Car Leasing and Hidden Defects: Can You Sue the Manufacturer After Buying the Vehicle?

Many individuals and businesses use leasing (crédit-bail or LOA - Location avec Option d'Achat) to finance their vehicles. If malfunctions or defects occur during the lease, and you decide to exercise the purchase option to become the owner of the vehicle anyway, do you lose the right to sue the manufacturer for hidden defects?

A fundamental ruling by the Commercial Chamber of the Court of Cassation on October 16, 2024 (Pourvoi No. 23-13.318) secures the rights of final buyers by providing a clear and favorable answer.

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The Facts: The Land Rover Breakdown During Leasing

In this case, a company (BFI) leased a Land Rover vehicle from a financial institution, which had purchased it from a dealership. Very quickly, malfunctions appeared. The leasing company requested the appointment of a judicial expert.

On June 26, 2019, the expert submitted his report, formally concluding that there was a design defect in an original part.

On September 6, 2019, more than two months after learning of the expert report, the company nevertheless decided to exercise the purchase option to officially become the owner of the vehicle. In October of the same year, it sued the dealership and the manufacturer (Jaguar Land Rover France) under the warranty for hidden defects.

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The Manufacturer's Argument: A Defect That Became Apparent

To escape liability, the manufacturer raised an argument that seemed logical: since the company had read the expert report in June 2019, it was fully aware of the part's defect. By voluntarily buying the vehicle in September 2019, the defect was no longer "hidden" (invisible) to it, but "apparent." Under Article 1642 of the Civil Code, the seller is not liable for apparent defects.

The Montpellier Court of Appeal followed this reasoning and dismissed the company's case, stating that it had purchased the vehicle "with full knowledge of the facts" and could no longer invoke the legal warranty of hidden defects.

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The Ruling: The Right Follows the Asset

The Court of Cassation firmly overturned the court of appeal's analysis. It recalled a fundamental principle of sales law:

"The warranty of hidden defects accompanies, as an accessory, the sold good. When the action under the warranty of hidden defects is exercised against the original seller due to a defect prior to the first sale, the knowledge of this defect is therefore assessed at the date of this sale in the person of the first buyer."

The Court deduced that:

"The knowledge that the sub-purchaser has of the defect of the thing during their own acquisition is irrelevant for the purposes of assessing the merits of their action against the original seller."

Clearly, what matters is whether the defect was hidden when the leasing company (the first buyer) bought the vehicle new from the dealer. Since the vehicle was new and the defect undetectable at that time, the warranty arose. The lawsuit being attached to the vehicle itself (as an accessory), it is automatically transmitted to the final buyer during resale (exercising the option). The fact that the final buyer discovered the defect in the meantime is irrelevant.

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What This Ruling Changes for You

If you are leasing a vehicle (or any industrial equipment) under a credit-bail or LOA:

1. You can exercise the purchase option without fear: If you discover a manufacturing or design defect during the contract, you can still decide to buy the vehicle. The manufacturer cannot use this purchase to argue that you accepted the defect or that the defect became apparent.
2. Extended protection: The action against the original manufacturer remains open under the conditions of the first sale. This is excellent protection for businesses and individuals faced with serial breakdowns or design defects.
3. Time limit to act: Note that you must still act within 2 years from the discovery of the defect (often materialized by the filing of the expert report) and within a limit of 20 years after the initial sale.

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How to Use Jurilia?

In the event of repeated breakdowns or design defects on your leased vehicle:

• Qualify the defect: Use Jurilia to compare your symptoms with the seller's and manufacturer's legal obligations under the hidden defects warranty (Article 1641).
• Draft your claim letters: Prepare a draft email or formal demand letter to the dealer or manufacturer to claim repair coverage or cancellation of the sale.
• Transfer your dossier: If the manufacturer refuses to cooperate, Jurilia compiles the technical documents of your case and connects you with a lawyer specialized in consumer or business law.