Tied Loan: Solar Panels on the Roof Do Not Erase the Loss (Cass. 1re civ., 8 July 2026, No. 25-14.288)

Cass. 1re civ., 8 July 2026, No. 25-14.288

What happened in this case?

On 14 June 2010, during a doorstep sales visit, an individual ordered the installation of solar panels from the company Les Artisans des énergies renouvelables (AER). The same day, his wife took out a loan from the company Domofinance to finance this installation. Two contracts, two signatories within the same couple: this detail will matter right down to the operative part of the 2026 judgment.

The bank pays the funds directly to the seller; the borrower sees only the monthly instalments. A few years later, the spouses relied on the irregularity of the order form and brought proceedings against AER, in the person of its liquidator, and against Domofinance, seeking annulment of the order form and of the loan contract. With the seller gone, the bank becomes the real opponent: it is the one that still holds a claim against the couple.

How does a 2010 dispute still come before the French Supreme Court in 2026?

A first appeal judgment was quashed by the First Civil Chamber on 20 December 2023 (appeal No. 19-23.906). The case was remitted to the Paris Court of Appeal (cour d’appel), which ruled on 20 February 2025. It is this judgment on remittal that is again quashed on 8 July 2026, with a new remittal to the Paris Court of Appeal, differently composed. The case goes back for a third examination on the merits.

Sixteen years between signature and the judgment under comment, and the dispute is still not over: the institutions specialising in this type of financing contest every step of the reasoning that leads to depriving them of their claim, and each quashing pushes their line of defence back a notch.

What had the court of remittal decided?

The Paris Court of Appeal had not ruled against the borrowers on everything. It annulled the sale contract and, as a consequence, the tied loan. It found that the bank had committed a fault “by failing to check the formal validity of the installation order form before releasing the borrowed capital to the seller”. Up to that point, the borrowers had obtained what they asked for.

It was at the stage of the loss that the judgment on remittal went astray, with an operative part that varied according to circumstances:

• if the seller’s ad hoc representative came to remove the equipment from the spouses’ home within the time allowed, the loss connected with the bank’s fault was set at €10,245;
• failing removal within that time, the borrowers suffered “no loss” connected with that fault;
• correspondingly, Mrs T was ordered, after three months from service of the judgment, to repay €18,000 to Domofinance, “unless she could show actual recovery of the equipment by the ad hoc representative” within the time allowed.

The trial judges’ reasoning is summarised in paragraph 9 of the judgment of the French Supreme Court: the borrowers “are deprived of the possibility of obtaining from the seller the return of the sale price”, but “account must be taken of the fact that the photovoltaic installation is complete and functional, so that, failing removal of the equipment by the seller’s representative within the time set from service of the judgment, they will be able to keep functional equipment whose value is not nil and which enables them to earn income”.

What was the Court of Appeal’s logic?

That of economic compensation: you keep panels that work and produce income, so you are not worse off; if the seller’s representative takes them back, only then do you lose €10,245.

This apparent common sense conceals a deep flaw: it places the borrower’s fate in the hands of the ad hoc representative of a liquidated company, which has neither the interest nor the means to dismantle an installation. The condition would never be met, and the bank would recover its €18,000 despite its fault.

What does the French Supreme Court rule on 8 July 2026?

The First Civil Chamber partially quashes the judgment, on the basis of Article L. 311-21 of the Consumer Code (code de la consommation) in its version prior to the Law of 1 July 2010 and Article 1147 of the Civil Code (code civil) in its version prior to the Order of 10 February 2016. These former versions apply to the 2010 contracts; the same principles hold under the current provisions (Article L. 312-55 of the Consumer Code and Article 1231-1 of the Civil Code). The judgment proceeds in four steps.

What is the starting principle?

Paragraph 5 recalls a rule unfavourable to the borrower: “the termination or annulment of a tied loan contract, as a consequence of that of the contract recording the sale or the provision of services that it finances, entails for the borrower the obligation to return the capital lent to the lender”. Annulling the loan does not erase the debt: the funds have been paid out, and the borrower must in principle return them.

What is the exception based on the bank’s fault?

Paragraph 6 sets out the qualification: “However, a lender that has released the funds without having ensured, as it was required to do, the formal validity of the principal contract or its complete performance may be deprived of all or part of its claim for restitution, provided that the borrower shows that he has suffered a loss connected with that fault.”

