Apple Inc. v. Samsung Electronics Co. Ltd. et al

Filing 900

NOTICE by Apple Inc.(a California corporation) Translations of Foreign Authority (Attachments: #1 Exhibit 1, #2 Exhibit 2, #3 Exhibit 3, #4 Exhibit 4, #5 Exhibit 5, #6 Exhibit 6, #7 Exhibit 7, #8 Exhibit 8, #9 Exhibit 9, #10 Exhibit 10, #11 Exhibit 11, #12 Exhibit 12, #13 Exhibit 13, #14 Exhibit 14, #15 Exhibit 15, #16 Exhibit 16, #17 Exhibit 17, #18 Exhibit 18, #19 Exhibit 19, #20 Exhibit 20, #21 Exhibit 21, #22 Exhibit 22, #23 Exhibit 23, #24 Exhibit 24, #25 Exhibit 25, #26 Exhibit 26, #27 Exhibit 27, #28 Exhibit 28, #29 Exhibit 29, #30 Exhibit 30, #31 Exhibit 31, #32 Exhibit 32, #33 Exhibit 33, #34 Exhibit 34, #35 Exhibit 35, #36 Exhibit 36, #37 Exhibit 37, #38 Exhibit 38, #39 Exhibit 39, #40 Exhibit 40, #41 Exhibit 41, #42 Exhibit 42, #43 Exhibit 43, #44 Exhibit 44, #45 Exhibit 45, #46 Exhibit 46, #47 Exhibit 47, #48 Exhibit 48, #49 Exhibit 49, #50 Exhibit 50, #51 Exhibit 51, #52 Exhibit 52, #53 Exhibit 53, #54 Exhibit 54, #55 Exhibit 55, #56 Exhibit 56, #57 Exhibit 57, #58 Exhibit 58, #59 Exhibit 59, #60 Exhibit 60, #61 Exhibit 61, #62 Exhibit 62, #63 Exhibit 63)(Selwyn, Mark) (Filed on 5/7/2012)

Exhibit 57

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Recueil Dalloz 2008 Pg. 2447

Group Insurance tested against Legislation on Unreasonable Clauses
Charlotte Goldie-Genicon, Senior Lecturer at the University of Paris II
(Panthéon-Assas)

Essentials
The First Civil Chamber sheds new light, in a Judgment of May 22, 2008, on the nature of the
relationship between the insurer and the member in the case of a group insurance contract, at
the same time that it calls for a fundamental reflection on a stipulation on behalf of third
parties and on the effectiveness of consumer protections. The Court of Cassation, recognizing
that there is a direct contractual bond of a bilateral nature between the member and the
insurer that is subject to the provisions of Article L. 132-1 of the Consumer Code, appears to
accommodate the existence of an original figure of stipulation: the contract stipulation on
behalf of third parties.

1 - There are marriages whose wealth comes from the obstacles they were able to
overcome. Such is the case that joins group insurance to the legislation on
unreasonable clauses, which just celebrated a Judgment of the First Civil Chamber of
the Court of Cassation of May 22, 2008 (1).
The facts of the case were favorable for such a meeting. On the occasion of the
granting of credits extended by the Cetelem Company, a borrower subscribed to the
group insurance contract entered into by the credit company to cover in particular
the risk of permanent and total disability. After being declared unfit for work and
placed in early retirement, the borrower summonsed the insurer to reimburse the
balance of credits, citing before the trial court the unreasonableness of a clause in
the group insurance contract which the insurer relied on against him to deny
coverage. The Court of Appeal of Nimes, in a Judgment of October 18, 2005,
rejected the application on the ground that the provisions of Article L. 132-1 of the
Consumer Code were inapplicable, since the clause was in a contract that was not
between the borrower and the insurance company, but between the latter and the
Cetelem Company, which the borrower had been content to subscribe to. The First
Civil Chamber of the Court of Cassation was then referred the following issue: can
the subscriber to a group insurance contract invoke the unreasonableness of a clause
in this contract against the insurer? The Court decided that "subscribing to the group
insurance contract, although a consequence of a stipulation on behalf of third
parties, nevertheless creates between the member and the insurer, who approves
him, a direct contractual relationship of a bilateral nature, whose terms, as such, fall
under the provisions" of Article L. 132-1 of the Consumer Code (2).
The First Civil Chamber thus lifts - in part - the veil over the mysterious nature of
group insurance, about which it can be said that it has created confusion among
lawyers for many years. And in so doing, the Court has contributed to renewing the
face of the stipulation on behalf of third parties upon which it based its argument. It
must, indeed, be kept in mind that the application of the legislation on unreasonable
clauses in group insurance closely depends on the legal nature that we attribute to
the latter. Thus, it is taught that if we analyze group insurance as a stipulation on
behalf of third parties subscribed for the benefit of the member, Article L. 132-1

