Car sold, price never paid: in France, the dealer has only two years to sue

Key points

• A professional who sells a car to a consumer has only two years to claim the price (article L. 218-2 of the French Consumer Code).
• Registration certificate, transfer form, delivery note: none of this paperwork adds a single day to the deadline.
• Only an acknowledgment of the debt by the buyer stops the clock (article 2240 of the French Civil Code).
• In a consignment sale, an owner who lets the dealer collect the price takes a double risk: never seeing it, then claiming it too late.
• A price escrowed from delivery solves the problem at the root: there is no longer any debt to recover.

A Lancia, a consignment sale and two years too many

The story starts like many others. A company leaves a used Lancia with a garage on consignment, wisely keeping the registration certificate. The garage finds a buyer, hands over the car with a document stating that the transfer is "in progress"… and never passes on the price. Its manager calmly explains that he paid himself, by offsetting commissions he was owed. Criminal complaint for breach of trust, liquidation of the garage: the owner then turns against the person driving the Lancia and claims the price from him.

The court of appeal sides with the owner. Its reasoning is appealing: a car must be registered, its sale involves a certificate and written documents, so it is not an ordinary sale, and the short limitation period should not apply. The French Supreme Court nonetheless overturns that ruling (Cass. 1re civ., 25 February 2010, no. 09-10.201): registration formalities do not take the sale outside the two-year period. Only a document from the buyer acknowledging that he still owed the price could have saved the claim. There was none. End of the road for the seller.

The rule: two years, not a day more

The ruling applied the former article 2272 of the French Civil Code, which covered "merchants". The reform of 17 June 2008 overhauled limitation periods but kept this short period and moved it to the Consumer Code. It now appears in article L. 218-2 of the French Consumer Code: actions by professionals for the goods or services they supply to consumers are time-barred after two years.

The contrast is striking. Between traders, the ordinary period is five years (article L. 110-4 of the French Commercial Code). Against a private buyer, the garage, the dealer or the prestige car trader has half that time. A polite reminder every six months is not enough: after two years, the buyer can simply plead limitation, and the debt can no longer be enforced in court.

What stops the clock

The period is interrupted when the debtor acknowledges the seller's right (article 2240 of the French Civil Code). A request for more time to pay, a signed payment schedule, an email in which the buyer admits owing the balance: each of these resets the count. Court proceedings also interrupt the period. Conversely, the registration certificate, the transfer form or the delivery note prove only one thing, the sale, never non-payment.

As a rule, it is for the party claiming to be discharged to prove payment (article 1353 of the French Civil Code). But the seller must act in time to benefit from that rule.

The consignment trap

The Lancia case reveals a second trap. The buyer dealt only with the garage, which behaved as the owner; the real owner was not party to the sale. Yet a contract in principle binds only those who entered into it. An owner who leaves a car on consignment therefore runs two risks: that the dealer collects the price without passing it on, and that it is then too late, or legally difficult, to claim it from the buyer.

The buyer does not come out unscathed either. Without a crossed-out registration certificate from the owner, he cannot register the car in his name within the one-month period set by article R. 322-5 of the French Highway Code, and drives in breach of the rules.

The fix: a price that cannot go missing

The whole story rests on a gap: the car leaves, the money stays on the way. Conventional escrow closes that gap. The buyer, as depositing party, pays the price into a CARPA account dedicated to the transaction, under the lawyer's responsibility. The car is handed over only once the funds are locked, and the price is released only when the agreed conditions precedent are met: delivery, handover of the crossed-out registration certificate and the vehicle status certificate, declaration of the sale.

In a consignment sale, the agreement can provide that the price is paid directly to the owner, as beneficiary, and not to the dealer, whose commission is settled separately. There is then no debt left to recover, and no limitation period to fear. For more, see our guide to selling a luxury car between private individuals and our escrow account guide.