Transfer of Risk in a French Sale of Goods: Who Bears the Loss if Goods Are Destroyed?

Res perit domino: why the transfer of risk in France follows ownership

The single most important idea in the French law on transfer of risk is that risk follows ownership. French law applies the old maxim res perit domino — the thing perishes for its owner. If goods are accidentally destroyed, damaged or lost through no one's fault between sale and delivery, the loss falls on whoever owned the goods at that moment. This is very different from the intuition of many foreign buyers, who assume that risk stays with the party physically holding the goods until they are handed over.

Article 1196 of the Civil Code makes the link explicit: the transfer of ownership carries with it the transfer of the risk of the thing. The two questions — who owns the goods? and who bears the risk of loss? — are answered together. To know who carries the risk of loss in a sale of goods in France, you first have to know who is the owner at the relevant time. That is why the rules on when does ownership pass and the rules on transfer of risk are studied side by side.

The practical consequence is stark. Because French law treats ownership as passing by mere agreement on the thing and the price, ownership — and therefore risk — often passes to the buyer well before the buyer sees, inspects, or collects the goods. A buyer can find itself liable to pay the full price for a consignment that was destroyed in the seller's own warehouse, simply because it had already become the owner. Understanding this default is the first step to managing it.

The buyer bears accidental loss once it is the owner, even before delivery

Under Article 1196 of the Civil Code, ownership of a specific, identified thing passes at the instant the seller and buyer agree on the thing and the price. It does not matter that the goods have not yet been delivered, or that the price has not yet been paid. This is the solo consensu principle: the sale transfers property by consent alone. Because the transfer of risk is attached to the transfer of ownership, the buyer becomes the party at risk at that same early moment.

The scenario that surprises foreign clients is this: the parties conclude a sale of a specific machine on Monday, delivery is scheduled for Friday, and on Wednesday the machine is destroyed by an accidental fire while still on the seller's premises. Under the default French rule, the buyer already owned the machine and therefore bore the risk. The seller's obligation to deliver is extinguished by the loss, yet the buyer must still pay the price. This is res perit domino operating at its harshest.

The rule is only a default, however. Article 1196 expressly allows the parties to agree otherwise, both on the moment ownership passes and on the moment risk passes — and the two can be set to different dates. A great deal of commercial drafting exists precisely to soften this default, whether through a retention-of-title clause, a clause tying risk to physical delivery, or a chosen trade term. We look at those variations below.

The seller's duty to preserve the goods and its liability for fault

The default rule does not leave the buyer wholly unprotected while the goods remain with the seller. Article 1197 of the Civil Code provides that the party who owes the obligation to deliver a thing must preserve it until delivery, applying all the care of a reasonable person. During the interval between sale and delivery, the seller is effectively the custodian of goods that already belong to the buyer, and must look after them accordingly.

This duty of care is the key qualification to res perit domino. The buyer bears only the accidental loss — the loss caused by a fortuitous event attributable to neither party. Where the goods are lost or damaged through the seller's fault or negligence, the seller remains liable, notwithstanding that risk had passed with ownership. So a fire caused by the seller's failure to maintain safe storage is the seller's responsibility; an unforeseeable external event is the buyer's.

In practice this splits the analysis into two questions. First, was the loss accidental (a true fortuitous event) or was it caused by fault? Second, if accidental, who owned the goods when it occurred? The burden of proving a fortuitous event lies on the party relying on it — typically the seller who wishes to be discharged from its duty to deliver. A seller who cannot prove that the loss was accidental, and free of any failure of care, cannot shelter behind the transfer of risk.

How a formal notice (mise en demeure) moves the transfer of risk

A formal notice to perform — the mise en demeure — can shift the transfer of risk between the parties. Article 1344-2 of the Civil Code provides that a notice to deliver a thing places the risk on the debtor of that obligation, if it is not already there. Where a seller is late in delivering and the buyer serves a proper notice to deliver, the risk of a subsequent accidental loss is thrown onto the seller, even in situations where it would otherwise have sat with the buyer.

