article 1600). The sale then concerns a conditional right.

Finally, the goods sold and the price must be determined or determinable. As for the goods transferred, the draft refers to the ordinary law of contracts, which has established the principles in this matter (Art. 1163 of the Civil Code). Regarding the sale price, Article 1603 of the draft provides that: “The sale price is freely agreed upon by the parties, unless the law provides otherwise.”

The judge cannot substitute for the parties to define the price himself or impose a method of determination other than the one they would have provided for in the contract.

The text adds, echoing the content of Article 1591 and the case law , that “the price must be determined or determinable” (Article 1604). This means that the determination of the price must not require a new agreement between the parties and must not depend on the will of only one of them.

Advice: How to ensure that the price does not depend on the will of either party when it is not immediately set at the conclusion of the contract?

Several methods of price determination can, in this case, be adopted:

by reference to the turnover of one of the parties or to the supplier's rate, provided that these do not depend solely on its will.

The draft specifies that sales concluded in execution of a framework contract are exempt from this rule. It thus resolves a doctrinal controversy concerning Article 1164 resulting from the 2016 contract law reform. This article provides that in framework contracts, it may be agreed that the price will be set unilaterally by one of the parties. Some authors have argued that only framework contracts are exempt from the requirement of price determination at the time of contract conclusion, with execution contracts being subject to it. This interpretation would partially strip the text of its substance.

As for other contracts, in principle, only an agreement between the parties at the time of the contract's conclusion allows for the determination of the price, excluding the intervention of the judge. Indeed, the latter cannot set the price themselves (Art. 1603) but can only, if the objective elements derived from the contract allow, liquidate the price (Art. 1604, para. 2). According to commentators, this is a slight inflection of the positive law that had been applied occasionally by case law .

Finally, pursuant to Article 1604, the sale concluded in violation of this rule would no longer be voidable but absolutely void.

The sale of another's property is subject to relative nullity, which can only be invoked by the buyer alone, to the exclusion of the seller or the true owner.

Cass. 3eciv., 16 April 1973, LawLex202200000960JBJ.

The action for annulment of the sale of another's property can only be exercised by the purchaser and not by the true owner, who only has a claim for recovery.

Cass. 3eciv., 9 March 2005, LawLex202200000061JBJ.

Article 1591 of the Civil Code does not require that the act itself indicate the price, but only that this price be determinable.

Cass. 3e civ. 3, 26 September 2007, LawLex202400001884JBJ.

Article 1591 of the Civil Code, under which the sale price must be determined and designated by the parties, does not require that this price be set in an absolute manner. The contract does not disregard this requirement as long as it contains a clause allowing the judge to determine the sale price in relation to elements not dependent on the will of the parties.

Cass. 3e civ., 5 January 1972, LawLex202400001885JBJ.

What are the new rules governing the content of sales contracts?

The Civil Code mentions the transfer of ownership effect (l'effet translatif) of the sale only in Articles 1583 and 1585 of the Civil Code. The draft reform of the law on special contracts aims to address this deficiency by dedicating Articles 1609 to 1616 to it.

The draft reiterates the rule of immediate transfer of ownership in Article 1609, para. 1: “The ownership of the sold good is legally acquired by the buyer with respect to the seller, upon the conclusion of the contract, even though the good has not yet been delivered nor the price paid.”

Current case law and Article 1196 already establish the principle.

The rule is not a mandatory public policy provision, and it is possible, in the contract, to delay the transfer of ownership until payment of the price or delivery of the goods (Article 1196 of the Civil Code and Article 1609 of the draft project). The transfer of ownership is also delayed when the goods subject to ownership have not yet been individualized (Article 1610) or, for a future good, at the moment it comes into existence (Article 1611).

Advice: When can it be useful to delay the transfer of ownership after the contract conclusion date?

Several reasons may justify deferring the transfer of ownership:

defer the transfer of ownership until the buyer pays the price, to protect against potential insolvency;

grant the buyer a withdrawal period during which the seller remains the owner of the property;

only defer the transfer of the risk burden so as not to impose on the buyer the risks related to the transport and delivery of the goods.

