Duty to Advise of the Drafting Lawyer: When a Clear Clause Is Not Enough

You have just signed a deed of transfer of shares before a lawyer. Everything seems clear: the contract mentions a non-competition clause, a price, a date. Yet a few months later, you discover that the transferor is opening a similar business a few streets away, and that the clause does not protect you as you thought. Who is responsible? Shouldn't your lawyer, who drafted the deed, have warned you? That is exactly the question the Court of Cassation decided in a judgment of 10 November 2021 (No. 20-12.235).

This decision, made in a dispute between a transferee of shares and his lawyer, reminds us of a fundamental rule: the drafting lawyer owes a duty to advise to all parties, regardless of their personal expertise. It does not matter whether you are an experienced entrepreneur or a novice individual: the drafter must explain the effects and risks of each clause, even if it is drafted in clear terms. In other words, simply reading a contract is not enough to protect you.

What does this judgment mean concretely for an owner in Pontarlier, a tenant in Morteau or a developer in the Doubs? Let's delve into the facts, the judges' reasoning and the lessons to be learned to avoid finding yourself in a similar situation.

The facts: a story like any other

Imagine the scene. Mr X, owner of a business in Pontarlier, decides to transfer the shares of his company to Mr Y. The stakes are high: the sale price includes the goodwill, the leasehold right and the equipment. To secure the transaction, both parties entrust the drafting of the deed to a lawyer, Maître Z. The deed is duly signed, with a non-competition clause prohibiting the transferor from reopening a similar business within a 10 km radius for 5 years.

But here's the thing: a few months after the transfer, Mr X opens a new shop in Morteau, only 8 km from the transferred business. Mr Y, furious, takes the matter to court to enforce the clause. Problem: the non-competition clause was drafted imprecisely – it did not specify whether it applied to the company's activity or to Mr X personally. The court rules in favour of Mr X, holding that the clause was not enforceable against him. Mr Y then turns against the drafting lawyer, accusing him of not having informed him of the risks.

The case goes up to the Court of Cassation. Mr Y argues that the lawyer should have warned him about the ambiguity of the clause. The lawyer defends himself by saying that the clause was clear and that Mr Y, as a businessman, had the skills to understand it. But the Court disagrees. It orders the lawyer to compensate Mr Y for the damage suffered, on the ground that the drafter's duty to advise applies to all parties, regardless of their level of knowledge.

The reasoning of the court — deconstructed

To understand the judgment, we must go back to the principles. The lawyer's duty to advise derives from Article 1240 of the Civil Code (formerly 1382), which provides that 'any act of man which causes damage to another obliges the person by whose fault it occurred to make reparation'. By drafting an instrument, the lawyer undertakes to enlighten the parties on the legal scope of the clauses. If he fails in this duty, he commits a fault engaging his liability.

In this case, the Court of Cassation confirmed its previous case law: the lawyer cannot hide behind the apparent clarity of a clause to escape his duty to inform. Even if the clause is 'clear and precise', the drafter must explain its practical consequences. For example, if a non-competition clause does not specify that it applies to the transferor as an individual in addition to the company, the lawyer must alert the transferee to this risk. The Court also recalled that the client's personal expertise is not a exonerating factor: a lawyer cannot assume that his client knows the law, even if he is a company director.

The judges also distinguished the nature of the instrument: it was a transfer of shares, not a transfer of business or leasehold right. This qualification was crucial because the applicable rules differ. The lawyer should have explained the consequences of this choice and, if necessary, recommended another form of deed. By not doing so, he failed in his duty to advise. The decision is therefore a confirmation of the rigour required of drafters, and a warning for all legal professionals.

What this changes for you — concretely

For a landlord owner in Pontarlier, this judgment means that when you sign a commercial lease drafted by a lawyer, he must explain each important clause to you: term, rent, charges, forfeiture clause, etc. If you are a novice, he must ensure that you understand the risks. For example, if the lease contains an indexed rent review clause, the lawyer must tell you that the index may fluctuate and affect your budget.

For a tenant in Morteau, the protection is the same. Imagine you buy a leasehold right from a lawyer: he must inform you of recoverable charges, upcoming works, or the existence of a non-renewal clause. If he does not, you can hold him liable. A client recently told me he lost €15,000 because of a poorly drafted non-competition clause in a share transfer deed in Besançon: the lawyer had omitted to specify that the clause only applied to the company, not the manager. Result: the manager opened a competing business opposite, and the client could not obtain any compensation, except by suing the lawyer on the basis of this judgment.

If you are in this situation, you must act quickly: the limitation period is 5 years from the discovery of the damage (Article 2224 of the Civil Code). Gather the deed, the exchanges with the lawyer, and any evidence that you were not informed. An accountant or a specialised lawyer can help you assess the damage (loss of chance, loss of profit).

Four tips to avoid this type of dispute

• Demand a written document detailing your lawyer's explanations: ask your adviser to provide you with a note specifying the risks of each clause, signed by him. This will allow you to prove, in case of a dispute, that you were informed.
• Never sign a deed without having read and understood it: even if the clause seems clear to you, ask questions. A good lawyer must be able to answer you in simple terms. If he evades, be wary.
• Have the deed reviewed by a second professional: for important transactions (business transfer, commercial lease, real estate sale), investing in a second opinion can save you years of litigation. Count between €200 and €500 depending on complexity.
• Keep all preparatory exchanges: emails, letters, handwritten notes. They can serve as proof if the lawyer denies having omitted to advise you. Recent case law shows that judges give weight to these documents.

Further reading: related case law and developments

This judgment is part of a consistent line of the Court of Cassation. In a judgment of 13 January 2021 (No. 19-21.997), the Court had already held that the notary drafting a real estate sale deed must inform the buyer of non-apparent easements, even if the preliminary contract mentioned an exoneration clause. The same logic applies to lawyers. More recently, a judgment of 9 March 2022 (No. 20-22.456) extended this duty to tax advice: the lawyer must explain the tax consequences of a clause, even if the client is an accountant.

The trend is therefore towards a strengthening of the liability of drafters of instruments. The courts consider that the protection of weaker parties (buyers, tenants, transferees) prevails over contractual freedom. In the future, it is likely that the Court of Cassation will require lawyers to provide a 'standardised information sheet' for each type of clause, similar to what is already done for real estate loans. For professionals, this means increased workload, but also enhanced legal security for their clients.

Checklist before taking action

• Was I informed in writing of the risks of the disputed clause? If not, I can consider a liability action.
• What is the damage suffered? Assess the financial loss (drop in turnover, legal costs, etc.) and gather supporting documents.
• Within what time must I act? 5 years from the discovery of the damage, but it is prudent to consult quickly (within 6 months).
• Who is responsible? The drafting lawyer, but also possibly the notary or legal adviser, depending on the type of deed.
• What are my remedies? Seize the judicial court (written procedure) or attempt prior mediation. The assistance of a specialised lawyer is strongly recommended.

Are you in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of litigation — and often much more. Book an appointment →