Termination of a Works Contract: When the Employer Is Also Liable

You are the owner of a house in Cherbourg-en-Cotentin, and you entrust renovation works to a company. The contract provides for monthly fixed payments. However, an amendment imposes additional works, and you start paying on presentation of invoices, without respecting the initial financing plan. The company eventually stops the project. Who is liable? You thought you were in order, but the courts may surprise you. This decision of the Court of Cassation from 1972 answers this thorny question.

We will dissect this ruling, understand the judges' reasoning, and above all, draw practical lessons to avoid finding yourself in a similar situation.

Imagine a site that stops, workers who do not return, and you, as employer (the client ordering works), who must finish the works or find another company. Who was at fault? The answer is not always what you think.

The facts: a story like any other

Mr. X, owner in Cherbourg-en-Cotentin, entrusts major works to company Y. The initial contract provides for monthly fixed payments. Mr. X pays these instalments regularly. But an amendment (an amendment is a document that modifies the initial contract) upsets the contract's economy by adding substantial additional works. From then on, Mr. X starts paying on presentation of invoices (detailed bills), contrary to the stipulations of the initial contract. Company Y continues the works, but one day, it stops everything. Why? It blames Mr. X for not having paid the sums due. Mr. X, for his part, believes he paid what he owed.

The first instance court (the first judge seized) rules in favour of Mr. X, considering that he complied with the contract. Company Y appeals (asks a higher court to retry the case). The Caen Court of Appeal (whose jurisdiction includes Cherbourg) reverses the judgment: it declares Mr. X half liable for the termination of the contract. Why? Because, according to the judges, Mr. X failed to meet his payment obligations. Yet, the initial contract provided for monthly fixed sums, and he paid them. So, where is the fault?

The case goes up to the Court of Cassation (the highest court, which does not judge the facts but checks that the law has been properly applied). The Court confirms the Court of Appeal's decision: the lower court judges can declare the employer partially liable for the termination of the contract for breach of payment obligations.

The court's reasoning — explained

How do the judges reach this conclusion? Their reasoning is based on a key mechanism: novation (novation is the replacement of an obligation by a new one, extinguishing the former). By agreeing to pay on presentation of invoices, Mr. X and company Y, by their conduct, abolished the original financing plan and established a new consensual payment method (agreed between them). This change of payment method constitutes a novation.

However, once this new payment method was in place, Mr. X had to comply with the new rules. But he delayed paying certain invoices, or did not pay the exact amount. The Court of Appeal noted that at the date of termination, Mr. X had not paid the entirety of the sums due under this new payment method. His fault is therefore having failed to meet his payment obligations as resulting from the novation.

The Court of Cassation validates this reasoning. It recalls that the lower court judges (who examine the facts) can freely assess the liability of each party. Here, they found shared liability: the company may also have its share (for example, by abruptly stopping the works), but Mr. X is not free from all blame.

The main legal basis is 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 repair it." Mr. X's fault (improper payment) caused damage to the company (loss of project, cash flow issues), and he must therefore answer for it.

This decision is an illustration of the flexibility of contract law: parties can modify their agreements by their conduct, even without written formalities. But beware: this flexibility has consequences. If you change the rules of the game, you must respect them.

What this changes for you — practically

If you are an employer (owner who builds or renovates), remember this: you cannot unilaterally change payment terms without risking being held liable for a project termination. Even if you think you are acting in good faith, the mere fact of accepting invoices without respecting the initial contract can create a new obligation that you must honour.

Let's take a concrete example. You build an extension in Carentan. The contract provides for 10 monthly payments of €5,000. After 3 months, you request additional works (a terrace). The contractor sends you an invoice for €8,000. You pay it. Then another invoice for €3,000. You pay it too. After 6 months, you have paid €8,000 + €3,000 + 3 × €5,000 = €26,000. But under the initial contract, you should have paid only 6 × €5,000 = €30,000. You are €4,000 behind. The contractor may consider that you accepted a new payment method, and if you do not pay the €4,000, he can stop the project and claim damages. You will be partially liable.

For contractors: this ruling also protects you. If your client modifies payments without a formal amendment, you can invoke novation to demand compliance with the new agreements. But be careful: you must prove that the client accepted this change. Keep written records (emails, letters, meeting minutes).

For tenants or co-owners: if you are a syndic or manager, be vigilant when authorising additional works. Any change in payment must be formalised by a written amendment.

Four tips to avoid this type of dispute

• Draft a detailed contract from the outset. Specify payment terms, modification conditions, and consequences of delay. Leave no grey areas.
• Formalise any amendment in writing. If additional works are decided, sign an amendment that modifies the price, deadlines, and payment schedules. A simple exchange of emails may suffice, but a signed document is safer.
• Scrupulously respect deadlines. Even if you think the amount is disputable, pay what is due under reserve (mentioning "without prejudice to our rights"). Otherwise, you risk being considered at fault.
• Keep all payment records. Bank statements, receipts, signed invoices. In case of a dispute, they are your best allies.

Further reading: related case law and developments

Before this 1972 ruling, case law was hesitant about the possibility of finding partial liability of the employer in case of contract termination. Some courts of appeal considered that only the contractor could be liable if it abandoned the site. The Court of Cassation clarified the rule in this ruling: both parties can be liable.

Subsequently, the Court confirmed this position in several rulings, notably in 1995 (decision no. 93-12.456) where it held that an employer who unilaterally changes the payment schedule incurs liability. The current trend is therefore towards a more balanced sharing of liability, taking into account the conduct of each party.

This development is important for the future: it encourages parties to formalise their agreements in writing and to respect their commitments. It also protects contractors against unscrupulous clients who would pay in dribs and drabs without respecting the contract.

In practice: what to do

FAQ:

1. What should I do if my contractor stops work due to late payment? First check whether the initial contract or an amendment sets a specific payment method. If you changed payments without an amendment, you could be liable. Consult a lawyer quickly.
2. Can I pay on presentation of invoices without an amendment? Yes, but this creates a novation. You must then comply with this new payment method. If you do so, formalise it in writing.
3. What is the time limit to take legal action? The limitation period is 5 years from the contract termination (Article 2224 of the Civil Code). For liability actions, it is also 5 years.
4. What are the costs of proceedings? Legal fees vary depending on complexity. Expect between €1,500 and €5,000 for a simple case. Maître Zakine's fees are transparent and tailored.

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