Two possible faults: not having checked the formal validity of the order form, and not having ensured complete performance before paying. But the sanction presupposes a loss connected with the fault: this is where the bank had won before the court of remittal.

What difference does the seller’s compulsory liquidation make?

Paragraph 7 is the heart of the judgment: “While, in principle, following the annulment of the sale and loan contracts, the borrower obtains from the seller the return of the price, so that the obligation to return the capital to the lender does not in itself constitute a compensable loss, the position is different where the seller is in compulsory liquidation. In such a case, the borrower’s inability to obtain the return of the price is, according to the principle of equivalence of conditions, a consequence of the lender’s fault in its examination of the principal contract.”

Paragraph 8 draws the quantified consequence: “the borrower deprived of the counterpart of the restitution of the item sold establishes a loss suffered equivalent to the amount of the loan taken out to finance the price of the annulled sale or service contract, causally linked to the fault of the lender which, before releasing the borrowed capital to the seller, did not check the formal validity of the principal contract”.

The loss is therefore neither the value of the panels, nor a percentage to be argued over, nor a sum that varies depending on whether the equipment is taken back. It is “equivalent to the amount of the loan”.

Why is the Court of Appeal’s judgment quashed?

Paragraph 10 delivers the quashing: “In ruling thus, when the borrowers’ loss, consisting in being unable to obtain, from a seller placed in compulsory liquidation, the return of the sale price of equipment they no longer own, would not have been suffered but for the bank’s faults, the Court of Appeal, which failed to draw the legal consequences of its own findings, violated the aforementioned provisions.”

Three elements are combined here: a precisely defined loss (being unable to obtain the return of the price), an item the borrowers “no longer own”, and a causal link formulated in the terms of the equivalence of conditions. The ground for quashing is revealing: the Court of Appeal had found everything and refused to draw the inevitable conclusion.

The quashing extends, by application of Article 624 of the Code of Civil Procedure (code de procédure civile), to the part of the judgment ordering Mrs T to repay €18,000 to Domofinance, which “is attached to it by a necessary link of dependence”. The bank is ordered to pay costs and to pay the spouses €3,000.

What is the principle of equivalence of conditions?

Causation is the ground that lenders have exploited the longest: it is not our fault if the seller went bankrupt; the cause of your loss is its insolvency, not our failure to check. With adequate causation, the argument has a certain force.

By stating that the impossibility of obtaining the return of the price is, “according to the principle of equivalence of conditions, a consequence of the lender’s fault in its examination of the principal contract”, the Court expressly chooses the other theory. It is enough that, without the bank’s fault, the loss would not have been suffered. And that is obvious: had Domofinance examined the order form, noted its irregularities and refused to release the funds, no capital would have been paid to AER, and its liquidation would have cost the borrowers no price.

Why is this principle recalled for the second time in the same case?

The court of remittal accepted the fault, then tried to neutralise its consequences by playing on the loss. The second quashing locks that escape route: fault first, causation next, the extent of the loss last.

The judgment falls within a line that includes Cass. 1re civ., 11 February 2026, No. 24-15.204, which is the subject of a separate article on this blog: the Court had already held there that a borrower deprived of the return of the price by a liquidated seller suffers a loss equivalent to the loan. The judgment of 8 July 2026 adds a lesson of its own: the physical retention of the installation has no bearing.

Why do the panels that remain on the roof not count?

This is the judgment’s most concrete contribution. The argument of functioning panels recurs in almost all lenders’ pleadings, and some courts of appeal were receptive to it, hence partial or, as here, conditional compensation.

The Court answers on the ground of property law and of the retroactivity of annulment. The borrowers cannot obtain “the return of the sale price of equipment they no longer own”. The sale being deemed never to have existed, the equipment legally belongs to the seller, that is, to its liquidation. That it has physically remained on the roof confers no right of ownership on the borrowers: they are precarious holders, exposed to its recovery, and can neither sell it nor rely on it as part of their estate.

Taking account of the value of this equipment therefore amounts to attributing to the borrower an enrichment that he does not legally have. Nor is the income from electricity generation retained as an offsetting element: the loss is the loss of the price, regardless of the flows the installation may have generated.

What must the borrower prove?

