Sales law: a latent defect 20 years on

The guarantee against hidden defects set out in articles 1641 et seq. of the French Civil Code obliges the professional or occasional seller to deliver a product free from defects likely to compromise its intended use.

The action must be brought within 2 years of discovery of the defect.

In practice, the “discovery” (in the legal sense) of the defect is often the result of a judicial expertise report, even if the buyer suspected its origin and nature long before the expertise.

The French Supreme Court recently settled a debate on the time limit for bringing this action after the sale.

The previous and antagonistic positions of two chambers of the Cour de cassation :

– Position of the 1st Civil Chamber and the Commercial Chamber: Period of 2 years from discovery of the defect, included in the 5-year period from the date of sale (article L. 110-4 of the French Commercial Code).

– Position of the 3rd civil chamber and several lower courts: 2-year period from discovery of the defect, included in the 20-year period from the date of sale (article 2232 of the French Commercial Code).

The reason for this debate lies in the fact that the law of June 17, 2008, codified in article L.110-4 of the French Commercial Code, reduced the limitation period from 10 to 5 years under ordinary law, but did not specify the starting point for this period. It was therefore up to the judge to set it.

The 1st civil chamber and the commercial chamber of the Cour de cassation agreed on a starting point of the day of the conclusion of the sales contract, which enclosed the period to act, as from the sale, within the 5-year prescription period of common law.

The 3rd Civil Chamber reasoned differently, wishing to give greater protection to the intermediary seller. It inserted the 2-year warranty period for latent defects within the 20-year time limit set out in article 2232 of the French Civil Code, thereby postponing the starting point of the limitation period to 20 years “from the day on which the right arose”, i.e. from the initial sale.

The judgments of July 21, 2023:

A mixed chamber, presided over by the First President, bringing together the three chambers of the Court concerned by the question, was convened for the occasion and handed down 4 rulings resolving this issue: under what conditions can a period whose starting point is variable or sliding (the discovery of the defect) be combined with a period whose starting point is fixed and determinable (the date of the sale)?

The various possible fixed deadlines were as follows:

– The 20-year period provided for in article 2232 of the Civil Code

– The five-year period stipulated in article L.110-4 of the French Commercial Code

The Court’s response:

An action under the warranty for latent defects must be brought within 2 years of the discovery of the defect and within 20 years of the sale.

The impact of this extension of the deadline varies considerably depending on whether you are the seller or the buyer, and more generally on the type of property involved in the sale.

While questioning the sale of an apartment or house 19 years later may not seem excessive, the situation is quite different when movable property is involved, and even more so when it comes to the sale of an animal.

We were able to observe that judicial appraisals of sales of sport horses concluded more than 7 years previously had just been ordered. The buyer’s influence on the animal and the repercussions of its living environment over all these years are such that dating the defect will not be easy.

Despite the extension of the time limit, the onus is still on the buyer to prove that the defect existed prior to the sale.

The legal uncertainty for sellers of these properties is colossal. It should be noted that since the latent defect action is an accessory to the property sold, it is passed on to successive purchasers of the property, so that all successive sellers can be held liable during the same period.

The reform of special contracts may bring a new change in the time limit, since the draft reform provides for two alternative wordings of article 1648 of the Civil Code:

– The action resulting from defects is prescribed by two years. This period begins to run from the moment when the buyer discovered or should have discovered the defect, without the action being able to be brought beyond the period set out in article 2232. Any clause to the contrary is deemed unwritten,

– Or “The action resulting from defects is prescribed by two years. This period begins to run when the buyer discovers or should have discovered the defect, but the action may not be brought more than ten years after delivery. Any clause to the contrary is deemed unwritten.

The deadline could then be reduced to 10 years.