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New case law on product liability – Update on compensable losses

Decision of the first Civil Chamber of the Cassation Court of 14 October 2015, N°14-13847

Concerning compensable losses on grounds of product liability, article 1386-2 of the French Civil Code (transposing the European Directive N° 85/374 of 25 July 1985 on liability for defective products), stipulates the compensation of losses resulting from harm to a person on the one hand and the compensation of damages exceeding 500 € and resulting from “a damage to a good other than the defective product itself” on the other hand.

The case law has repeatedly stated the necessity for the claimant to prove both the existence of a defect of the product (in the sense of article 1386-4 paragraph 2 of the Civil Code: i.e. the product’s not offering the safety which one can legitimately expect) and the existence of a damage external to the product itself.

The Cassation Court provides an important clarification as to the outcome of economic losses resulting from a damage to the product itself.

In the case at hand, the owner of a sailing boat claimed from the manufacturer, on the grounds of liability for defective products, the compensation of losses due to the refurbishment of the boat as well as to the damages resulting from the loss of rent and loss of use.

The sailing boat was found to be a defective product in the sense of articles 1386-1 and following of the Civil Code, i.e. a product not offering the safety which one can legitimately expect.

By the above mentioned judgment the Cassation Court annuls the decision of the Appeal Court of Aix-en-Provence of 10 October 2013, which upheld the compensation claims of the boat owner and ordered the manufacturer to compensate all of the economic losses claimed.

The High Court clarifies how article 1386-2 of the Civil Code is to be interpreted: the purely economic losses, whether they be direct or indirect, insofar as they are strictly consequential to a material damage affecting the defective product itself, are excluded from the regime of defective product liability and are therefore not compensable on these grounds.

The claimants of course still have the possibility to act directly against the manufacturers on other grounds of liability, such as the legal warranty against hidden defects.

Solène Marais