Article 1612, para. 1, specifies that: “The rights, actions, and charges related to the sold property are automatically transferred to its successive purchasers.”

These ancillary items, automatically transferred, are defined particularly broadly to allow the judge some discretion. Commentators on the draft indicate that they can include both claims and debts. Thus, the following can be transferred: from the active perspective, the action for warranty, actions for the repair of the property , the benefit of a non-compete clause; from the passive perspective, obligations incumbent on the purchaser of the property. This transfer would no longer require artificial recourse to certain legal mechanisms such as stipulation for another but would result solely from the effect of the law. The Reform Commission provides the example of the commitment to never develop a certain activity in a certain place, which would be transferred to successive purchasers of the property to which it is attached, based solely on this provision.

The same article then specifies, in its second paragraph, that “each seller retains the right to claim compensation for their personal loss.” The Reform Commission provides the example of the owner of a damaged property who must sell the property for a price lower than its value before the damage occurred and wishes to obtain compensation for this loss even though they have sold their property.

Regarding the actions transferred to the purchaser, Article 1613 of the draft states: “Any seller may enforce against the action brought against him by a subsequent purchaser the exceptions likely to exclude or limit the warranty or compensation that he himself owes to his own purchaser.” This provision enshrines a classic case law and results from the “necessarily contractual” nature of the action thus transferred.

The draft then presents the correlation that exists, in principle and subject to the absence of a contrary provision, between the ownership of the fruits produced by the thing and the burden of risks in Article 1614, paras. 1 and 2: “The fruits derived from the property benefit the one who, on the date of their production, is the owner. Correspondingly, the accidental loss of the property is at their risk, unless the seller has been put in default to deliver it and subject to the provisions of Article 1351-1.”

Finally, the draft bill provides for two provisions dedicated to the buyback option (Article 1615 and 1616).

The sale is a consensual contract which, unless otherwise stipulated, transfers ownership upon the exchange of consents.

Cass. 3e civ., 6 March 1996, LawLex202100006406JBJ.

Unless otherwise stipulated, the purchaser of a building has standing to act against the builders, even for damages arising prior to the sale, based on the ordinary contractual liability that accompanies the building as an ancillary.

Cass. 3e civ., 9 July 2014, LawLex202300002141JBJ.

The manufacturer of the sold item is entitled to enforce against the sub-purchaser, exercising a contractual action, all the defenses that it can enforce against its own contracting party.

Cass. 1re civ., 7 June 1995, LawLex200500005488JBJ.

Positive law subjects the seller to several obligations: they are bound by an obligation to inform the buyer, must deliver a conforming item, and are liable for a warranty in case of a defect in the item or warranty agaainst dispossession (garantie d'éviction) .

The draft bill introduces the subsection dedicated to it with a duty of information and a rule of interpretation favorable to the buyer. It only applies to the qualities and characteristics of the sold good: its scope would be reduced compared to current law, which does not distinguish between obligations. For other contractual provisions, Article 1190 of the Civil Code applies: “In case of doubt, a negotiated contract is interpreted against the creditor and in favor of the debtor, and an standard form contract against the party who proposed it.” According to Article 1617: “The seller is required to clearly express what relates to the qualities and characteristics of the good he transfers. To this extent, the obscurities and ambiguities of the contract are interpreted against him.”

Furthermore, the seller is required to deliver the goods as well as their ancillary items (Article 1619) at the location where the goods are situated at the time of the contract's conclusion and within a reasonable time in the absence of a contrary clause (Article 1621), at their own expense (Article 1622).

He owes a warranty in case of dispossession which may result from a personal act of the seller (Article 1624) or originate from a third party (Article 1625).

In this respect, the draft enshrines several judicial solutions:

if the first warranty is mandatory, the second, protecting the buyer against dispossession by a third party, may be waived, unless the seller was aware of the defects  or if it is a professional seller  (Article 1626);

the seller only guarantees legal disturbances caused by third parties and not factual disturbances .