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should not be expected to apply, since the insurance contract is concluded between
two professionals, whereas if one departs from the model of a stipulation on behalf
of third parties to recognize the existence of an insurance contract between the
insurer and each of the members, it would be possible for Article L. 132-1 to apply
since the contract in this case can be concluded between a professional and a
consumer. The Judgment issued by the First Civil Chamber of the Court of Cassation
is in this respect, paradoxical: it acknowledges that group insurance is built, at least
in part, on the model of the stipulation on behalf of third parties, but admits, at the
same time, that the consumer protection legislation could be applied. It is this
apparent contradiction that needs to be dissipated. One cannot help being struck by
the contrast between the assurance that the Court of Cassation demonstrated in
affirming the application of Article L. 132-1 and the uncertainties that affect the legal
analysis that it holds concerning group insurance. If the legal analysis of group
insurance appears to be hesitant (I) it, however, firmly applies Article L. 132-1 of the
Consumer Code to the relationship between insurer and member (II).
I - A hesitant Legal Analysis of Group Insurance
2 - The Judgment of May 22, 2008 is an ambiguous contribution to the controversy
that undermines the doctrine concerning the legal nature of group insurance. If the
First Civil Chamber relies on the existence of a stipulation on behalf of third parties,
which is the consequence of the insured subscribing to the group insurance contract
(A), it also acknowledges the existence of a direct contractual relationship of a
bilateral nature between the insurer and the member, thus seeming to take a step
towards acknowledging the original figure: the contract stipulation on behalf of third
parties (B).
A - Subscribing to the group insurance contract, which is the consequence of a
stipulation on behalf of third parties
3 - Group insurance is defined, since Law No. 89-1014 of December 31, 1989
(3), in Article L. 141-1 of the Insurance Code as a "contract entered into by a legal
entity or the head of a firm in view of the enrollment of a group of people that meet
the conditions specified in the contract, to cover the risks that depend on the
duration of human life, risks affecting the physical integrity of the person or related
to maternity, risk of work disability, risk of disability or unemployment," each
member to "have a similar relationship with the underwriter." This unitary definition
of group insurance, however, masks a more anomalous reality. Indeed, there is not
just one type of group insurance, but several possible kinds of group insurance
whose legal analysis is likely to vary, some having mandatory enrollment (enrollment
is therefore a necessary consequence of belonging to the group), others having
optional enrollment (4).
The Judgment of May 22, 2008 specifically involved a special kind of group insurance
whose enrollment is optional, borrowers group insurance, often underwritten by a
credit institution with an insurer to insure its future borrowers-members against risk
of death, illness, disability or unemployment (5). The credit institution occupies a
special place because it combines the qualities of the underwriter of the group
insurance contract and the beneficiary of the insurance, as the borrower-member
generally designates it to receive the insurance indemnity ensuring repayment of the
loan balance in the contingency (6). As for the insurer, it most often reserves the
right to select the risks by refusing to accept certain members who so apply, due to
the excessive risk they represent.
4 - Two main analyses (7) of group insurance are opposed in doctrine: a "unitary"

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concept (8) and a "fragmented" concept (9). According to the first, which is the
oldest, group insurance is akin to omnibus insurance (10) and would be built on the
model of the stipulation on behalf of third parties. A single insurance contract would
be concluded between the insurer-promisor and the member-stipulator, each insured
having the capacity of third party beneficiary of a stipulation subscribed for his
benefit that he accepts by enrolling in the group insurance contract. The first
provision, which is designed to cover the risks referred to in the group insurance
contract, is coupled with a second stipulation in favor of the credit institution, whose
purpose this time is the payment of the insurance compensation (11).
This classic concept of group insurance has some weaknesses, however, the main
one (12) relating to the existence of an obligation incumbent on of each of the
members-insured. We must indeed keep in mind that with borrowers group
insurance, the member must, in principle, make payment of the insurance
premiums. He is not therefore offered a direct right without compensation by group
insurance, as pointed out by the Court of Cassation itself, but a contractual
relationship of a bilateral nature. Moreover, the use of the stipulation on behalf of
third parties, under this type of assumption, is controversial. The Court of Cassation
has indeed recognized that the stipulation on behalf of third parties did not preclude
"in the case of acceptance by the beneficiary, that he is bound by certain obligations"
(13), apparently accommodating what is known as the stipulation on behalf of third
parties with an obligation, but some authors have argued that it could not then be a
real stipulation on behalf of third parties (14). The Court of Cassation, indeed,
subordinates the birth of the obligation to the beneficiary's acceptance, and the birth
of the beneficiary's right is inseparable from the creation of the obligation which it is
the counterpart to, and it is this acceptance that makes the beneficiary both the
creditor and the debtor of the promisor. There would therefore be more deviation
from the relative effect of contracts and any qualifying of the stipulation on behalf of
third parties would be incorrect.
It would be even more questionable in the case of borrowers group insurance, that
enrollment is not sufficient to create the bond between insurer and member, since
the insurer's approval is necessary to the birth of the coverage. Isn't the insurer's
right to refuse to contract with a member who presents an undue risk incompatible
with the acknowledgment of a stipulation on behalf of third parties (15)? The
promisor who undertakes under the terms of a stipulation on behalf of third parties is
indeed required to carry out his obligation towards the beneficiary. It is hard to see
where there is a commitment by an insurer which may choose, or not, to offer its
guarantee to the insured who approach it.
5 - The "fragmented concept" of group insurance defended by the modern doctrine, ,
on the contrary, attempts to acknowledge the existence of as many individual
contracts as there are members. There wouldn't be just a single insurance contract
containing a multitude of stipulations on behalf of third parties, but a multitude of
insurance contracts between the insurer and each member-insured. More specifically,
in the event that the insurer has reserved the right to select the risks, the insured's
enrollment in the group contract would act as a contract offer from the insurer and
the insurer's approval would be acceptance of this offer, permanently sealing the
contract that was formed (16). The members would not therefore be beneficiaries of
a stipulation on behalf of third parties but would indeed be parties to an insurance
contract. As for the contract binding the insurer to the credit institution-underwriter,
it would avoid being qualified as an insurance contract. It would involve one variety
of a framework contract whose purpose is to define the conditions of coverage

