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Buyer pulled out: can I get damages?

What are my rights if a buyer pulls out at the last minute?

THE MAN buying our house has dropped out after wasting four months of our time and has failed to complete his side of the deal. We believe that, under French law, we are entitled to 10 per cent of the house sale as compensation, but neither our agents nor our notaire seem interested or very hopeful that we will receive anything, because he lied about having the money in the first place. However, he went right through the process until the final signing date. This is surely very wrong. What can we do? S.S and D.W.

YOU say the vendor went "right through the process". Was a compromis de vente (initial sales agreement) signed? It makes all the difference.

If a contract was signed, there may be a penalty clause in it. In general, the penalty clause allocates the deposit to the vendor in the event that the purchaser refuses to complete when no further condition prevents completion, and in general deposits are 10 per cent. Check the wording of your contract. In the absence of a penalty clause, the vendor would need to obtain an award of damages from the court.

If no contract was signed, then no compensation is due. The only recourse you might have would be to sue the recalcitrant purchaser for damages on the basis of Article 1382 of the Code Civil, but it would be necessary to demonstrate to the court (a) that the vendor has actually suffered loss and (b) that the prospective purchaser’s conduct was in some way wrongful.

The law does not compensate for simple disappointment and in principle anyone may withdraw from a negotiation until a contract has actually been signed.

In commercial negotiations, damages may now be available in the event a party suffers demonstrable loss (eg: his lawyer’s and accountant’s fees in connection with due diligence) when the other party pulls out in what is considered to be an "abusive" manner (called rupture abusive de pourparlers), but this has not yet been extended to private property sales and being the first claimant who attempts to get the courts to create case law on the subject would be difficult.

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