Case Law

Supreme French civil court upholds privity of contract as a limit on tort liability claims based upon a contractual fault 👇

Seventeen years after the Boot Shop ruling (Ass. plén., Oct. 6, 2006, No. 05-13255), the Commercial Chamber of the Court of Cassation clearly aims to restore full effectiveness to the principle of privity of contract.

In a notable ruling dated July 3, 2024, No. 21-14947, the Commercial Chamber of the Court of Cassation, relying on articles 1134 and 1165 of the former Civil Code, set a limit to the principle that “a third party to a contract may invoke, on the basis of tort liability, a contractual breach as long as this breach caused them harm.”

The Commercial Chamber now holds that “to avoid undermining the debtor’s expectations,” it is appropriate to place the contracting party who is a victim on equal footing with the third-party victim: both can now have the contract’s limitation of liability clauses enforced against them, whether or not they are parties to said contract.

This position stands in coherence with Civil Code articles governing contractual liability, which only applies “to damages that were foreseen or could have been foreseen at the time of the contract’s conclusion, except when non-performance is due to gross or willful misconduct.” (Article 1150, now 1231-3 of the Civil Code, a principle maintained unchanged by successive reforms, though applied sparingly by the courts).

One question remains: given that the general principle was reaffirmed by the Plenary Assembly in 2020, will the other chambers of the Court of Cassation adopt the new nuance proposed by the Commercial Chamber?

This ruling may significantly impact how contractual breaches are treated in tort liability claims, emphasizing the importance of clear contractual terms and the boundaries of liability in commercial agreements. As the legal landscape continues to evolve, stakeholders should remain vigilant about the implications of this decision on future contracts and liabilities.

Article written by Julien Jorand from Alchimie Avocats.