A few years ago, I handled the case of a branch manager from one of my subsidiaries who found himself standing before a criminal court.
No prison sentence, but a conviction nonetheless.
A familiar scenario: poorly completed subcontracting contracts, insufficient compliance checks, and a subcontractor employing undeclared foreign workers.
What was often described to me as “something that only happens in American dramas” had just happened in real life.
That concrete reality now finds a clear confirmation in a recent ruling from the French Court of Cassation.
📌 Case Law Confirmation
The Court of Cassation reviewed an appeal filed against a conviction of a company director operating in the home construction sector.
The appellate court had found that several contracts entered into by the company lacked the mandatory payment guarantees for subcontractors, and that the director could not escape liability simply because he had not personally signed those contracts.
The Court of Cassation rejected the appeal.
The ruling reaffirms two key principles:
- The director’s status (as a builder under the French Construction and Housing Code) entails personal legal obligations, including ensuring proof of the subcontractors’ payment guarantees.
- The absence of a personal signature does not exonerate the director where, in the absence of a valid and effective delegation of authority, he had the powers, competence, and means to prevent or stop the wrongful practices.
In other words, the Court grounds the director’s personal criminal liability in his function and organizational duty of vigilance, not merely in the act of signing a contract.
⚖️ Legal Framework
1️⃣ Principle of Personal Criminal Liability
- Article 121-1 of the French Criminal Code: “No one is criminally liable except for his or her own conduct.”
The director’s liability is therefore personal—but performing a function can itself constitute the conduct giving rise to liability.
2️⃣ Sector-Specific Obligations
- French Construction and Housing Code (CCH):
- Article L.231-13: Defines the concept of “builder,” which carries specific statutory obligations.
- Article L.241-9: Penalizes the conclusion of a construction contract lacking the required subcontractor payment guarantee (including potential imprisonment and fines).
These provisions make the builder—and by extension, the company’s managing officer, responsible for ensuring compliance with payment guarantees.
3️⃣ Duty of Vigilance in Subcontracting and Undeclared Work
- French Labor Code (Articles L.8222-1 et seq.):
Requires principals and contracting entities to verify that subcontractors comply with labor and social security obligations.
Failure to do so can amount to concealed employment, an offense punishable by criminal and administrative sanctions.
4️⃣ Delegation of Authority – The Only Possible Defense
- Case law consistently holds that only a valid, effective, and properly documented delegation of authority—conferring real competence, authority, and means—can shield the director from personal liability.
Without such a delegation, the director’s position alone carries the obligation to ensure compliance and accountability.
🔎 About the Sanction
The ruling confirms the conviction handed down by the Court of Appeal against the company director.
Rather than speculating about the specific sentence imposed, it is safer to recall that:
- Under Article L.241-9 CCH, concluding a contract without the required payment guarantee constitutes a criminal offense punishable by up to two years’ imprisonment and a €18,000 fine (see the text for precise terms).
- In this case, the Court upheld the principle that, in the absence of a valid delegation of authority, the director was personally responsible for ensuring compliance—and thus the conviction was properly confirmed.
🧩 Practical Implications
- The signature no longer determines liability: what matters is not the act itself, but the director’s position and the compliance framework he has established.
- Delegations must be formal and effective: they must be written, clearly define their scope, and include real operational means (training, budget, authority).
- Controls and traceability are key: directors must implement audits and reporting mechanisms to demonstrate effective oversight.
- Subcontracting risks are significant: payment guarantees, social security compliance, and subcontractor documentation must be systematically reviewed and verified.
✳️ This Court of Cassation ruling is not a scene from a legal drama—it’s a reminder that judicial reality catches up with business practice.
For company directors, the illusion of being shielded by informal delegation is dangerous.
⚠️ A word of warning to executives:
What’s at stake here isn’t just a technical violation—it’s the personal exposure of the director through lack of organizational control.
This doesn’t just happen on television. It happens in real companies.
