By a judgment published on 8 January 2026 (Cass. 3E civ., 8 January 2026, no. 24-12.082), the Court of Cassation recalls a fundamental distinction in construction law: the lump-sum compensation due by the client who decides to withdraw from a contract for the construction of an individual house (CCMI) falls under the forfeiture clause, and not the penalty clause; as such, it cannot be reduced by the judge, even if its amount may seem high.
In this particular case, the individuals had signed a CCMI stipulating that, in the event of termination on their initiative, they would be required to pay the builder compensation amounting to 10% of the agreed price, a sum intended to cover costs already incurred and loss of earnings. Having abandoned their project, they sought a reduction in this compensation, which had been set at €13,781. The Paris Court of Appeal had reduced it to €6,980, viewing it as a manifestly excessive penalty clause. The Third Civil Chamber rejected this reasoning and reinstated the contractual compensation.
Legal analysis is based on the classic distinction between two contractual mechanisms that are often confused. The penalty clause, governed by Article 1231-5 of the Civil Code, penalises the culpable non-performance of an obligation and may, as such, be reduced or increased by the judge if its amount appears manifestly excessive or derisory. The withdrawal clause, on the other hand, is the monetary consideration for a right of withdrawal granted to one of the parties: this party does not breach their commitments; they are exercising a right. However, in the context of a CCMI, Article 1794 of the Civil Code expressly recognises the client's right to unilaterally terminate the fixed-price contract before its completion, requiring them to compensate the contractor for their expenses, their work, and anything they might have earned. The High Court draws the logical consequence: the lump-sum compensation negotiated by the parties to arrange this legal right is not intended to penalise a fault, but to organise in advance the liquidation of a right. It cannot therefore be classified as a penalty clause, nor, consequently, be reduced by the judge.
In practice, this solution reminds prospective homeowners that a CCMI is not a contract that can be rescinded without cost. Before signing, it is essential to carefully examine the financial conditions for unilateral termination and assess the actual exposure in the event of a change of plans, particularly when the builder has already undertaken studies, administrative steps or supplies. For builders, the decision secures contract drafting and confirms that the lump-sum compensation provided for in Article 1794 remains fully enforceable, provided it is clearly set out as the consideration for a right of withdrawal and not as a penalty for non-performance.
Clients who are considering abandoning a construction project would be well-advised to seek legal advice before issuing any notice. This will allow them to assess the exact nature of the stipulated clause, the possibility of an amicable settlement, and grounds for recourse, for example, resulting from a prior breach by the builder. The line between a withdrawal penalty and a penalty clause remains fine, and each case requires individual analysis.
References: Cass. 3E civ., 8 January 2026, No. 24-12.082, published in the Bulletin; Articles 1794 and 1231-5 of the Civil Code; Articles L. 231-1 et seq. of the Construction and Housing Code.