09 Fév 2021 IT contracts and the obligation of the software vendor : best endeavors or result ?

A decision of the Paris Court of Appeal of June 26 2020 (in French) provides an opportunity to take stock of a crucial subject in IT contracts: the difference between the obligation of results and the best endeavors obligation.

The case is quite complex, but can be summarized as follows: a client (the COMPASS company) has deployed a management tool for collective kitchens. After an initial deployment project with a service provider that failed, the customer contacted directly the software company. The software company signs a service contract with the customer: the company becomes the software integrator.

The project goes badly from the start: reports show that there are blocking anomalies, regressions, and above all catastrophic response times as soon as the software is used on several sites at the same time.

The tone quickly escalates, and the customer terminates the contract after 9 months, after a formal notice to solve the problems. The software company sues the customer for abusive termination of the contract.

There was no judicial expertise, but findings made in the presence of another IT company. The service provider had an amicable expert report drawn up on his side.

This post focuses on the subject of the obligation of results.

There are two types of obligations in French contract law : the obligation of results and the obligation of means (or best endeavors).

When a person or a company undertakes an obligation of means, they undertake to do everything they can to succeed, to put all the means at his disposal (this is the reason why one speaks of obligation of means in the plural). This is the case of a medical doctor: he or she must do everything he or she can to cure you.

In an obligation of results, one makes a commitment to provide this result. A typical example is the car dealer from whom you buy a car. The car dealer has an obligation to deliver the car to you.

The distinction between the two types of obligations is essential in the event that the liability of the service provider is sought by the client.

If the service provider has an obligation of means, its liability is only engaged if the customer demonstrates that it did not do all its best endeavors to deliver the service. The burden of proof that the provider has not done its work properly rests on the customer.

Conversely, in an obligation of results, it is sufficient to demonstrate that the results have not been attained to engage the provider’s liability. As the Court of Appeal tells us: « the obligation of result carries with it a presumption of fault. The creditor (in fact, there is a typo, it is the debtor) of the obligation can only exonerate himself from liability by demonstrating a foreign cause, whether it is a case of force majeure, the act of a third party or the fault of the victim ».

In the case judged by the Court of Appeal, the contract mentioned an obligation of results. The provider could have escaped liability by demonstrating that the client had committed a fault (e.g., by not participating in committee work, not doing the tests, etc.). No fault from the client? The provider is automatically responsible for the failure.

This is the same solution that was chosen by the Bordeaux Court of Appeal to close the IBM / MAIF saga in 2015 (in French).

A classic solution, certainly.

The reader of the ruling is left with a somewhat strange impression, as the ruling quotes extracts from the contract. However, the obligation of result was aimed at the services themselves, not the final result (the system had to work well, with correct response times, and no regression).

But this impression is certainly due to the fact that the Court of Appeal cited only excerpts, not the contract as a whole.

In the end, when drawing up a contract for IT services, you must be very careful about the distinction between the obligation of results and the obligation of means.

If an obligation of results is signed, it is necessary to specify what it relates to (services, measurable performance, functionalities…).

When you must draft and negotiate an IT contract, or when you have to construe a signed contract in a project that is going less well than expected, we are at your disposal through our contact form or directly at 00.33.1.84.17.66.22.

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Bernard Lamon
Bernard Lamon
BL@nouveaumonde-avocats.com

Avocat fondateur, spécialiste en TIC. Voir ma fiche complète.