Latent defects in a chain of sales: retention of title does not block the sub-purchaser’s right of action

A company purchases a lifting station from a distributor, who had originally acquired it from an original seller.

The contract between this original seller and the distributor included a retention of title clause: the original seller remained the owner of the machine until the price was paid in full.

The machine turns out to be unusable.

The sub-purchaser brings a direct action against the original seller for latent defects (Article 1641 of the Civil Code).

The original seller argues in its defence that since the distributor did not pay the price in full, ownership was never transferred. Furthermore, the warranty for latent defects is transferred as an accessory to the item. No transfer of ownership, no possible legal action.

The Court of Cassation rejects this argument.

A retention of title clause is a form of security (Article 2367 of the Civil Code): it suspends the transfer of ownership but does not call into question the firm and definitive nature of the sale, which occurred as soon as there was an agreement on the item and the price.

Consequently, the warranty for latent defects exists as soon as the sale is concluded, regardless of the existence of a retention of title clause.

The sub-purchaser has the standing and a legitimate interest to take legal action against the original seller.