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offered to members, and would therefore create the contours of future individual
insurance contracts entered into with each of them. For one author, Mr. Bourdon,
this framework contract is close to referencing contracts that are concluded in
matters of distribution between central purchasing and suppliers (17).
6 - Faced with the doctrine's hesitation, the laws relating to group insurance cause
more trouble than certainties. Article L. 141-6 of the Insurance Code presumes in
particular the subscriber deemed representative of the insurer, thus joining with the
fragmented concept of group insurance: if the underwriter is the insurer's agent
during each enrollment, then an insurance contract is concluded between the insurer
and each member, and the subscriber only intervenes as a representative to the act.
But this legal presumption of a mandate, besides that it is open to criticism (18), is
of no help in the present case since Article L. 141-6 itself excludes borrowers group
insurance from the scope of application.
7 - The case law offers no surer guidance than the laws on the subject. If the Court
of Cassation admits without hesitation that the credit institution is the beneficiary of
a stipulation on behalf of third parties entered into by the insured (19), it is much
less firm concerning the latter's situation and vacillates between the unitary concept
and the fragmented concept of group insurance. Some judgments thus expressly
make reference to a stipulation on behalf of third parties entered into in favor of the
insured (20), while others admit the existence of a contract between insurer and
member (21). The place given to the split analysis of group insurance, however,
tends to grow within the jurisprudence.
A reading of the Judgment of May 22, 2008 leaves one perplexed in this regard. The
Court of Cassation seems therein to hesitate between the unitary analysis and the
fragmented analysis of group insurance. It acknowledges, on the one hand,
enrollment in the group insurance contract as being the result of a stipulation on
behalf of third parties, thereby confirming the positive response it intends to provide
to the stipulation on behalf of third parties with obligation: the stipulation on behalf
of third parties may be the cause of an obligation incumbent on the memberbeneficiary, regardless of whether that obligation is a primary obligation - the
obligation to pay premiums - and not a mere incidental obligation. But the Court
held, on the other hand, that enrollment creates a direct contractual relationship of a
bilateral nature between member and insurer. Isn't this an implicit sacrifice to the
fragmented concept of group insurance? Isn't it somewhat clumsy to argue that the
stipulation on behalf of third parties is the source of a contractual relationship
between insurer-promisor and insured-beneficiary? The Court of Cassation itself
moreover seems to be aware of this difficulty: isn't the negative turn it employs (22)
a sign that this direct contractual relationship is not a normal consequence attached
to the stipulation on behalf of third parties (23)? There is, in fact, no awkwardness or
contradiction. The stipulation on behalf of third parties is perfectly compatible with
the recognition of a contract between member and insurer, provided one wants to
admit the existence of an original figure of stipulation: the contract stipulation on
behalf of third parties.
B - Is enrollment in the group insurance contract the result of a contract stipulation
on behalf of third parties?
8 - The solution given in the Judgment of May 22, 2008 is not new, since the Court
of Cassation has had occasion to assert, in a Judgment dated June 7, 1989, that
"adherence to the group insurance contract, although a consequence of a stipulation
on behalf of third parties, nevertheless creates a direct contractual relationship

