French Consumer Law is a comprehensive and comparative overview of French and EU law in this field, covering: advertising, unfair commercial practices, conditions for the validity of contracts, unfair terms, product conformity, latent defects, product safety.

French Consumer Law

The victim of fraud may either bring an action for damages on the basis of tort without bringing an action for nullity of the contract, in particular when that action would be dismissed or time-barred , or bring the two actions together. The scope of the damages actions for fraud is growing and that tendency is expected to increase in the light of a judgment of the Court of Cassation rendered in 2 …

Compensable damage

The victim of fraud may either bring an action for damages on the basis of tort without bringing an action for nullity of the contract, in particular when that action would be dismissed or time-barred , or bring the two actions together. The scope of the damages actions for fraud is growing and that tendency is expected to increase in the light of a judgment of the Court of Cassation rendered in 2008, having ruled that a court of appeal not asked by the victim of fraudulent non-disclosure for the annulment of the sale, may, without having to expressly rule on the intentional nature of the non-disclosure, which also constitutes a breach of the seller's pre-contractual information obligation, award damages to the buyer to compensate for his loss . Indeed, unlike fraud, which necessarily implies the intention to deceive , the breach of an information obligation can be sanctioned by damages in the absence of intentional misconduct. It is nevertheless surprising for the buyer to be able to claim damages in tort due to an unintentional fault, on the basis of  “fraudulent non-disclosure” which, if he had brought an action for nullity on the grounds of Article 1139 (former Article 1116) would not have been established in the absence of an intent to deceive .

In a tort action, the victim may thus be entitled to a reduction in the sale price and the award of additional damages, the manner and amount of which are a matter for the sovereign assessment of the trial courts . Insofar as such compensatory damages are intended to compensate a particular cause of injury, they are to be distinguished from default damages, in the event of a delay in the restitutions resulting from the annulment of the contract. When the victim brings actions both in nullity and in tort, the perpetrator of the fraud may be ordered to pay compensatory damages, in addition to the default damages for bad faith .

The victim may obtain reimbursement for his material loss, the expenses he can show having incurred in connection with the fraudulent sale of his vehicle, i.e. the cost of the registration document, insurance and its extension in the event of emergency repairs, repairs and taxi costs , or sums disbursed to rent a garage , compensation for the repairs made due to the defects affecting the object sold and whose existence had been knowingly concealed from him by the seller  or compensation for his upset , disturbance of enjoyment  or non-pecuniary damage . The victim of fraud may also claim compensation for his non-pecuniary damage, the hardships suffered to have the various breakdowns having damaged the vehicle repaired, as he had to take several kinds of public transport, which quadrupled his travel time - at late hours when this kind of transport is less frequent and less safe - and disrupted his family and personal life . According to the Court of Appeal in Montpellier, a person who knowingly deceives a contractual partner by claiming that the car sold has never been in an accident must pay compensation for the incidental damage caused by the annulment of the sale for fraud, related to the deprivation of the possibility to keep the vehicle and the initiation of lengthy legal proceedings abroad . In addition, the professional seller cannot absolve itself of all liability by means of a clause by which the buyer acknowledges having been informed of the change of engine of the vehicle purchased and undertakes to waive all recourse, when the waiver of the right to take legal action, which is not presumed, is only valid if the buyer has made this waiver in full knowledge of the facts, i.e. that he has been informed of all the consequences of an engine replacement .

The Court of Cassation  has excluded the possibility for the seller, the perpetrator of the fraud, to claim the benefit of an occupation fee, in addition to the restitution of its property following the annulment of the contract of sale. The enjoyment of the property prior to the annulment of the contract, is not refundable to the seller, either in kind or in value, when, having retroactively never existed, the sale cannot produce effects due to the retroactive effect of the annulment of the sale. However, no longer ruling on the grounds of the retroactive effect of the annulment, but on that of tort, the mixed chamber of the Court of Cassation stated that “only the party to the annulled contract of sale that acted in good faith can seek the conviction of the party at fault to compensate the damage suffered as a result of the conclusion of the annulled contract”. Moreover, an action for damages cannot be dismissed pursuant to the adage “no one can allege his own turpitude”, inapplicable in matters of tort . Thus, the buyer, the victim of the fraudulent maneuvers carried out by the seller solely for the purpose of obtaining a large sum of money from him, is justified in seeking the annulment of the contract, even if he himself had acted in the belief that he would make a substantial unjustified profit. In the same way that the inexcusable mistake of the victim is irrelevant , his indignity is of little importance.

The question of compensable injury in respect of loss of opportunity arose when a victim of the fraudulent non-disclosure nevertheless chose to pursue the contract. In this case , the Court of Cassation considers that the compensable injury can only result from the “loss of a chance not to contract or to contract on more favorable terms” within the framework of the contract maintained. This cannot be the loss of a chance to obtain the expected gains from an operation, which would never have been realized, whether or not there was fraud, or that to conclude a more favorable contract with a third party, when the buyer has made the choice not to request the annulment. In other words, hypothetical damage does not constitute compensable damage .

Finally, the victim may act against the third party who contributes to the realization of the damage suffered as a result of the fraudulent maneuvers of his contractual partner. Thus, the notary incurs his liability if he fails to fulfill his professional obligations - in particular to ensure the regularity of the construction sold - and contributes to the occurrence of damage suffered by the buyer as a result of the fraudulent maneuvers of the sellers .