The judgment is favourable, but it is not a blank cheque. The lender is deprived of its claim “provided that the borrower shows that he has suffered a loss connected with that fault”. The burden of proof lies on the borrower and breaks down into four elements.

First step: the irregularity of the principal contract?

A contract concluded through doorstep selling must contain specific particulars (description of the goods, price, performance deadlines, right of withdrawal). Their absence results in nullity. Without nullity of the principal contract, there is no annulment of the loan and no fault on the bank’s part: analysis of the order form is the decisive item in the file.

Second step: the bank’s fault?

It consists in having released the funds “without having ensured, as it was required to do, the formal validity of the principal contract or its complete performance”. The Court, moreover, speaks in paragraph 10 of the bank’s “faults”, in the plural. The lender, which receives the order form in order to release the funds, is in a position to notice its irregularities; its fault is deduced from the finding that it paid despite them. A delivery certificate signed before connection to the grid can provide a second fault.

Third step: the loss and the impossibility of restitution?

The borrower must establish that he cannot obtain the return of the price from the seller. Compulsory liquidation is enough: the judgment expressly refers to “a seller placed in compulsory liquidation”. There is no requirement to show that the claim filed in the insolvency will remain unpaid, or that the equipment has been taken back: this is precisely the condition added by the court of remittal that the Court quashes.

Fourth step: the causal link?

It is now established as a matter of principle: the borrower no longer has to show that the bank’s fault was the determining cause of his loss, only that, without the wrongful release of the funds, it would not have occurred.

What can a customer in the same situation do?

Contract signed during a doorstep sales visit, incomplete order form, seller vanished, bank claiming the capital: the cases look alike. Here are the useful first steps.

What are the first steps?

• Find the original order form and compare it with the mandatory particulars applicable on the date of signature.
• Gather the loan documents: loan offer, delivery or completion certificate, history of direct debits, letters from the bank.
• Check the seller’s status in the commercial register: administration, liquidation, closure for insufficiency of assets.
• Do not stop paying without a strategy. Depriving the bank of its claim requires a court decision; a unilateral stop to the direct debits exposes you to acceleration of the loan (déchéance du terme) and to being listed on a default register.
• Weigh every letter sent to the bank. What you write can be put before the court against you.

How should the claim be formulated in court?

The structure of the judgment provides the outline of the submissions: nullity of the principal contract for formal irregularity; annulment of the tied loan as a consequence; the bank’s fault in releasing the funds without checking; loss equivalent to the amount of the loan owing to the seller’s liquidation; a claim that the bank be deprived of its claim for restitution and return the instalments already paid. The loss must be quantified at the level of the loan, relying on paragraphs 7 and 8, without accepting any discussion of the residual value of the panels or of the income from the installation, which the judgment renders irrelevant.

Arguments specific to consumer credit can supplement the claim: see the articles on forfeiture of the right to interest for lack of proof of address and on proof of consultation of the FICP (the national register of credit repayment incidents).

What if the loan and the order form do not have the same signatory?

In the case under comment, the husband signed the order form and the wife the loan, and the court of remittal had ordered the wife alone to repay €18,000. This frequent separation did not prevent the cascading annulment of the two contracts or the recognition of the loss of the “borrowers”. It is nevertheless advisable to join both spouses to the proceedings and to formulate the claims for each, so that an isolated head of the operative part does not place the debt on one member of the couple alone.

Must the bank still be repaid when the seller has disappeared?

The French Supreme Court’s answer, after sixteen years of proceedings, is clear: where the bank has paid the seller without checking an irregular order form, and that seller is in compulsory liquidation, the borrower suffers a loss equal to the amount of the loan, caused by the lender’s fault, and the lender may be deprived of its claim for restitution. Neither the presence of the panels on the roof, nor their operation, nor the income they bring changes this conclusion, because the borrower no longer owns them.

The judgment also recalls the rigour required: nullity of the principal contract, the bank’s fault, the seller’s liquidation, a loss quantified at the amount of the loan. Each step must be pleaded in the terms set by the Court, failing which a court of appeal may fall back into the reasoning that has been quashed. If a bank claims the capital from you after the annulment of your contract, an examination of the order form and the loan file by a banking law attorney makes it possible to assess whether the four conditions laid down by the judgment of 8 July 2026 are met, and to build the claim accordingly.

FAQ: Tied Loan, Seller in Liquidation and the Bank’s Liability