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between the member and the insurer" (24). The perseverance shown by the Court of
Cassation in this matter is not trivial. It demonstrates that, for the Court, there is no
inconsistency in claiming that the provision may result in a direct contractual
relationship and the negative formulation that it uses tends to emphasize the only
apparent nature of this contradiction: the insured's enrollment, even if it is the
consequence of a stipulation on behalf of third parties can well be the cause of a
contract between member and insurer.
9 - As was remarkably shown by one author, Mr. Martin (25), there is indeed, next to
the traditional forms of stipulation on behalf of third parties, an original figure of
stipulation: the contract stipulation on behalf of third parties. The promisor does not
promise to perform a service in favor of the beneficiary, but to enter a contract with
predetermined conditions with the beneficiary, if the latter so requests by accepting
the stipulation (26). The contract stipulation on behalf of third parties would thus be
close to a form of unilateral promise to contract, as the promisor already gives its
consent to the entering of a contract preconstituted towards the third party
beneficiary (27), who would benefit from a right of option exercised through the
power he has to accept or reject the stipulation subscribed to his advantage (28).
The stipulation on behalf of third parties would therefore not be in any way
incompatible with the creation of individual contracts in the promisor-beneficiaries
relationship and therefore not inconsistent with the existence of an obligation
incumbent on the beneficiary. This obligation would be simply the consequence of
the contract arising out of the acceptance by the beneficiary of the stipulation made
in his favor (29). The major advantage of this type of stipulation is the possibility for
the "beneficiaries to access, via the stipulator's bargaining power, contract terms
that they would not have received in isolation by individual and separate discussions
with the supplier or service provider concerned" (30).
This attractive construction must be somewhat amended in the case of borrowers
group insurance. It must be remembered that in this type of contract, the insurer
usually reserves the right to approve or not the members who contact it. It has not
therefore already committed to providing its coverage to all the members who so
request. The stipulation on behalf of third parties then has a somewhat more modest
purpose: the promisor undertakes to offer the member the coverage conditions it
has negotiated with the credit institution, in the event that it accepts the member
(31). Only if it has waived the right to select the risks will the real purpose of the
stipulation on behalf of third parties be the entering of an insurance contract. In
other words, either "the insurer has already committed to accommodate all the
seekers for the insurance" (32) and the direct right that the latter receive is "a right
of option to benefit, or not, from a promise of insurance" (33), or that "the insurer
has, more conventionally, reserved the right to individual select risks" (34) and the
members are empowered against it with the "right to have access to specifically
negotiated terms to their attention" (35). There will therefore, in the latter case,
once the insurer's approval is obtained, be a juxtaposition of the group contract,
bearing the stipulation on behalf of third parties, and an individual insurance contract
whose terms are largely derived from those laid down in the source contract.
10 - The stipulation would thus, in certain circumstances, constitute a "conventional
method of forming contracts on behalf of third parties" (36), which the First Civil
Chamber of the Court of Cassation clearly recognized in a Judgment of March 9,
1983 (37) The Court of Cassation thereby indeed approves the reasoning of the trial
court stating that "the stipulation on behalf of third parties (...) only conferred to the
member the power to conclude with the insurer a separate contract whose purpose

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(...) is a direct and reciprocal commitment of the parties." The ""enrollment
application" was [therefore] not an acceptance, but an insurance proposal
determining the purpose and conditions of the agreement to come (...)." The
analysis of group insurance adopted by the Court of Cassation in its annual report for
1986 also shows, in an underlying way, this figure of the contract stipulation on
behalf of third parties. In the words of the Court, group insurance is based "originally
on a stipulation on behalf of third parties, by which the promisor (the insurer)
undertakes to the underwriter to offer insurance to members in accordance with the
conditions established by them. But as of the enrollment in this proposal, a direct
contractual relationship is established between the member and the insurer" (38).
11 - It remains that the wording of the Judgment of May 22, 2008 is not entirely
clear. The Court of Cassation appears to have "remained halfway down the road
leading to the fragmented analysis of insurance" (39): it does not explicitly recognize
the existence of a contract between member and insurer, as it could have done in
other rulings (40), but only that of a direct contractual relationship of a bilateral
nature. Does this mean that there is, in its view, no real contract between member
and insurer, but only a relationship whose contractual nature results from the fact
that it arises from the contract between insurer and underwriter (41)? Yet it is
difficult to see what would be the consistency of such a contractual relationship
unless it is that of a contract between insurer and member (42). The Court also itself
emphasized, in its terms, the two key moments in the formation of this contract: the
enrollment by which the member proposes to the insurer to contract under the
conditions defined in the group contract, and the approval by which the insurer
accepts this offer. Thus, there is indeed an exchange of consent and the birth of an
insurance contract between insurer and member, which confirms the aforementioned
Judgment of March 9, 1983 and the Annual Report for 1986 described above.
The solution posed in the Judgment of May 22, 2008 deserves to be corrected on one
point: it is not enrollment that creates a direct relationship between member and
insurer, but the latter's approval. As the insurer has reserved the right to select the
risks, the coverage offered by it and the obligation to pay premiums, which is the
counterpart, can arise only from the consent given by the insurer in this approval.
12 - Recognition of a stipulation on behalf of third parties along with the insurance
contracts concluded between insurer and members is not in any way heresy, as we
have seen. One last point must, however, be considered: what is the purpose of this
stipulation on behalf of third parties? After all, if we assume that an individual
contract is formed between member and insurer, this contract is sufficient to explain
that the latter is bound towards each member to insure the risk under the contract:
the members-insured are simply parties to the insurance contract and may, as such,
require the provision of the service that was promised to them. There is no need for
it to use the mechanism of the stipulation on behalf of third parties. This is, in
reality, only a truncated view of group insurance that obscures some of the insurer's
commitments.
It should be understood, in fact, that the insurer is bound as of the conclusion of the
original contract to the credit agency and only the mechanism of the stipulation on
behalf of third parties helps to explain this requirement (43). The insurer's
commitment is, as we have seen, "less aggressive" (44) when he has reserved the
right to accept the members who present themselves to him. This does not mean
that it is non-existent. The insurer is bound by the coverage conditions in the
contract-support agreement with the credit institution and has only one alternative:

