- In principle, the law on the sale of goods does not make a distinction between sales contracts between professionals or sales contracts vis-à-vis consumers. However, statutory law does have special provisions to protect consumers including the fact that consumers’ claims for defects may not be restricted or ruled out.
- There is a great degree of freedom, however, in drafting individual sales contracts between professionals so that claims for defects may usually be considerably extended or restricted but not easily ruled out between professionals of different lines of business.
- Under French law, GTCs are, in principle, subject to the same statutory and case-law rules as individual sales contracts. Any limitation of liability has to be accepted by the party against which it is asserted (evidence of consent is usually more difficult to achieve for GTCs).
- A defect as to the conformity of the delivery (“défaut de déliverance conforme”) exists when the goods delivered does not comply with the contractual specifications agreed between the parties (art. 1604 of the French civil code).
- In the absence of contractual specifications, the quality that the good shall display may be inferred from its price or from the characteristics of the good in consideration of which the sale has been concluded.
- A hidden defect (“vice caché”) is a defect which renders the delivered goods unfit for its intended use or which diminishes its use in such a way that if the purchaser had been aware of this it would not have bought it or only at a lower price (art. 1641 of the French civil code). In the absence of any precision as to the intended use of the goods at the time of the sale, the judges appraise it with regard to the normal and usual use of such goods.
The “garantie d’éviction” (i.e. guarantee of rightful title) obliges the seller, even in the absence of any warranty stipulated under the agreement, to guarantee the purchaser against partial or complete revocation of the right to use the goods sold or against alleged encumbrances on the goods which were not declared at the time of the sale (art. 1626 of the French civil code).
Rights and Remedies of Purchaser
- Remedy for non-conformity with delivery obligation: The purchaser is entitled to require the completion, repair or exchange of the sold goods or thede jure termination of the sales contract. The purchaser may also claim damages.
- Remedy for hidden defects: The purchaser may freely choose between keeping the good and obtaining a reduction of the price as set by an expert(“action estimatoire”) and returning the good and terminating the sales contract (“action rédhibitoire”). The purchaser may also claim damages.
- Repair or exchange of the goods in the event of quality issues;
- Replacement in the event of a fungible goods (i.e. delivery of identical goods);
- Compulsory delivery of the good if there is an absence of delivery;
- The addition of goods in the event of quantity issues.
Contractual restrictions to repair or exchange the goods are generally deemed permissible in individually negotiated contracts and in GTCs concluded between professionals.
Right to Choose Subsequent Performance
- In principle, the purchaser is entitled to freely choose the remedy it intends to seek.
- Limiting the types of subsequent performance and transferring the right to choose the subsequent performance to the seller are generally deemed permissible in individually negotiated sales contracts and in GTCs concluded between professionals.
Costs of Subsequent Performance
- In principle, the costs incurred in relation with subsequent performance lie with the seller (transportation, packaging…).
- In the event of consumer contracts, the statute on legal conformity warranty provides that the costs of subsequent performance are entirely borne by the seller. Any provision that (in)directly limits or excludes the consumer’s rights pursuant to this warranty, before any claim is made by the consumer, is to be ignored (“reputée non écrite”).
Conditions for Claims for Damages
- Claims for damages are subject to the following preconditions:
- Breach of conform delivery obligation: the purchaser shall prove that the non-compliant delivery has caused it damage (i.e. need to prove a defect, a damage and a causal link between these two elements).
- Hidden defect warranty breach: The purchaser shall prove that the seller knew about the hidden defect and that such defect caused it damage. For a defect to be characterized as a hidden defect, the purchaser shall prove that it affects the intended use of the good, it existed prior to the sale and that it was hidden at the time of the sale.
- Consumers’ rights pursuant to the legal conformity warranty cannot be directly or indirectly limited or excluded prior to the purchaser forming a claim in this respect.
- In individually negotiated sales contracts or in GTCs concluded between professionals certain limitation and/or exclusion of liabilities are permitted. Nevertheless, liability in the event of fraud, wilful deceit or inexcusable fault cannot be limited or excluded.
Extent of Claims for Damages/Limitation of Liability
- The whole damage has to be compensated. Only direct damages which were foreseen/could have been foreseen upon conclusion of the sales contract/GTCs may be indemnified under French contractual law.
- In principle, the hidden defect legal warranty cannot be excluded but for contracts concluded between professionals of the same speciality.
- The conform delivery obligation may be limited unless the contract is signed between a professional and a consumer.
- In principle, the extent of liability may not be restricted to the detriment of the consumer in contracts vis-à-vis consumers (“clauses abusives”).
- In individually negotiated sales contracts or in GTCs concluded between professionals certain limitation and/or exclusion of liabilities are permitted. Nevertheless, liability in the event of death, bodily harm, fraud, wilful deceit (“dol”) or inexcusable fault/gross negligence (“faute lourde”) cannot be limited or excluded. A limitation/exclusion of the liability provision which contradicts the aim of the essential obligation under the contract is to be ignored (“réputée non écrite”).
Withdrawal from Sales Contract
- If the conform delivery obligation applies: The purchaser is in principle free to terminate the sales contract owing to a lack of conformity of the delivered good. The seller may, in certain instances, refuse such termination (e.g. the invoked lack of conformity was not a decisive element for the purchaser).
- If the hidden defect warranty applies: The purchaser is entitled to claim termination of the sales contract (“action redhibitoire”) except if the good sold cannot be returned to the seller or if, according to the judges’ appraisal, the defect is not serious enough to justify termination.
Limitation Period for Claims for Defects
- Limitation period for conform delivery obligation: The purchaser has five years as of the date on which it knew or should have known the facts substantiating its claim to introduce judicial proceedings.
- Limitation period for hidden defect warranty: The purchaser has two years as of discovery of the defect to initiate judicial proceedings.
- Limitation period for legal conformity warranty: The purchaser has two years as of the delivery of the good to initiate judicial proceedings.
Purchaser’s Obligation to Inspect Goods and Report Defects in B2B Contracts
- In sales contracts/GTCs between professionals, the purchaser must inspect the goods without undue delay after delivery and report any detected/apparent defect to the seller without undue delay. The purchaser must also report hidden defects without undue delay after detection.
- If the purchaser fails to inspect the goods or to report any defect, the goods will be deemed to have been accepted and the purchaser may not assert any claims for unreported defects. Presumed acceptance does not apply if the seller has maliciously concealed the defect. If the purchaser is a “professional in the same line of business” as the seller, any defect shall in principle be deemed as known (not hidden) by it but such qualification is subject to the judges’ appraisal.
- In individually negotiated contracts/GTCs, the obligation to inspect the goods and report any defect may be extended, limited or excluded.