The offence of deception in commercial law: constituent elements and penalties

Trust is at the heart of commercial relations. Whether buying a product or subscribing to a service, consumers and professionals alike legitimately expect the information provided to be accurate and the service or good to be as promised. However, certain economic players may be tempted to breach this obligation of loyalty in order to increase their profits. French law severely punishes such behaviour through the offence of deception, an offence designed to protect the integrity of transactions and the sincerity of the consent of co-contracting parties. Understanding the contours of this offence, its constituent elements and the penalties incurred is essential for any economic operator wishing to secure its practices and avoid potentially far-reaching legal proceedings. This article details the fundamental aspects of deception in French commercial law. For a overview of commercial fraud To find out more, visit our dedicated page.

Definition and legal basis of the offence of deception

The offence of deception is a criminal offence whereby a professional deceives or attempts to deceive a contractual partner, whether a consumer or another professional, as to certain essential characteristics of goods or services. This is a breach of public trust and of the necessary fairness in economic exchanges.

The aim: to protect the fairness of commercial transactions

The main aim of making deception a criminal offence is to ensure that contractual relations are based on sound and sincere principles. By penalising misleading information or manoeuvres designed to mislead the commercial partner, the law aims to ensure a form of equality and transparency in economic exchange. The aim is twofold: to protect the assets of the buyer or customer, who runs the risk of paying for a good or service that does not meet his or her legitimate expectations, and to preserve healthy competition between businesses by preventing some from gaining an unfair advantage through dishonest practices. Cracking down on deception thus helps to make business more ethical and to ensure that the market operates smoothly. It is important to note that this offence is distinct from the offence of forgerywhich concerns the fraudulent modification of the very substance of a product.

Key articles of the Consumer Code

The offence of deception is primarily based on the Consumer Code. Article L. 441-1 of this Code (formerly L. 213-1) defines the offence as follows: "It is forbidden to deceive or attempt to deceive the contracting party, by any means or process whatsoever, even through the intermediary of a third party: 1° Either on the nature, species, origin, substantial qualities, composition or content of useful principles of any goods; 2° Or on the quantity of the goods delivered or on their identity by the delivery of goods other than the specific goods which were the subject of the contract; 3° Or on the suitability for use, the risks inherent in the use of the product, the tests carried out, the instructions for use or the precautions to be taken. ". This article clearly sets out the principle of the prohibition of deception and lists the various aspects to which it may relate.

Criminal penalties are mainly set out in article L. 454-1 of the French Consumer Code (formerly L. 213-1, paragraph 2 et seq.), which sets out the applicable prison sentences and fines, as well as any aggravating circumstances. Other provisions, particularly in the Criminal Code concerning fraud, may sometimes be applied cumulatively or alternatively depending on the specific facts of the case, but the Consumer Code remains the main forum for punishing deception in commercial and consumer relations.

Material elements of deception

For an offence of deception to be defined, a number of material elements must be present. These elements concern the context in which the deception takes place (a contract), the object to which it relates (goods or services), the act of deception itself and the means used to achieve it.

The existence of a contract (sale, provision of services, etc.)

Deception presupposes the existence of a contractual relationship, or at least the prospect of entering into a contract.. Article L. 441-1 of the Consumer Code refers to misleading "the contracting party". This means that the offence can only be committed during the formation or performance of a contract, whether it is a sale, a provision of services, a contract for services, etc.. Contracts may be written or verbal, and may be between a professional and a consumer or between two professionals.. It is important to note that mere attempted deception is also punishable, even if the contract was not ultimately concluded or if the other party was not deceived. Case law considers that deception can occur even before the formal conclusion of the contract, if there are talks or a binding offer..  

The nature of the "goods" or services concerned

Article L. 441-1 expressly refers to "goods". This term must be understood in its broadest sense. It covers all tangible movable property, whether natural or manufactured, food or non-food.. Case law has applied the text to sales of foodstuffs (meat, wine, milk, etc.), manufactured goods (cars, household appliances, clothing, etc.), animals, works of art, etc..  

Although the text explicitly refers only to "goods", case law and legal writers agree that deception can also involve the provision of services.. This follows from the general expression "deceiving the contracting party by any means or process whatsoever" and from the protective purpose of the text. For example, deception has been found in relation to banking services, transport contracts, repair services, training services, intellectual services, etc.. Article L. 441-1, 3° explicitly refers to "fitness for use" and the "risks inherent in the use of the product", concepts that apply to both goods and services.  

Deception: what can it involve?

The law sets out a precise list of the elements that may be involved in deception. These elements form the core of the offence. At least one of these aspects must have been the subject of misinformation or a manoeuvre designed to mislead the contracting party.

Nature, species, origin, substantial qualities

The deception may first relate to the intrinsic characteristics of the goods.  