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concluding the insurance contract under those conditions, by approving the insured,
or not entering into it. It cannot offer a participant less favorable conditions than
those set in the original contract, and these conditions may involve the type of
pricing, as well as the coverage period, the nature of the insurable risks, or the
nature and extent of the benefits paid... Group insurance in effect allows the insurer
to achieve economies of scale, it authorizes granting members a reduction in the
amount of the premium that would be about 30% (45). Each member could
therefore, as a third party beneficiary, require the insurer-promisor to give him
access to the predetermined coverage conditions in the group contract.
The recognition of a stipulation on behalf of third parties has another advantage: it
allows to explain that the lender does not completely remove itself from the group
insurance scene after the conclusion of the initial contract. It may in fact require that
the insurer-promisor carry out towards policyholders the stipulation subscribed to
their advantage (46), which was indeed acknowledged in a Judgment of the Court of
Cassation of June 7, 1989 (47). The underwriter can thus get the insurer to offer to
any approved member the coverage conditions specified in the contract-support.
The qualification of the stipulation on behalf of third parties also carries another
consequence: the right of the stipulating credit institution to revoke the stipulation
created for the benefit of the borrowers-members, as long as they have not accepted
the stipulation by enrolling in the group contract. Three successive periods thus
succeed one another: before enrollment, the credit institution may withdraw the
right that members have available to them to access the terms negotiated on their
behalf; once a borrower has enrolled, this right is confirmed and becomes irrevocable
with regards to him: the member "benefits from an analysis of his risk on the basis
agreed to at the date of application, since [the insurer] can no longer, in principle,
change these conditions" (48); once approval is obtained, the insurance contract is
finally concluded, which results in the birth of the coverage. The insurer can no
longer change in the future the coverage offered to the insured (49), unless there is
a special provision authorizing it (50) or it has included in the contract a clause
allowing the revision under certain conditions (51).
It must finally be noted, in conclusion, that the juxtaposition of a stipulation on
behalf of third parties and individual insurance contracts can avoid some of the
disadvantages attached to the unitary concept of group insurance. Thus, the insurer
cannot enforce against the insured the compensation between the claim that this
insured holds against it for the payment of the insurance benefits and the claim it
holds against another insured who has not paid his insurance premiums (52). It also
cannot cancel all the individual insurance policies in the event of a disaster striking
one of the members, since there is not a single insurance policy but a multitude of
insurance contracts that are independent of one another (53).
The analysis of group insurance used in the Judgment of May 22, 2008 remains
hesitant, as we have seen. The Court of Cassation, however, has been much firmer
when it comes to affirming the application of Article L. 132-1 of the Consumer Code.
II - A Firm Application of Article L. 132-1 of the Consumer Code to the
Member-Insurer Relationship
13 - The debate concerning the legal nature of group insurance is far from sterile
(54). By basing itself on the structure of group insurance that has emerged, the First
Civil Chamber of the Court of Cassation is able to support the extension of Article L.

