FRANCE Trends and Developments Contributed by: Xavier Pernot, Pierre Linais and Pauline Vitte, Jeantet
Background: a long-awaited reform Article 1254 represents the culmination of decades of scholarly discussion rather than a sudden innovation. The question of lucrative misconduct and its integra- tion into the French Civil Code has been the subject of extensive doctrinal debate for many years on two major points: • the recognition of a lucrative fault; and • what type of sanctions for a lucrative fault. Definition of lucrative misconduct The definition of lucrative fault was subject to debate, based essentially on two competing approaches. • The first approach put forward was to adopt an objective definition that would refer exclusively to the economic outcome. The goal of this approach was to remove any obstacle to the application of the sanction for lucrative misconduct that could be created by the need to demonstrate the author’s intention. • The second approach was to adopt a subjective conception of lucrative misconduct by adding the author’s deliberate intention to the economic outcome. The argument in favour of this approach was that lucrative misconduct requires examining the author’s deliberate intention to prioritise profit. Sanctions for lucrative misconduct As explained above, French civil liability law adheres strictly to the principle of full compensation, precluding punitive awards to victims. Therefore, further debate took place on the appropriate sanction for lucrative misconduct, as it needed to be coherent with the French legal system into which it would be integrated. Different approaches were expressed. Some authors were in favour of punitive damages, which would represent a complete departure from the French legal system. Others preferred that the amount of the civ- il penalty that would go beyond what is necessary to restore the victim’s pre-harm situation would be attributed to the victim. Other authors argued for a civil penalty that would be distinct from the victim’s compensation.
Consecration of a New Civil Penalty for Lucrative Misconduct France has introduced a civil penalty targeting lucra- tive misconduct ( faute lucrative ) through the DDADUE Law of 30 April 2025 (Law No 2025-391). This reform introduces Article 1254 into the French Civil Code, establishing a civil penalty for lucrative misconduct that applies to both contractual and tor- tious breaches arising from professional activities. Lucrative misconduct is defined as a deliberate breach from which a professional derives profit exceeding the damages they could be ordered to pay to the victim. Introduction: the challenge of profitable misconduct In French civil liability law, the principle of full com- pensation aims to restore victims to their pre-harm situation, preventing both loss and profit for the victim. The victim cannot profit from compensation beyond what is necessary to restore their pre-harm situation. This principle therefore prohibits punitive damages paid to victims as private penalties, which are known in Anglo-Saxon systems but have traditionally been rejected in French law for the benefit of compensa- tory damages. However, lucrative misconduct that allowed wrongdo- ers to profit despite compensating victims has mul- tiplied. Moreover, lucrative misconduct represents a challenge in economies where the threat of legal sanc- tions no longer suffices to dissuade powerful econom- ic operators with substantial financial capacities from disregarding the law, fundamental rights and ethics for reasons of economic efficiency, profitability and profit. Therefore, the question of whether to implement a more repressive regime has led to discussions for several years. The introduction of this civil penalty for lucrative mis- conduct marks a significant departure from the prin- ciple of full compensation that has long characterised French civil liability law, representing a major turn- ing point in how the French legal system addresses wrongdoing.
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