• Nature This is the fundamental identity of the product (e.g. selling synthetics as silk).
• Species Refers to a more specific category within a given type of product (e.g. selling whiting for hake).
• Origin Misrepresentation: This concerns the geographical origin or the manufacturer of the product (e.g. selling a product made in Asia as being "Made in France", or attributing a work to a renowned artist when it is by an unknown person). Indicating a false geographical origin is a common form of deception, particularly for products with a protected designation of origin (PDO) or a protected geographical indication (PGI).
• Substantial qualities The determining characteristics that prompted the co-contractor to buy. They vary according to the type of product (e.g. freshness for food, power for an engine, age for a piece of furniture, water-resistance for a watch). The quality falsely alleged must be considered essential by the average buyer or by the contract.  

Composition, content in useful principles

This aspect concerns the internal structure of the product.  

• Composition The different elements that make up the merchandise (e.g. selling an alloy as pure gold, concealing the presence of allergens in a food).
• Content in useful principles refers to the concentration of a specific component that gives the product a particular value (e.g. the cocoa content of a chocolate, the concentration of an active ingredient in a plant protection product, the percentage of fat in a dairy product).  

Quantity, identity

Deception may also relate to quantitative aspects or to the very identity of the item delivered..  

• Quantity This involves delivering less than the agreed quantity (e.g. net weight less than advertised, shorter length, insufficient number of units). The use of false measuring instruments also falls into this category.
• Identity Default: This is the act of delivering something different from that which was the subject of the contract (e.g. delivering a different model of car from the one ordered, substituting one product for another of lesser value).

Fitness for purpose, inherent risks

This category, referred to in 3° of Article L. 441-1, concerns the use and safety of the product or service..  

• Fitness for purpose Misleading as to the ability of a product or service to perform its intended function (e.g. selling software as being compatible with a system when it is not, guaranteeing that a garment will be waterproof when it leaks).
• Risks inherent in use Concealing or minimising the dangers associated with the normal use of the product (e.g. not mentioning the side effects of a cosmetic product, concealing the dangerous nature of a children's toy, not informing about the risks associated with a surgical operation).

Checks carried out, instructions for use, precautions

Lastly, deception may involve information relating to the safety, use and guarantees surrounding the product..  

• Checks carried out Falsely claiming that a product has undergone quality or safety tests or checks (e.g. falsely stating that a product complies with a standard, claiming that a second-hand vehicle has been fully serviced when this is not the case).
• Instructions for use or precautions to be taken Providing incorrect, incomplete or misleading instructions on how to use the product or on the precautions necessary to avoid a risk.

Means used to deceive (manoeuvres, false allegations, concealment)

The law specifies that deception may be carried out "by any means or process whatsoever".. This covers a wide variety of behaviours. It may involve :  

• False allegations Explicit misrepresentation, whether verbally, in writing (labelling, advertising, contracts) or pictorially.
• Fraudulent manoeuvres Positive acts aimed at creating a false appearance (e.g. disguising a defect on a vehicle, falsifying documents, using a pseudonym).
• Concealment Deliberate concealment of essential information that the trader is required to disclose (e.g. concealment of a known major defect in a property, failure to reveal the true origin of a product). Simple silence may also constitute deception if it relates to a substantial quality or risk that the trader could not have been unaware of and had a duty to disclose.

Jurisprudence takes a broad view of the means used, finding deception to be present where any procedure has been used to abuse the other party's trust.

The intentional element: the need for fraudulent intent

Like most offences, deception is an intentional offence. This means that it is not enough to prove the existence of a material act of deception; it must also be established that the perpetrator acted with culpable intent, i.e. with full knowledge of the facts..  

Awareness of deceiving the co-contractor

The moral element of deception lies in the intention to deceive the contractual partner. The perpetrator must have been aware of the inaccurate nature of the information provided or of the deceptive nature of the manoeuvres employed, and must have acted with the aim of misleading the contracting party with regard to one of the elements covered by the law.. The perpetrator must have known that the goods or service did not possess the qualities advertised or had characteristics different from those promised. This awareness must exist at the time the act of deception is committed..  

Distinction from unintentional error

This requirement of intention makes it possible to distinguish deceit (a criminal offence) from simple error or unintentional breach of contract, which are matters for civil liability.. If the seller or service provider has provided inaccurate information or delivered non-conforming goods through simple negligence, ignorance or clumsiness, with no intention to harm or deceive, the offence of deception will not be constituted. For example, a seller who, in good faith, relays erroneous information given by his own supplier, without having the means to verify it, is not necessarily committing deception if he himself was unaware of the falsity of the information. However, the line can be very fine, particularly for professionals who are presumed to know the products they are selling.  

Proof of intent

Fraudulent intent, being a psychological element, is often difficult to prove directly.. It is most often deduced from the material circumstances of the case. Judges look for evidence that the perpetrator could not have been unaware of the falsity of his allegations or the misleading nature of his actions. Several factors may be taken into account:  

• The author's professional status: a professional is supposed to know the products or services he is offering. Their ignorance will be less easily accepted than that of a private individual.
• The nature of the element to which the deception relates: deceiving about the origin or composition is often more revealing of an intention than deceiving about a more subjective quality.
• The extent and repetition of the facts: repeated or systematic acts of deception are evidence of deliberate intent.
• The existence of specific manoeuvres designed to conceal reality.
• Failure to react or take corrective action after being informed of the problem by the customer or the authorities.

