The Court:

In view of article 1992 Code civil:

Given that to make an agent liable to his principal there must be not only a fault committed by the former but also damage to the latter caused by such fault;

Given that according to the judgment under attack Habasque retained Delville and Sons, insurance brokers, to effect on his behalf a policy of fire insurance with the insurance company La Prévoyance and that Habasque was guilty of two serious errors in doing this such that, according to the Court of Appeal, had there been a fire the company could have avoided the policy or at any rate made recovery extremely difficult;

But given that such harm is a mere possibility, dependent on events which may or may not occur, and that although the Court of Appeal did not point to any actual harm which Habasque could have suffered as a direct result of the faults of which Delville and Sons were guilty it nevertheless ordered Delville and Sons to repay Habasque the amount of the premiums and the sum of 2,000 francs as damages;

Given that in so holding it failed to give any legal basis for its decision, and thereby violated the article cited above;

For these reasons QUASHES the decision below.

Subsequent Developments

TThis note on subsequent developments reflects the legal situation as of October 2004.

Civ 20 January 1930: "For an agent to incur liability towards his principal, it is necessary not only for him to have committed a fault, but also for this fault to have been the direct cause of the harm actually suffered by the principal. Although he may have been at fault, the agent cannot be ordered to pay damages for harm which is merely possible and subject to the occurrence of events which have not yet happened". Case law maintained.

Although the Cour de cassation does not seem to have made a pronouncement recently on the question, a judgment of the appeal court of Aix en Provence of the 29 March 1995 (Gaz Pal 1995, I, 110) has ruled on this point in relation to estate agents: "In performance of a management mandate which an estate agent receives, he has the primary obligation of verifying the solvency of the tenants which he recommends to his principals, and will find himself liable if he only verifies the financial capacity of these tenants very superficially, which is so in this case, the documents produced (...) not being sufficient to satisfy this elementary verification. The fault being thus verified, as well as the reality of the detriment resulting from it for the landlords, the judgment given, which has found liability on the part of the agent, is confirmed. The landlords' appeal is not however allowed, as it is not possible on the evidence for the estate agent, in the context of his contractual liability for harm, to be held as a co-debtor who is jointly and severally liable for all the sums which the tenants could still owe. Part of their debt had to be considered as a risk inherent in the performance of a continuing contract insofar as no one can guarantee the maintenance of the debtors' solvency throughout the term, and it is not established that the tenants would immediately be in an insolvent state". This judgment amounts nevertheless to the application of a more general rule, applied here to relations between the agent and the principal, by virtue of which, in the case of contractual liability, the creditor only has a right to the precise sum lost, and not to a larger sum on the pretext that non-performance of the contract has compelled him to incur supplementary expenses in order to realise his objectives (Cass com 20 January 1998, Bull no 35). Further, as the commentator on the judgment of the 20 January 1930 observes (Gazette du Palais 1930, 1, p 413): "it is the application, in relation to agents, of a constant rule for contractual faults as for delictual ones. In the case of bad performance of the mandate, an agent can only be required to compensate as against the principal for harm which results from it", and likewise on the condition "that the fault has occasioned harm which is certain and present".

Translation by Mr Raymond Youngs

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