The draft bill primarily introduces a significant innovation by merging the regime of the warranty against hidden defects with that of non-conformity defects. The classification of these two concepts being the subject of significant litigation, the two bases would now be combined in a single paragraph entitled “On the warranty against defects of the sold goods.”

The warranty should apply when the good “is unsuitable for the use normally expected of a similar good or does not conform to the specifications of the contract” (Art. 1641 of the draft bill). This new warranty would be endowed with a hybrid regime. In some respects, the protection of the buyer would be weakened. According to the text:

the warranty for defects could be excluded by a contractual clause, whereas the warranty for hidden defects is now a mandatory public policy provision, unless the buyer is a professional in the same specialty ;

if the professional seller is presumed to know the defects of the item sold, which allows for liability to be engaged and the warranty to be enforced even in the case of a clause excluding it, they could provide evidence to the contrary, under the terms of Article 1642, para. 2, of the draft bill, whereas the Court of Cassation currently establishes an irrebuttable presumption of knowledge of the defects ;

the reservations made by the buyer, which allow them to invoke the warranty for apparent defects, otherwise presumed accepted, would be subject to strict formal rules: they should be written, reasoned, and adversarial (countersigned); if compliance with the adversarial process is not possible, the reservations should be notified to the seller within five business days from the delivery of the goods (Art. 1643 of the draft bill).

Advice: It would henceforth be possible to introduce a clause modifying the warranty for hidden defects even in contracts concluded between persons other than professionals of the same specialty.

However, the scope of this provision risks being reduced to a minimal portion insofar as such a clause:

is irrefutably deemed abusive in contracts concluded between professionals and consumers when it leads to “compelling the consumer to fulfill their obligations while, reciprocally, the professional would not fulfill their obligations [...] of guaranteeing a good” (Art. R. 212-1 of the Consumer Code);

could be considered abusive on the basis of Article 1171 in an adhesion contract, even concluded between two professionals, as long as it creates a significant imbalance.

It would therefore be necessary to ensure that such a clause limiting the warranty would not be sanctioned on the basis of these texts.

Certain new provisions enshrine existing case law:

on the apparent nature of the defect that prevents the buyer from invoking the warranty, the draft reform merely reiterates the Civil Code (Art. 1642 of the Civil Code and Art. 1643-1 of the draft reform);

the professional seller and buyer are defined as the person who habitually engages in the sale or purchase of goods similar to the one being sold.

Others strengthen the protection of the buyer. Thus, Article 1650 ends a jurisprudential uncertainty by stating that “Where applicable, the existence of a defect does not prevent the buyer from exercising the right to annul the contract for defect in consent.”

In positive law, the combination of an action for nullity and for warranty against hidden defects is only allowed in the case of an action based on fraud  but not on error .

Regarding its implementation, when the warranty is due, the draft reform recalls the buyer's free choice between the return of the good for a refund of the price or a partial refund while keeping the good. The buyer may also request the conformity of the good, without the seller being able to impose any of these options (Article 1644 of the draft).

The seller is also required to compensate the buyer for the damage suffered, in accordance with Articles 1231 et seq., when they were aware of the defects affecting the goods (Article 1645 of the draft). This text thus resolves the controversial question of whether the seller's liability follows ordinary law or falls under a specific liability regime, in favor of the latter interpretation.

Finally, the draft allocates a provision to the time limits for the warranty action: “The action resulting from defects is time-barred after two years. This period begins to run from the moment the buyer discovered or should have discovered the defect, without the action being exercisable beyond the period set in Article 2232. Any contrary clause is deemed unwritten.”

A ten-year cutoff period is thus added to the two-year prescription. This latter point had also been the subject of judicial controversy: should a maximum period be applied, after which the buyer, even if unaware of the defect, could no longer act? If so, the question of the duration of such a period also arose. The Court of Cassation had ultimately upheld the 20-year cutoff period of Article 2232 of the Civil Code . The Reform Commission incorporated this solution into the law, not without debating the duration of the cutoff period to be retained.