Proof of intent is left to the discretion of the trial judge, who will base his or her decision on a body of corroborating evidence.

Criminal penalties for deception

The offence of deception is severely punished under the Consumer Code, with penalties that may be increased in certain circumstances. Additional penalties may also be imposed.

Main penalties (imprisonment, fine)

Under Article L. 454-1 of the French Consumer Code, deception is punishable by a penalty of two years' imprisonment and a 300,000 fine. These are the maximum penalties for natural persons. The amount of the fine may be increased, in proportion to the benefits derived from the offence, to 10 % of average annual turnover, calculated on the basis of the last three annual turnover figures known at the time of the offence.. This provision makes it possible to adapt the penalty to the economic capacity of the perpetrator and the seriousness of the illicit profit made.  

Legal entities (companies, associations, etc.) may also be held criminally liable. In this case, the fine is increased fivefold, up to a maximum of 1,500,000 euros or 50 % of average annual turnover, according to the same calculation methods..  

Aggravating circumstances (danger to health, organised gang, etc.)

The penalties are increased to seven years' imprisonment and 750,000 fine (or 10% of average annual turnover) if the deception:  

1. Has resulted in the use of the goods being dangerous to human or animal health.
2. Was committed as part of an organised gang.

These aggravating circumstances testify to the particular seriousness that the legislator attaches to endangering public health or to the commission of the offence by structured networks. The fine for legal entities is also increased to €3,750,000 or 50% of average annual turnover in these cases..  

Additional penalties (posting, bans, etc.)

In addition to the main penalties, the courts may impose additional penalties on individuals and legal entities found guilty of deception. Article L. 454-3 of the French Consumer Code provides in particular that:

• Posting or broadcasting the sentence (at the convicted person's expense).
• Disqualification from holding a public office or a professional or social activity in the exercise or during the exercise of which the offence was committed, for a maximum period of five years.  
• Disqualification from civic, civil and family rights.  
• Permanent closure or closure for a maximum of five years of the establishments or one or more of the establishments of the company used to commit the offences.  
• Exclusion from public contracts for a maximum of five years.
• Confiscation of the thing that was used or intended to be used to commit the offence or the thing that is the product of the offence.  

These additional penalties are designed to reinforce the deterrent effect of the conviction and prevent repeat offending.

Defending yourself against an accusation of deception

Being accused of deception can have very serious legal and commercial consequences for a professional or business. It is therefore essential to prepare a solid defence if you are accused. Several lines of defence can be envisaged, often with the indispensable help of legal counsel.

Contesting the material elements

The first strategy is to contest whether the material elements of the offence have been brought together. This may involve demonstrating :

• The absence of a contract or of sufficiently advanced discussions at the time of the alleged offences.
• That the element alleged to have been the subject of the deception (nature, origin, quantity, etc.) was not covered by the law or was not substantial for the other party.
• That the information provided was accurate or that the allegations made have not been borne out.
• That the alleged manoeuvres were not such as to deceive an ordinarily diligent contractor.
• That the causal link between the act complained of and the alleged error of the co-contractor has not been established.

This challenge is based on a precise factual analysis of the case and may require technical expertise (for example, to verify the composition or qualities of a product).

Demonstrate the absence of fraudulent intent

Even if the material elements appear to be present, the defence may seek to prove the absence of culpable intent.. It must then be established that the author :  

• Was in good faith and legitimately unaware of the inaccuracy of the information or the defect in the product.
• Committed a simple error or unintentional negligence.
• Has been deceived by its own supplier or a third party.
• Was not aware that he was contravening any regulations.

Proof of good faith can be provided through the production of internal documents (quality procedures, training, etc.), correspondence with suppliers, or testimonials attesting to the work carried out.

The importance of legal representation

When faced with an accusation of deception, whether from a customer, a consumer association or the supervisory authorities (DGCCRF), the assistance of a lawyer is highly recommended, if not essential. A a lawyer to defend you will be able to :

• Analyse the facts of the case and the documents in the file in detail.
• Check whether the constituent elements of the offence have been met.
• Develop the most appropriate defence strategy (substantive challenge, negotiation, procedure, etc.).
• Gather the necessary evidence to support the defence.
• Assisting and representing the defendant at all stages of the proceedings (investigation, inquiry, hearing).
• Negotiate alternatives to prosecution (composition pénale, transaction, etc.).

Our expertise in business criminal law and our knowledge of case law are major assets in asserting your rights and limiting the consequences of being implicated.

Navigating the complexities of commercial and criminal law requires an in-depth knowledge of the texts and their application. If you are faced with a situation involving possible deception, whether you are the victim or the accused, do not hesitate to contact our firm to discuss your options and benefit from tailored legal support.

Sources

• Consumer Code: Articles L. 441-1 (definition) and L. 454-1 to L. 454-3 (penalties)
• Criminal Code (for possible alternative or cumulative qualifications such as fraud)
• Case law of the Criminal Division of the Court of Cassation