Responsibility towards third parties: The Court of Cassation sets its limits

Tort liability for breach of contract: the Court sets its limits

From the iconic stop Bootshop from 2006, French case law admits that The third party to a contract can engage the tortious liability of a party when the party committed a contractual breach that caused damage to the third party.

This advance has been consolidated by several decisions making it unnecessary to demonstrate a distinct delictual fault. The stopping of July 3, 2024 marks a significant turning point, however, by introducing a Important limit to this solution.

A brief summary of previous decisions rendered by the Court

• Bootshop discontinuation — October 6, 2006 : The Court of Cassation has ruled that a third party to the contract may invoke a tortious fault based on a breach of contract if it causes harm to him.
• Bois Rouge stop — January 13, 2020 : The Court went further by specifying that the third party does not have to demonstrate a delictual fault distinct from the breach of contract. The simple demonstration of the causal link between the breach and the damage is sufficient.

The facts behind the Court's decision

• The company Clamageran was in charge of the handling of machines belonging to Aetna Group Spa.
• A machine is damaged. The insurance company of Aetna Groupe Spa, Itas Mutua, indemnifies the claim and acts as a subrogation against Clamageran.
• The contract in question, concluded with Aetna Group France, contained a limitation of liability clause.

The new limit introduced by the Court: the enforceability of limitation of liability clauses

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

The Court of Cassation overturned the appeal decision by considering that the limitations of liability stipulated in the contract may be opposed to the third party, as long as the latter acts on the basis of a breach of contract.

In order not to thwart the expectations of the debtor, who has undertaken in consideration of the general structure of the contract and not to confer on the third party who invokes the contract a more advantageous position than that available to the creditor himself, a third party to a contract who invokes, on the basis of delictual liability, a contractual breach that has caused him damage may be subject to the conditions and limits of liability that are apply in the relationships between the contracting parties.

In other words: a third party cannot get more than what the violator's counterparty could claim.

Conclusion and recommendations

The judgment of July 3, 2024 does not abandon the Bootshop principle but in reduces the effective range. It marks an important step in the balance between protection of third parties and legal security of the parties to the contract.

It is therefore crucial for businesses to secure their contractual framework in the face of the risks of litigation from third parties.

To do this, it is necessary to:

• to incorporate limitation of liability clauses clear and sturdy.
• to ensure that these clauses do not affect an essential obligation of the contract, an imperative condition for their validity.

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