Loss of Chance: How the Court of Cassation Limits Your Compensation

Imagine: you have just bought a flat in Moissac, near Montauban. The notary certified that everything was in order. Yet a few months later, you discover that the previous owner had a dispute with the co-owners' association. As a result, you are ordered to pay unpaid service charges. You then think: "I will take action against the notary to obtain compensation." But how much can you actually claim?

This question was decided by the Court of Cassation in a judgment of 19 September 2007 (No. 05-15.139). The answer is less obvious than it seems: the loss arising from a loss of chance to avoid a conviction that has become enforceable is assessed solely with regard to the probability of obtaining a more favourable decision. In other words, it is not the amount of the conviction that you can claim, but only a fraction corresponding to the lost chance of obtaining a better outcome.

This decision, rendered in a case involving a company and its director, has concrete repercussions for any owner, tenant or property professional. It sets a strict limit on compensation: you will never be compensated for the entirety of your loss, but only for the probability that you would have had of avoiding that loss. A principle that changes the game in many property disputes.

The Facts: A Story That Happens Every Day

The case begins with a routine guarantee transaction. A company (let's call it "Company X") had granted a loan guaranteed by the personal guarantee of its director, Mr Y. However, the bank had authorised the director to enter into this guarantee without complying with the legal formalities. The company was ordered to repay the loan, and the director was pursued as guarantor.

Before the courts, Company X attempted to defend itself by invoking the bank's liability. It argued that if the bank had properly informed the director of the risks, he would never have agreed to act as guarantor, and the company would not have been convicted. In short, the company claimed from the bank the full amount of the conviction, several hundred thousand euros, for loss of chance to avoid that conviction.

The Paris Court of Appeal upheld the principle: the bank had committed a fault by failing to comply with its information obligations. But as to the amount of compensation, the judges considered that the loss should be limited to the "loss of chance" of obtaining a more favourable outcome. The company appealed to the Court of Cassation, arguing that the loss of chance should be assessed on the basis of the probability of avoiding the conviction, not of obtaining a more favourable decision.

The Court of Cassation rejected this reasoning. It recalled that the loss arising from a loss of chance is assessed solely with regard to the probability of obtaining a more favourable decision, not the probability of avoiding any conviction at all. In other words, it is not the chance of being completely exonerated that matters, but the chance of obtaining a less unfavourable judgment.

The Reasoning of the Court – Analysed

To understand this decision, one must first grasp the legal concept of "loss of chance". In French law (Article 1240 of the Civil Code, which requires compensation for damage caused by one's fault), when a person commits a fault that deprives another person of a chance to obtain an advantage or avoid a loss, that lost chance is compensable. But be careful: only the chance itself is compensable, not the final outcome.

Let's take a concrete example: if a lawyer forgets to file a claim within the time limit, the client loses the chance to obtain justice. Even if their case was excellent, they will only be entitled to compensation proportional to their chances of winning, not the entirety of their loss. This is exactly what the Court of Cassation recalled in this judgment.

The difficulty in this case was that the company was seeking compensation for the loss of chance to "avoid" the conviction, i.e., not to be convicted at all. The Court considered that this wording was too broad: what matters is the probability of obtaining a more favourable decision than the one ultimately rendered. For example, if the company had a one-in-two chance of obtaining a lesser conviction, compensation would be limited to 50% of the difference between the actual conviction and what it might have obtained.

The Court of Cassation thus quashed the judgment of the Paris Court of Appeal, which had not concretely investigated what probability the company had of obtaining a more favourable decision. Lower courts must now assess this probability based on the elements of the case (strength of arguments, case law, etc.). This is a reversal from a previous practice where some courts compensated the loss of chance to avoid the loss more broadly.

What This Changes for You – Concretely

For a landlord in Montauban, this decision has direct consequences. Imagine you entrusted the management of your property to a lettings agency that forgot to take out rent guarantee insurance. Your tenant stops paying and you lose €12,000 in rent. You sue the agency for fault. According to this judgment, you cannot claim the full €12,000, but only the portion corresponding to the probability that the insurance would actually have covered your rent. If that probability is 70%, you will only get €8,400.

For a buyer who is a victim of a latent defect: if the seller did not inform you of a serious defect, your loss is the loss of chance to have been able to negotiate a lower price or to withdraw from the purchase. You will not recover the full cost of repairs, but only the fraction corresponding to your chances of avoiding the loss.

If you are a co-owner and the managing agent commits a fault (for example, by not carrying out urgent works), your compensation will be limited to the loss of chance of avoiding the damage. Concretely, if the damage was 80% inevitable, you will only be entitled to 20% of the cost of the works.

The message is clear: do not count on full compensation. Loss of chance is a restrictive concept. If you are in this situation, you must gather all evidence of your real chances of obtaining a more favourable decision (expert reports, case law, statements). A lawyer will help you quantify this probability, which is often complex.

Four Tips to Avoid This Type of Dispute

• Keep all written documents: contracts, emails, recorded delivery letters. Proof of what was said or promised is crucial to establish the other party's fault. For example, if your notary assured you verbally that the property was free of charges, ask for written confirmation.
• Use qualified professionals: before signing a lease or a sale agreement, have the document reviewed by a specialist lawyer. A 30-minute consultation (about €45) can save you years of proceedings.
• Anticipate risks: take out legal expenses insurance. It often covers lawyer's fees in property disputes. Check the limits and exclusions.
• Act quickly: limitation periods are short (5 years for contractual matters, 2 years for latent defects). As soon as you notice a problem, consult a lawyer so as not to lose your rights.

Further Reading: Related Case Law and Developments

This 2007 decision is part of a consistent line of authority from the Court of Cassation. As early as 1999 (Civ. 1re, 16 November 1999, No. 97-20.582), the Court held that the loss of chance must be measured by the probability of the favourable event occurring. More recently, a judgment of 14 December 2022 (Civ. 3e, No. 21-23.756) applied this principle to a property dispute: a buyer who had not been informed of a risk prevention plan could only claim the loss of chance of withdrawing from the purchase, assessed at 30% of the price.

The trend is therefore towards strict control of the amount of compensation. Lower courts must now precisely justify the percentage adopted. In the 2007 judgment, the Paris Court of Appeal was quashed for not having carried out this investigation. In future, expect courts to require expert reports or statistics to support the probability.

For property professionals (notaries, agents, managing agents), this case law is a safeguard: it limits their financial exposure in the event of a fault, but does not exempt them from their obligations. Prevention is better than cure, especially since reputation is at stake.

Checklist Before Taking Action

• Have I clearly identified the other party's fault? (breach of duty to inform, negligence, etc.)
• What was the percentage chance of obtaining a more favourable decision? (consult an expert or lawyer to assess it)
• Have I kept all evidence? (contracts, correspondence, photos, expert reports)
• Am I within the time limit to act? (check the limitation period: generally 5 years, but sometimes less)
• Can my legal expenses insurance cover the costs? (contact your insurer)

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