The clause stipulating that no recourse can be exercised against the seller regarding easements constitutes a mere boilerplate clause that cannot exempt the seller from the consequences of their fault in failing to mention in the deed an easement of which they cannot be unaware.

Cass. 1re civ., 21 June 1967, LawLex202300002318JBJ.

The stipulation that restricts the warranty owed in the event of a sale cannot be enforced by the professional seller.

Cass. 3eciv. 11 May 1994, LawLex200500005487JBJ.

The warranty against dispossession due to a third party is owed if the disturbance suffered by the buyer is a legal disturbance, existing at the time of the sale, not declared and unknown to the buyer.

Cass. 1re civ., 28 October 2015, LawLex202200000769JBJ.

A non-warranty clause for hidden defects, invoked by the initial seller against the intermediary seller, must be applied when both are professionals in the same specialty.

Cass. com., 3 February 1998, LawLex200500004305JBJ.

It is appropriate to equate the seller who knew of the defects with the one who, by their profession, could not have been unaware of them.

Cass. 1re civ., 21 November 1972, LawLex202200000729JBJ.

The inadmissibility of the action for warranty against hidden defects due to the expiration of the short period does not prevent the reclassification of its basis by the judge, as long as the defect affecting the item constitutes fraud by the seller.

Cass. 1re civ., 16 April 1991, LawLex200500004332JBJ.

The purchaser whose claim for warranty has been upheld on the basis of hidden defects cannot claim damages on the basis of error.

Cass. 1re civ., 14 May 1996, LawLex200400003432JBJ.

The action for warranty against hidden defects must be initiated within two years from the discovery of the defect, without exceeding the ultimate deadline of twenty years from the day the right arises, which, in this matter, corresponds to the day of the sale concluded by the party sought for warranty.

Cass. mixte, 21 July 2023, LawLex202300010599JBJ, LawLex202300010602JBJ, LawLex202300010609JBJ, LawLex202300010618JBJ.

What new rules are envisaged regarding the seller's obligations?

The preliminary draft reform of the law on special contracts provides, like the Civil Code, provisions governing the obligations of the buyer.

To the obligation to pay the price, provided for by Article 1650 of the Civil Code, the draft adds, in Article 1651, an obligation to take delivery of the goods that case law had long established: “The buyer has two essential obligations, to pay the price and to take delivery of the goods.”

Nevertheless, and in accordance with current case law, it is exempt from this latter obligation when the good has apparent defects (Art. 1654).

The buyer being required to collect the goods, it is also up to them to bear the cost (Art. 1653 of the draft).

Regarding the place and time of performance, under the terms of Article 1655 of the draft: “The buyer's obligations must be performed at the place and time agreed upon by the parties. In the absence of a contract, they must be performed at the place and time of delivery, after the execution of the latter.”

In relation to the current Article 1651 of the Civil Code, the draft adds a clarification. If the buyer's obligations must be fulfilled by default at the place and time of delivery, it is only after the execution of the latter. The buyer cannot be blamed for not fulfilling their obligation if the seller has prevented the removal of the goods due to their own breaches .

Regarding the sanctions for non-performance, a case of automatic rescission is provided, although more limited than that currently recognized by the Civil Code. Thus, according to Article 1656 of the draft bill: “In the sale of perishable goods, the rescission of the sale will occur automatically and without notice, in favor of the seller, after the expiration of the agreed term for collection.”

The current provision of the Civil Code also concerns, for its part, goods and movable effects.

The rescission of the sale in favor of the seller in the event of failure to take delivery can only be recognized if the seller has previously delivered the sold item under the conditions provided in the contract.

500 Questions - Business Law

399. What rules govern the transfer of ownership effect in a contract of sale?

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399. What rules govern the transfer of ownership effect in a contract of sale?

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