FRANCE Trends and Developments Contributed by: Xavier Pernot, Pierre Linais and Pauline Vitte, Jeantet
Previous reform attempts Although Article 1254 appears as an innovation in the French legal system, it should be noted that previous reforms had already attempted to address lucrative misconduct but did not reach completion. For example, in 2005, the “Catala” project envisioned punitive awards with partial allocation to state cof- fers rather than victims, providing that the “ author of a manifestly deliberate offence, and in particular a lucrative offence, may be ordered to pay, in addition to compensatory damages, punitive damages, part of which the judge may award to the public treasury ”. On the other hand, in 2008, the “Terré” project favoured giving an option to the victim, stating: “In cases of fraud, the creditor of the unperformed obli- gation may prefer to request the court to order the debtor to pay all or part of the profit derived from the non-performance.” Finally, another project dated 13 March 2017 pro- posed a civil penalty rather than punitive damages, specifying that the amount of the civil penalty shall be allocated to the funding of a compensation fund related to the nature of the damage suffered, or, failing that, to the Public Treasury. European influence Ultimately, Article 1254 emerged under the influence of European Union law, through Law No 2025-391 of 30 April 2025, which transposed Directive 2020/1828 on representative actions for consumer protection. One may be surprised that Article 1254 stems from this Directive, as it aims to ensure that a representa- tive action mechanism for the protection of the collec- tive interests of consumers is available in all member states, and focuses on creating procedural mecha- nisms that allow qualified entities to bring collective actions on behalf of consumers rather than introduc- ing civil penalties for lucrative misconduct.
viding that “Where a person is found liable for a breach of legal or contractual obligations relating to their pro- fessional activity, the judge may, at the request of the public prosecutor, order them to pay a civil penalty, the proceeds of which shall be allocated to a fund dedicated to the financing of collective actions”. It also states that the order to pay the civil penalty may only be made if the following conditions are met: • the perpetrator of the damage has deliberately committed a fault with a view to obtaining an undue gain or saving; or • the breach has caused one or more damages to several natural or legal persons in a similar situa- tion. Under Article 1254, the “ amount of the penalty shall be proportionate to the seriousness of the fault com- mitted and to the profit derived therefrom by the per - petrator of the fault. If the latter is a natural person, this amount may not exceed twice the profit made. If the perpetrator is a legal person, this amount may not exceed five times the amount of the profit made” . It also states that the total amount of fines imposed in situations where a civil penalty is combined with an administrative or criminal penalty, by reason of the same facts, shall not exceed the highest statu- tory maximum. In addition, it is not possible to insure against the risk of being ordered to pay the civil pen- alty. Conditions for applying the civil penalty Lucrative misconduct contains three essential char- acteristics: • a legal element (ie, a fault); • a material element (ie, an economic result and harmful result); and • a moral element (ie, deliberate intent with a view to obtaining gain or saving). Legal element: any fault The legal element of lucrative misconduct is a fault, which is defined as a breach of a legal or contractual obligation by a professional related to their profes- sional activity.
Understanding lucrative misconduct Provisions relating to lucrative fault
Article 1254 of the French Civil Code ultimately enshrines a subjective definition of lucrative miscon- duct with a sanction in the form of a civil penalty, pro-
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