On 3 July 2024, the French Court of Cassation overturned its previous case law and ruled that third parties may now invoke limitation of liability clauses, applicable to the relationship between contracting parties, against one of the contracting parties in an action in tort.
In this case, a contract for the handling and unloading of machinery had been concluded between two companies. When the machines were being unloaded, one of them was damaged by an employee of the company responsible for unloading and handling. The manufacturer of machines was indemnified by its insurer, which sought to hold the handling company liable in tort as the employer. The defendant invoked the limitation of liability clause in the general conditions of the handling contract, to which the plaintiff was not a party.
The Court of Cassation quashed and set aside the appeal judgement. It held that a third party bringing an action in tort against a party to the contract and alleging a contractual breach may rely on the conditions and limitations of liability set out in that same contract.
This decision is justified by the need “not to frustrate the expectations of the debtor, who undertook in consideration of the general scheme of the contract, and not to place the third party invoking the contract in a more favourable position than the creditor himself .”