The direction of the notice matters. Article 1344-2 protects the buyer against a seller who sits on the goods after the delivery date has arrived. The mirror image is the buyer who fails to collect. Where the buyer is the one in default — it has not taken delivery by the agreed date — the position reverses. French case law has long held that, once the term fixed for collection has passed, the goods pass to the buyer's risk and the seller is no longer bound to keep them at the buyer's disposal indefinitely.

For a foreign trader, the lesson is procedural as much as substantive. If your counterparty is in default over delivery or collection, do not rely on informal chasing. A dated, written formal notice is the instrument that fixes the moment from which risk is allocated to the defaulting party. It also starts other consequences running, such as the right to seek termination or damages. Keeping evidence of that notice is often decisive if the goods are later lost.

Reversing the default: tying risk to delivery, retention of title and Incoterms

Because Article 1196 is only a default, the parties are free to detach the transfer of risk from the transfer of ownership and to fix each at the date that suits their trade. The most common variation is a clause providing that risk passes on physical delivery rather than on conclusion of the contract. This aligns French law with the commercial expectation of most cross-border buyers — that you should not bear the risk of goods you have not yet received. A clause of this kind is valid and routinely enforced.

A retention-of-title clause works in the other direction and has a knock-on effect on risk. If the seller reserves ownership until full payment of the price, then, because ownership has not passed, the goods in principle remain at the seller's risk — including the risk of transport — until the reservation is lifted by payment, even where the goods are already in the buyer's hands. Parties often correct this by expressly separating the two: reserving title for security while placing risk on the buyer from delivery. See our note on transfer of ownership and risk for how these interact.

In international trade the parties usually rely on Incoterms and risk transfer. The ICC Incoterms rules allocate the point at which risk passes from seller to buyer, term by term — for example at the ship's rail, at the carrier, or on arrival. They are contractual, not statutory: an Incoterm fixes cost and risk but does not, by itself, settle the transfer of ownership under French law, which continues to follow the Civil Code unless the parties agree otherwise. Choosing a term therefore answers the risk question but leaves the property question to be checked separately.

Generic goods: risk passes only on individualisation

The solo consensu rule applies cleanly to specific, identified goods — a named machine, a numbered vehicle. It cannot apply in the same way to generic goods sold by weight, count or measure, because until the exact goods are set aside you cannot say which units belong to which buyer. Article 1585 of the Civil Code addresses this: where things are sold by weight, count or measure rather than in a single block, the sale is completed only when the goods are weighed, counted or measured.

For the transfer of risk, the consequence is that both ownership and risk of generic goods pass only at the point of individualisation — when the specific quantity is identified and appropriated to the contract, whether by weighing, counting, measuring, or marking. Before that point the seller keeps the risk: if part of an undifferentiated bulk is destroyed, the loss falls on the seller, who can still perform by drawing the buyer's quantity from the remaining stock. This is a meaningful protection for buyers of commodities and bulk materials.

By contrast, where a defined lot is sold as a single block for a global price, ownership and risk pass at the conclusion of the contract, as with specific goods. The distinction between a sale in bulk and a sale by measure therefore decides the moment of risk. For a foreign buyer of raw materials or fungible goods, it is worth confirming in the contract how and when the goods will be individualised, since that act is what triggers the passing of both property and risk.

The practical trap: goods destroyed after sale but before delivery

Bring the strands together in the case that causes most disputes: goods sold but destroyed before delivery. Under the default rule, if the goods are specific and were individualised at the sale, the buyer became owner and therefore bears the risk — it must pay the price even though it will receive nothing, unless the loss was due to the seller's fault or the seller was in default under a notice to deliver. This is the counter-intuitive result that catches out unwary foreign buyers.

Change one fact and the answer changes. If the sale was of generic goods not yet weighed, counted or measured, the seller still owned them and bears the loss. If a retention-of-title clause was in force and the price unpaid, the seller in principle retained both ownership and risk. If the buyer had served a valid notice to deliver, the risk had shifted to the seller under Article 1344-2. Each variable — nature of the goods, ownership clause, default, chosen term — can flip the outcome, which is why the analysis has to be done contract by contract.