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132-1 of the Consumer Code to group insurance (A). The reasoning it employs,
including the reference to a direct contractual relationship of a bilateral nature, raises
questions about its possible influence on assumptions other than group insurance
(B).
A - The extension of Article L. 132-1 of the Consumer Code to group insurance
14 - The issue of the application of Article L. 132-1 of the Consumer Code is not new
and the First Civil Chamber of the Court of Cassation has already had to deal with it.
It has indeed admitted, in a Judgment of February 26, 2002 (55), that a group
insurance contract could be covered by the legislation on unreasonable clauses. But
it has made this application in such an underground manner, without ruling on the
specific structure of group insurance. The Judgment of May 22, 2008 confirms the
extension of Article L. 132-1 to group insurance. It does it this time in an open
manner and brings to the solution the theoretical justification that it was lacking.
Indeed, the Court clearly based itself on the legal analysis that it draws from the
relationships resulting from group insurance as the foundation for its decision.
It should be remembered, in this regard, that the application of the legislation on
unreasonable clauses closely depends on the legal nature that is assigned to group
insurance. It has been argued that, if we analyzed group insurance as a stipulation
on behalf of third parties taken out in favor of the member, Article L. 132-1 should
not be applicable (56). The scope of this article in effect is "contracts entered into
between professionals and non-professionals or consumers" (57). However, in the
unitary concept of group insurance, the insurance contract is concluded between the
insurer and the underwriter, who both qualify as professionals. Added to this is that
the member then does not have the capacity of a party to the contract that contains
the clause (58): The stipulation on behalf of third parties, in the unitary concept,
does not make him a contracting party and he cannot, as a third party, take action
to secure the elimination of such a clause (59).
If we admit, on the contrary, that each member is a party to an individual insurance
contract whose terms are derived from the original contract between insurer and
underwriter, Article L. 132-1 can be applied, provided of course that the member is a
consumer. The contract is indeed entered into between a professional (the insurer)
and a consumer and the member is a party, and not a third party, to the contract.
He may therefore indeed claim the protection of the law on unreasonable clauses,
provided that the insurance he has taken out does not cove r an occupational hazard
(60).
The Judgment of May 22, 2008 may, therefore, be surprising at first: it admits the
existence of a stipulation on behalf of third parties in favor of the member, but
disciplines the trial court for refusing to apply Article L. 132-1. This paradox is due in
reality, as we have seen, to the possibility of admitting the coexistence of a
stipulation on behalf of third parties - which is then a stipulation of a contract on
behalf of third parties - and of the fragmented concept of group insurance. Once it is
recognized that the stipulation can lead to a contract between insurer and member,
there is no obstacle to admit the application of the legislation on unreasonable
clauses to insurer-member relationships.
15 - This application, if it is legally sound, is also timely. One could certainly argue
that the coverage conditions written into the group contract were originally
negotiated between contracting parties of equal strength: the insurer and the
underwriter. We are in the situation that is opposite to that sometimes encountered

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in case law (61) where the contract was concluded between two consumers, but
negotiated with a professional agent for one of the two consumers, a situation where
some authors seek the application of the legislation on unreasonable clauses because
of the weakness of the unrepresented consumer (62). Here the contract was
concluded between a professional and a consumer but negotiated by two
professionals. Couldn't it therefore be argued that the underwriter was able to
defend the interests of its members and that they therefore do not deserve the
protection of Article L. 132-1? This analysis is not convincing. Negotiating for one's
self is not the same, first of all, as negotiating on behalf of a third party and it is not
certain that the lender will use the same care in protecting the interests of its
borrowers that it would have used to defend its own interests. It should be
remembered, moreover, that the member, as of the moment when he commits
himself, has no power to negotiate. The term used to designate his acceptance is, in
this respect, revealing: he adheres to the contents of a pre-constituted contract,
some of whose clauses will indeed often be beyond him. The member therefore
deserves to benefit from the protection of the law on unreasonable clauses. One last
argument can finally be put forward: the application of Article L. 132-1 of the
Consumer Code to group insurance is not contrary to the insurer's forecasts. The
latter is aware, when it negotiates the group contract, of the type of population and
type of risks that will be covered by the insurance it offers. It knows perfectly well in
advance that its coverage is for consumers who may, as such, avail themselves of
the legislation on unreasonable clauses. The situation therefore differs from that
encountered in the chains of transferring contracts in which the consumer, the final
beneficiary of the action for contractual liability that passed along the chain, can
have a clause in the original contract enforced against him without power to invoke
its abusive nature (63). Compliance with the original debtor's forecasts then calls for
the non-application of Article L. 132-1 if the contract originally entered into bound
together two professionals.
16 - The relativity of the penalty for the unreasonableness of the clause calls for
particular attention: the disputed clause shall be deemed unwritten in the single
contract binding the insurer to the member who has invoked Article L. 132-1: it is
indeed, in the words of the Court of Cassation, the provisions of the bilateral
contractual relationship established between insurer and which are member of this
text. The clause shall remain, however, in the group contract uniting the insurer to
the lender, as well as in all contracts between the insurer and the other members,
until they have been brought before the judge (64). This means that the disputed
clause will remain in future insurance contracts concluded by the new members. The
consumer associations, however, could act on the basis of Article L. 421-6 of the
Consumer Code, to demand the removal of this clause from the group contract,
when the latter will seek to cover non-occupational risks: the group contract can
then indeed be analyzed as containing a model contract offered to or intended for
consumers, within the meaning of that Article. Thus we see that an individual
insurance contract has some autonomy compared to a group contract: it will not
always be the perfect tracing for the predetermined stipulations in the latter, since
certain clauses in the contract originally provided in the group contract can be
eliminated because they are abusive, or even because they have not been brought to
the member's attention at the moment he expressed his consent to the contract by
enrolling (65). Similarly, the requirement attached to an individual insurance
contract is separate from that governing a group contract: the biennial requirement,
specific to an insurance contract, will only, in fact, be applied to the insurer-member
relationship, as a group contract cannot be classified as an insurance contract.

