CONTRACT AND LIABILITY LAW

Subrogated recourse and loss of chance: a subrogation receipt does not relieve the insurer of the obligation to prove the extent of the loss

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Cass. 2e civ., 17 Sept. 2026, appeals Nos. 24-17.365 and 24-18.000, published in the Bulletin

The facts. A fire completely destroyed a company’s recently built extension and damaged a neighbouring building. Although the fire was traced to a faulty electrical appliance, the expert reports identified two factors that had made the damage worse: an electrical cabinet that was not properly sealed, and a failure of the automatic CO2 fire suppression system. Having compensated its policyholder, the property damage insurer relied on subrogation receipts (quittances subrogatives) to bring a subrogated recourse action against the installer of the electrical cabinet, the company responsible for maintaining the fire suppression system, and their respective liability insurers.

The Rennes Court of Appeal upheld the subrogated claim. It ordered the liable third parties to compensate the subrogated insurer for 25% of the overall loss, calculated directly on the amounts set out in the subrogation receipts, on the basis of a loss of chance of avoiding the aggravation of the damage. The liable third parties and their insurers then appealed to the Cour de cassation. They challenged the evidential value of the subrogation receipt as to the extent of the damage, as well as the basis used to calculate the loss of chance.

The ruling. In a judgment published in the Bulletin, the Second Civil Chamber of the Cour de cassation quashed the Court of Appeal’s decision on two fundamental points, on the basis of former Articles 1249, 1251(3), 1252, 1315 and 1147 of the French Civil Code.

First, on subrogated recourse, it held that a subrogee cannot enjoy more rights than the subrogor. A subrogated insurer acting against the liable third party must therefore prove the existence, reality and exact extent of the loss actually suffered by the insured. Producing subrogation receipts and proof of payment is not sufficient on its own.

Second, on loss of chance, it reiterated that a debtor is only liable for the consequences of its own wrongful non-performance. Where the fault merely aggravated damage arising from a separate cause, the loss-of-chance rate cannot be applied to the total amount of the damage. The trial judges must first determine the portion of the damage corresponding solely to the aggravation caused by the event giving rise to liability, and only then apply the loss-of-chance coefficient to it.

➡️ Our view. This judgment is a reminder of the rules governing proof and compensation in subrogation matters. The insurer may value the loss contractually or through a settlement when it compensates its policyholder, but that valuation is in no way automatically binding on the liable third party. The third party keeps the right to dispute the existence, assessment and attribution of the damage.

In practice, this judgment requires practitioners to act early, at the stage of the pre-action court-appointed expert assessment or of the investigation. They should ensure that the expert’s remit expressly includes an adversarial, itemised quantification of the losses, which strictly separates the cost of the original damage from the cost attributable to its aggravation.

 

UNFAIR COMPETITION

Free-riding: the mere precedence or distinctiveness of a business concept is not enough to establish fault

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Cass. com., 23 Sept. 2026, No. 25-14.331

The facts. A company devised and developed a promotional concept for artisan bakers for Epiphany. It was built around collectible coins (écus) struck by the Monnaie de Paris and bearing the crests of sports teams. The concept was first implemented and marketed in the bakery of a managing partner and his operating company.

The company that devised the concept was later placed in compulsory liquidation. That company, represented by its liquidator, together with the operating company and its manager, then found that a group of competing companies was selling Epiphany promotion kits to bakeries based on a similar operation. The original creators sued these competitors for trade mark infringement, unfair competition and free-riding (parasitisme).

The Court of Appeal upheld the claim for economic free-riding. It held that the business concept was distinctive, did not simply reproduce standard practice, and therefore represented an economic value capable of being unfairly appropriated. The competitors found liable then appealed to the Cour de cassation.

The ruling. Pursuant to Article 1240 of the French Civil Code, the Commercial Chamber of the Cour de cassation quashed the Court of Appeal’s decision. It restated the strict evidential requirements for establishing free-riding.

The Court reaffirmed that business ideas and concepts are free for anyone to use. Taking up and adapting an idea or concept that a competitor has implemented cannot, in itself, amount to wrongful free-riding. Economic free-riding penalises a specific form of unfair conduct: deliberately following in another’s wake in order to take undue advantage of its efforts, know-how, established reputation or investments.

It is therefore for the claimant to identify precisely the individualised economic value it seeks to protect. The Court censured the lower court judges for merely noting that a concept existed and had been marketed first. They had not specifically established the human and financial efforts, or the underlying know-how, that would have given the concept its own individualised economic value.

➡️ Our view. The Court reiterates that chronological precedence or the mere “originality” of an idea is not sufficient to found a claim for unfair competition.

On the evidential side, companies seeking to protect their commercial innovations must build a substantial body of evidence before taking any legal action. In particular, they should:

  • keep a record of the specific financial investments made to launch a product or concept;
  • document and value the human effort and know-how deployed ahead of the commercial launch;
  • clearly identify the specific intangible assets that make up the company’s economic value.

 

REAL-ESTATE LAW

Order for payment and defence of non-performance: the creditor’s silence is not an admission of defective performance

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Cass. com., 14 Oct. 2026, No. 25-15.254

The facts. A service provider specialising in industrial laundry carried out various linen-cleaning services for a client company. When several invoices for these services went unpaid, the service provider started order for payment proceedings (injonction de payer) to obtain payment.

The client company objected to the order for payment. It raised the defence of non-performance (exception d’inexécution), citing recurring delays, missing items and various cleaning defects. It also relied on the fact that the service provider had not responded to its complaint emails.

The Bordeaux Commercial Court, ruling as a court of last resort, declared the objection admissible and dismissed the service provider’s claim for payment. The judges held that the service provider had not proven that it had fully performed its obligations, because it had not responded to the numerous complaints sent by the debtor. In their view, this meant the claim was not yet due. The service provider then appealed to the Cour de cassation.

The ruling. Pursuant to Article 1353 of the French Civil Code, the Commercial Chamber of the Cour de cassation quashed and set aside the judgment for reversing the burden of proof.

The Court reiterated how that burden is shared. The creditor must prove the existence and extent of its claim. The debtor who relies on the defence of non-performance under Article 1219 of the French Civil Code must establish that the alleged breaches or defective performance are real and sufficiently serious.

The Court censured the commercial court judges for making the claim’s enforceability conditional on the service provider proving that its services were satisfactory. The services had been carried out, which was not disputed in principle, and only their defective performance was alleged. The burden of proving those allegations therefore lay solely with the debtor.

The Court clearly states that failing to respond to written complaints does not relieve the party relying on the defence of non-performance of the obligation to actually prove the alleged breaches. The creditor’s silence does not amount to an admission.

➡️ Our view. This decision is a reminder of the rules on the burden of proof in the law of obligations and in order for payment proceedings. The Cour de cassation reaffirms that a mere allegation of dissatisfaction, or a build-up of unanswered complaint emails, cannot shift the burden of proof onto the service provider. The defence of non-performance is a substantive defence, and the debtor bears both its risk and the burden of proving it.

For businesses, the lesson is that contesting is not enough when a dispute arises. To justify refusing to pay, they must prove the poor performance with solid evidence, such as bailiff’s reports, documented customer complaints or specific formal notices.