For the seller, the same facts create a different exposure: a seller who cannot prove the loss was accidental, or who failed in its duty of care under Article 1197, cannot rely on the transfer of risk to escape liability, and may face a claim for non-delivery. Both sides therefore have a strong interest in a clear risk of loss clause and in adequate insurance covering the party who actually bears the risk at each stage of the transaction.

How to control the transfer of risk in your French contracts

The transfer of risk is one of the few points where a short clause can save a large loss. Because the Civil Code rule is a default, a well-drafted contract can place risk exactly where the parties intend and remove the surprise from res perit domino. The following steps set out a practical method for a foreign seller or buyer dealing under French law.

Default rule versus contractual variations: who bears the risk

The table below summarises how the transfer of risk is allocated across the common scenarios. It assumes an accidental loss with no fault by either party; where fault is shown, the party at fault answers for the loss regardless of who bore the risk. Use it as a checklist, not a substitute for reviewing the actual contract.

The pattern is consistent: the default is res perit domino, and every variation either delays ownership, ties risk to a physical event, or penalises the party in default. Once you can place your transaction in one of these rows, you can predict the risk of loss outcome and, more importantly, redraft it before a loss occurs rather than after.

Frequently asked questions about the transfer of risk in France

Who bears the risk of loss before delivery in France?

By default, the owner does. Because ownership of specific goods passes at the moment the parties agree on the thing and the price under Article 1196 of the Civil Code, the buyer usually bears the risk of accidental loss even before delivery. The seller is liable only where the loss was caused by its fault or where it was in default under a notice to deliver.

Does risk pass with ownership in France?

Yes. French law follows the maxim res perit domino, and Article 1196 provides that the transfer of ownership carries the transfer of risk. To know who bears the risk you have to identify who owned the goods at the moment of loss.

Can we make risk pass on delivery instead of on sale?

Yes. Article 1196 is a default rule and the parties may agree that risk passes at a different moment from ownership. A clause tying risk to physical delivery, or a chosen Incoterm, is valid and commonly used to align French law with the buyer's expectation.

What happens if goods are destroyed before I collect them?

If the goods were specific and you had become the owner, you bear the accidental loss and must pay the price, unless the seller was at fault or in default under a notice to deliver. If the goods were generic and not yet individualised, or subject to a retention-of-title clause, the seller generally still bears the loss.

Do Incoterms change who bears the risk?

Yes, for the risk question. Incoterms allocate the point at which risk passes from seller to buyer and are enforced as part of the contract. They do not, by themselves, settle the transfer of ownership, which continues to follow the Civil Code unless the parties provide otherwise.

Does the buyer still have to pay if the goods are destroyed?

If the buyer bore the risk at the time — typically because it had become the owner and the loss was accidental — then yes, the price remains due even though the goods will never be delivered. This is the practical sting of res perit domino and the main reason to address risk expressly in the contract.

Does retention of title keep the risk with the seller?

In principle yes, because a retention-of-title clause postpones the transfer of ownership until payment, and risk follows ownership. Many contracts, however, separate the two by reserving title for security while placing risk on the buyer from delivery, so the clause should be read carefully.

Key takeaways on the transfer of risk in France

How our French lawyers help with the transfer of risk

Petroff Avocats advises foreign sellers and buyers on both sides of the risk question. For sellers, we structure contracts and general terms so that risk moves to the buyer at delivery while title is reserved as security, and we defend claims where goods are lost after risk has passed. For buyers, we make sure you are not left carrying the risk of goods you have not received, by drafting delivery-linked risk clauses, matching Incoterms to your transport, and aligning your insurance with the contractual risk point. When a loss has already occurred, we analyse who owned the goods, whether the loss was accidental or caused by fault, and whether a notice to deliver had shifted the risk, then pursue or resist the resulting claim.

This article is for general information only. It does not constitute legal advice and should not be relied upon as such. The transfer of risk in a sale of goods depends on the exact terms of your contract and the facts of your transaction. Contact our French lawyers for advice on your situation.