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The application of Article L. 132-1 to a group insurance contract is fully justified as
long as one wants to admit the existence of a contract concluded between insurer
and member. However, we have seen that the wording used by the Court of
Cassation was ambiguous and that it did not explicitly recognize the existence of
such a contract. We can therefore ask whether the Judgment of May 22, 2008 has a
broader scope.
B - The influence of Article L. 132-1 of the Consumer Code outside of group
insurance
17 - We can, first of all, examine the potential impact of the Judgment of May 22,
2008 on the stipulations on behalf of third parties that prosper outside of group
insurance. Can we grant the third party beneficiary the right to invoke the
unreasonableness of a clause that the promisor enforces against him? Everything
depends on the type of stipulation proposed. If the provision in question can be
regarded as a contract stipulation on behalf of third parties, because the promisor
has undertaken with a third party to enter into a contract whose conditions are
predetermined - or to consider this third party's application on the basis of these
conditions - there is no obstacle to accepting the application of Article L. 132-1,
when the third party beneficiary has the status of consumer: the contract arising
from the acceptance of the stipulation will then indeed be concluded between a
professional and a consumer, and the third party beneficiary shall be a party to that
contract. The solution resulting from the Judgment of May 22, 2008 is thus
potentially applicable to all the provisions on behalf of third parties with the
responsibility incumbent on the third party beneficiary.
If, on the other hand, the stipulation merely seeks to enforce a provision to the
benefit of a third party, it is no longer possible to apply the legislation on
unreasonable clauses. Under such an assumption, in effect, the obligation that is the
possible counterpart of the right offered to the third party beneficiary remains the
stipulator's responsibility - otherwise, the stipulation would be a contract stipulation
on behalf of third parties. There is, in the words of the Court of Cassation, no direct
contractual relationship of a bilateral nature between promisor and third-party
beneficiary, but a simple direct right to the latter's benefit. Moreover, this bilateral
nature is necessary for the application of Article L. 132-1, as the unreasonableness
of a clause requires the characterization of a "significant imbalance between the
parties' rights and obligations." Added to this is that the third party beneficiary is not
then a party to the contract between promisor and stipulator and cannot, as such,
demand the elimination of one of this contract's clauses. This has, for example, led
the Court of Appeal of Grenoble, in a Judgment of February 26, 2004 (66), to deny
the benefit of the provisions relating to unreasonable clauses to an officer who
benefited, for his second home, from a remote monitoring contract concluded by the
company to his benefit.
18 - It is, secondly, the wording used by the Court of Cassation that raises doubt.
We have seen that the Court expressly did not recognize the existence of a contract
between the insurer and the member, but only a direct contractual relationship of a
bilateral nature. Two interpretations of the Judgment are then possible: either the
contractual relationship of a bilateral nature is just another way to describe the
existence of a contract between insurer and member and the Judgment of May 22,
2008 would be limited to strictly enforcing the terms of Article L. 132-1, paragraph
1, of the Consumer Code (the contract has indeed been concluded between a
professional and a consumer), or the Court did not intend to recognize the conclusion

