FRANCE Trends and Developments Contributed by: Xavier Pernot, Pierre Linais and Pauline Vitte, Jeantet
Because lucrative fault can appear in multiple con- texts and can manifest differently across economic sectors and regulatory regimes, Article 1254 proposes a broad definition of fault that is not restricted to a particular area. This means that any legal obligation is a possible legal element of lucrative fault, and that the source of the obligation that is breached is irrelevant. However, one limit lies in the requirement that the breach of legal or contractual obligations must be related to the wrongdoer’s professional activity. Moral element: deliberate intent with a view to obtaining gain or saving The second condition concerns the moral element – ie, intent. The breach must be deliberately committed with a view to obtaining undue gain or savings. This criterion actually divides into two aspects. • The fault must be voluntary, which means that any negligence or imprudence is excluded from the application of Article 1254, even if it leads to obtaining gain or saving. • The fault must be directed towards an economic goal, which means that there is no need to demon- strate an intent to cause harm to others for Article 1254 to be applicable. The breach of the contrac- tual or legal obligation must be conducted con- sciously and with the intention of making a profit. Overall, the intentional element is directed toward securing undue gain from the deliberate breach, which distinguishes lucrative misconduct from other quali- fied civil faults, establishing it as a specific form of intentional wrongdoing. Material element: profit and serial damage The final criterion of lucrative misconduct concerns the causal element of the fault and the intent, which also divides into two results. • An economic result (ie, obtaining gain or saving) naturally flows from the deliberate intent behind the breach through which the wrongdoer seeks either positive gain or avoided costs. • A harmful result (ie, serial damages) – Article 1254 specifies that the breach must have caused serial damages, meaning harm to multiple individuals or
legal entities in similar situations. This requirement ensures that the sanction addresses systematic misconduct rather than isolated incidents. However, one might wonder whether the requirement of serial damages is welcome, as it creates a signifi- cant limitation: if one breaches a contractual or legal obligation to make profits or avoid costs but that fault causes harm only to one person, no civil penalty could be imposed. In one way, it leaves open the possibility to commit a lucrative fault without being sanctioned when committed against a single person. The civil penalty Nature of the sanction Article 1254 characterises the sanction as a civil pen- alty. If the civil penalty is equal only to the undue profit, it is purely confiscatory and the aim is only to prevent the wrongdoer from profiting from their wrong. It thus escapes being characterised as a punitive sanction. The civil penalty can be multiplied but cannot exceed twice the profit obtained if the wrongdoer is an individ- ual, or five times the profit obtained if the wrongdoer is a legal entity. In this context, the civil penalty could exceed the undue profit made by the wrongdoers and could be considered a punitive sanction. In reality, the nature of the civil penalty will depend on its quantum. Assessment of the civil penalty Article 1254 provides that the amount of the civil penalty is calculated based on the seriousness of the breach and the profit obtained by the person who committed the breach, but it cannot exceed a certain amount. Determining seriousness of the breach The amount would normally be assessed based on the circumstances of each case, and may take into con- sideration the extent of damage, the strategies used to circumvent the law, and/or the methods employed to conceal fraud. Determining the profit obtained by the person who committed the breach
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