  Under Article 2224 of the Civil Code, the action for nullity and the action for compensation (except in the case of physical injury, when the period is extended to ten years from the day when the holder of a right knew or ought to have known the facts enabling him to exercise it: Article 2226) are barred after five years, but the starting point of the limitation period in these cases differs: for the action for nullity, it is from the discovery of the error (Article 1139) whereas for the action for compensation, it is the starting point of common law (Article 2224), i.e. from the day on which the holder of a right knew or ought to have known the facts which enabled him to exercise it. See Cass. 1re civ., 9 July 2015, LawLex201500001683JBJ.

 Cass. com., 28 May 2008, LawLex201400000772JBJ, finding that "having noted that the seller's silence on the project to build premises constituted fraudulent maneuvers, when the construction of these premises, which deprived the buyers of a broad view over the public green zone, constituted a decisive element of the consent, as if the buyer had known, he certainly would not have given the same price for the property for sale, the court of appeal, which was not seized of an application for the annulment of the sale, without having to expressly decide on the intentional nature of the non-disclosure that it found and which also amounted to a breach of the seller's pre-contractual information obligation, was able to award damages to the buyer as compensation for his injury".

  Cass. 1re civ.,2 April 1996, LawLex200500009087JBJ, having awarded compensation for the buyer's injury, following the possession for more than three years of a vehicle he could not duly register, or sell. See also CA Basse-Terre, 14 March 1994, LawLex200600001572JBJ and CA Caen, 19 November 2008, LawLex201200001530JBJ.

  TI Angers, 28 December 2006, LawLex200700000767JBJ, having taken into consideration the material and psychological injury suffered by the tenants, due to the fraudulent maneuvers of the lessor who had rented them an unsanitary house dangerous for their health.

 CA Versailles, 21 January 2010, LawLex201200001086JBJ.

 CA Montpellier, 13 February 2014, LawLex201400000402JBJ.

  CA Caen, 19 November 2008, LawLex201200001530JBJ.

 Cass. ch. mixte, 9 July 2004, LawLex200600001739JBJ. See also CA Montpellier, 13 February 2014, LawLex201400000402JBJ, op. cit.: the contracting party who obtains the annulment of a sale for fraud is not liable for any compensation whatsoever for the use he may have made of the property until the retroactive annulment.

  Cass. 1re civ., 22 June 2004, LawLex200500007325JBJ.

  Cass. 1re civ., 21 February 2001, LawLex200500005940JBJ.

 Cass. 1re civ., 25 March 2010, LawLex201400000720JBJ, followed in the same case of the Cass. com., 10 July 2012, LawLex201400000721JBJ. In this case concerning the transfer of shares of a company offering the long-term lease of computer equipment, which gave rise to two judgments of the Court of Cassation, the First Civil Chamber held that the damage of the assignee from whom the assignor had concealed the existence of counter-letters enabling some lessees to acquire the leased equipment at a favorable residual price at the end of the contract, who nevertheless chooses not to seek the annulment of the contract, could only result from "the loss of an opportunity to contract or not to contract on more favorable terms" and not, as the trial judges had considered, from the loss of an opportunity to obtain the expected gains, which, in any event, prohibited the disputed counter-letters, even if they had not been concealed.  Since the referring court considered that "this loss of opportunity to contract or not to contract on more favorable terms" could be understood in the sense of a loss of opportunity to conclude a more advantageous contract with another, the Commercial Chamber overturned it, simply recalling that the purchaser "having made the choice not to seek the annulment of the contract, its compensable injury corresponded solely to the loss of opportunity to have been able to contract on more advantageous terms". In other words, the loss of opportunity to contract only applies to the contract that the victim has chosen to maintain, and not the possibility to conclude a more advantageous contract with a third party. See also Cass. com., 21 June 2016, LawLex201600001219JBJ.

 See Cass. com., 24 September 2013, LawLex201300001407JBJ: in this case concerning a share transfer in which the victim of fraudulent non-disclosure, preferring the continuation of the contract to its annulment, claimed damages for the overvaluation of the transfer price resulting from the fraudulent non-disclosure of the transferor, the Commercial Chamber, approving the trial judges who had dismissed the claim for compensation on the grounds that "the maneuver consisting in concealing the negotiations which ultimately had [...] no impact on the value of the shares transferred", held that "the alleged damage [...] was non-existent, since it was not demonstrated that the price was excessive when it was agreed upon by the parties".

  See Cass. com., 28 June 2005, LawLex200600002444JBJ; CA Aix-en-Provence, 30 October 2012, LawLex201400000447JBJ; Cass. 2e civ., 25 June 2015, LawLex201500001017JBJ.

 CA Paris, 14 November 2006, LawLex200700000765JBJ.

 See Cass. 1re civ., 28 May 2008, LawLex201400000772JBJ, when the victim of incidental fraud does not request annulment and brings an action for damages, the judges may be satisfied with the breach of an information obligation, outside of any intentional element (required, however, in respect of fraud), to grant damages on the grounds of Article 1240 (former Article 1382) of the Civil Code.

  Cass. com., 7 January 1997, LawLex200500005014JBJ.

  Cass. com., 4 January 2000, LawLex200500009091JBJ: the conviction of the seller, the author of the fraudulent maneuvers, to pay the legal interest on the sale price from the date of payment, as well as damages in compensation, in particular, of the interest on the loans taken out by the buyer, does not compensate the same injury twice, but compensates the buyer for the unavailability of the amount unduly paid and the damage caused by the fraud.

 CA  Versailles, 21 January 2010, LawLex201200001086JBJ.

  CA Versailles, 10 June 2010, LawLex201200001423JBJ.

 CA  Colmar, 7 September 2006, LawLex200700000758JBJ.

  CA Orléans, 18 December 2006, LawLex200700000763JBJ, having awarded compensation for the upset and inconvenience caused to the buyer by the failure of his acquisition project.

French Consumer Law

382. Compensable damage

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382. Compensable damage

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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