Beware: French Court of Cassation rules that clauses limiting or exonerating liability, agreed between the contracting parties, may also be enforced against third parties

Written By

margaux compagnon Module
Margaux Compagnon

Senior Associate
France

Dual qualified in New York and Paris, I work as an associate in the Dispute Resolution Group.

djazia tiourtite module
Djazia Tiourtite

Partner
France

As a partner in our Dispute Resolution Group in Paris, I take a pragmatic approach to disputes, combined with deep expertise in French civil procedural rules in all aspects of litigation (mediation, negotiation, lawsuits, and enforcement).

In the Boot Shop ruling of October 2006, followed by the Bois Rouge ruling of January 2020, the Court of Cassation allowed third parties to rely on a breach of contract in tort where the breach had caused them damage. This case law conferred a significant advantage to third parties, as prior to these decisions limitation of liability clauses agreed between contracting parties were not enforceable against them by those who were not a party to the contract. 

The solution turned out to be dangerous in practice: the debtor (contracting party) found itself faced with a multitude of potential creditors, whereas it thought it had contractually committed itself to only one, the party it had contracted with. The solution additionally appeared profoundly unfair: unlike a contracting party, a third party acting on the basis of a contract could not have the content of that contract set against it, and in particular the clauses limiting or exonerating liability. This meant that the contracting party could limit its liability to a specific sum towards the other contracting party but find itself liable indefinitely towards third parties.

A turning point: The Clamageran ruling

The Clamageran ruling, handed down on 3 July 2024, represents a major turning point in this respect. 

In this case, an Italian company (Aetna Group) had transported a number of machines for exhibition at a…

Full article available on Disputes +

Latest insights

More Insights
power station

UK Supreme Court grants anti-suit injunction and re-affirms Enka upholding parties’ agreement to arbitrate

Nov 20 2024

Read More

Dutch Mass Claims Litigation – Has the WAMCA failed to deliver its promise to high-risk litigation funders or is it yet too soon to tell?

Nov 15 2024

Read More
Curiosity line blue background

It takes all kinds – the Federal Court issues a decision on Moccona and Vittoria’s trade mark dispute over the use of coffee jars, dismissing the infringement claim and cross-claim for cancellation

Nov 14 2024

Read More