Tort liability for contract breach: French Supreme Court sets limits

Tort Liability for Contract Breach: French Supreme Court Sets Boundaries

Since the landmark Bootshop ruling in 2006, French case law has allowed a third party to a contract to bring a tort claim against a contracting party when a contractual breach causes damage to that third party.

This principle was reinforced by several decisions eliminating the need to prove a separate tortious fault. However, the July 3, 2024 ruling marks a significant shift by introducing an important limitation.

Brief Recap of Previous Decisions

• ‍Bootshop – October 6, 2006: The French Supreme Court held that a third party to a contract may invoke tort liability based on a contractual breach if it caused harm.
• ‍Bois Rouge – January 13, 2020: The Court went further, stating that the third party does not need to prove a distinct tortious fault. Demonstrating the causal link between the breach and the damage is enough.

Facts Behind the July 2024 Decision

• Clamageran was responsible for handling machines owned by Aetna Group Spa.
• A machine was damaged. Aetna Group Spa’s insurer, Itas Mutua, compensated the loss and sued Clamageran by subrogation.
• The contract with Aetna Group France included a liability limitation clause.

The New Limitation: Enforceability of Liability Limitation Clauses

On appeal, judges refused to apply the liability limitation clause, arguing it was not enforceable against the insurer since it was not a party to the contract.

The Supreme Court overturned this decision, ruling that liability limitations in the contract can be enforced against a third party when the claim is based on a contractual breach.

In other words: A third party cannot obtain more than what the contracting party itself could claim. This preserves the debtor’s expectations and prevents giving the third party a more favorable position than the creditor.

Conclusion and Recommendations

The July 3, 2024 ruling does not abandon the Bootshop principle but narrows its scope. It marks an important step in balancing third-party protection with contractual certainty.

Businesses should:

• Include clear and robust liability limitation clauses.
• Ensure these clauses do not undermine essential contractual obligations, as this is key to their validity.

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