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of a contract between insurer and member and the Judgment of May 22, 2008 would
then be detached from the terms of Article L. 132-1 of the Consumer Code. For this
text to be applied, it would be sufficient that a contractual relationship of a bilateral
nature exist between a professional and a consumer, without that they have directly
entered into a contract. The solution would then extend beyond the scope of group
insurance to apply to other situations where the professional and the consumer have
not given their consent directly but are united by a contractual bond of a bilateral
nature. One would think, for example, of the case of the assignment of a contract in
which the assignor would have the capacity of a professional and the assignee that of
a consumer; the assignee could claim against the assignor the unreasonableness of a
clause, even if the assignor's consent cannot be analyzed as generating a new
contract (67). Transportation contracts could also be affected by this solution. We
know that Article L. 132-8 of the Commercial Code, as amended by the Act of
February 6, 1998, raised the recipient to the rank of a party to a transportation
contract (68) in the land transportation of freight (69). The contract was only
however initially concluded between the shipper and the carrier, and the consignee
was, subsequently incorporated into this contract when he joined it. The recipient, if
he has the capacity of consumer, could then take advantage of the abusive nature of
certain clauses against the carrier, since a direct contractual relationship of a
bilateral nature binds him to the latter.
The union, which has now been consummated, between group insurance and the
legislation on unreasonable clauses has not been without obstacles. It continues to
cause problems. But it carries in its womb, as we have seen, fruitful questions
concerning the mechanism of the stipulation on behalf of third parties. May it
continue to feed the debate among lawyers for a long time.
Key Words:
CONSUMER * Unfair Clause * Group Insurance * Member * Insurer * Direct
Contractual Relationship
(1) D. 2008. Jur. 1954, Note D. R. Martin; JCP G 2008. II. 10133, Note A. Seriaux,
and I. 179, No. 8, Obs. P. Grosser.
(2) It then moves to another area, automatically belonging to a violation of Art. L.
133-2 Cons. C. by the trial court: the clause that the insurer claimed to enforce
against the member was ambiguous and the appellate court should, in accordance
with the requirements of Art. L. 133-2, have chosen the meaning most favorable to
the insured-consumer.
(3) V. L. Mayaux, in J. Bigot, P. Baillot, J. Kullmann and L. Mayaux, Treaty on
Insurance Law, V. 4, Personal Insurance, LGDJ, 2007, No. 771 f., Pg. 619 f.; Y.
Lambert-Faivre and L. Leveneur, Insurance Law, Dalloz, 12th Ed., 2005, No. 917 fol.,
Pg. 776 s.
(4) In this sense, J. Kullmann, Basic Legal Rights in Group Insurance, RGDA 1998.
524 s.
(5) See on this point, J. Kullmann, in Personal Insurance, op. cit., No. 938 fol., Pg.
777 s.
(6) See on this point, L. Mayaux, Personal Insurance, op. cit., No. 785, Pg. 628 fol.

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(7) Another analysis was proposed by some authors: group insurance should be
treated as an insurance contract with bilateral effect concluded between the insurer
and the underwriter on the head of the members-insured (D. Veaux, J.-Cl. Civil Law,
Appendices, Insurance, Issue. 18, No. 10, C. J. Berr and H. Groutel, note under Civ.
1st, Dec. 15, 1978, D. 1979. Jur. 402, P. Malaurie, L. Aynès and P. Stoffel-Munck,
Bonds, Defrénois, 3rd Ed., 2007, No. 816, Pg. 431). Contra, J. Francois, Legal
Transactions conferring Three Party Status (stipulation on behalf of third parties and
delegation of claim), Thesis, Paris II, 1994, No. 174, Pg. 130.
(8) L. Mayaux, Personal Insurance, op. cit., No. 819, Pg. 655.
(9) Ibid., No. 824, Pg. 660.
(10) In this sense, Picard and Besson, General Treaty of Marine Insurance, t. IV,
LGDJ, 1945, No. 38.
(11) L. Mayaux, Personal Insurance, op. cit., No. 823, Pg. 658 s.
(12) For other criticisms raised against the qualification of stipulation on behalf of
third parties, See L. Mayaux, Personal Insurance, op. cit., No. 823, Pg. 658 s.
(13) Civ. 1st, Dec. 8, 1987, Bull. Civ. I, No. 343, RTD Civ. 1988. 532, Obs. J.
Mestre, D. 1989. Somm. 233, obs. J.-L. Aubert, G. Venandet, The Stipulation on
Behalf of Third Parties with Obligation accepted by the Third Party Beneficiary, JCP
1989. I. 3391. Already, in the same direction, Civ. 1st, November 21, 1978, D. 1980.
Jur. 309, Note C. Carreau; JCP 1980. II. 19315, note P. Rodière; Defrénois 1979.
1176, obs. J.-L. Aubert. Contra previously Civ. 3rd, April 10, 1973, D. 1974. Jur. 21,
Note C. Larroumet.
(14) See not. J. Ghestin, C. Jamin and M. Billiau, Civil Law Treaty, The Effects of a
Contract, LGDJ, 3rd Ed., 2001, No. 974, Pg. 1050 f.; C. Larroumet, The Obligations,
The Contract, 2nd Part, Effects, Economica, 6th Ed., 2007, No. 807 bis, Pg. 982 f.
(15) In this sense, F. Boucard, Legal Analysis of Group Insurance in Credit Matters,
RGDA 2002. 644 ff., spec. 647.
(16) In this sense, V. Bourdon, Distribution of Insurance by Associations,
Contribution to the Study of Group Insurance, LGDJ, 2002, No. 470, Pg. 233.
(17) V. Bourdon, prev. thesis, No. 498 f., Pg. 246 s.
(18) In this critique, See V. Bourdon, prev. thesis, No. 371 f., Pg. 184 f. He stressed
in particular that the underwriter will combine the capacity of the insurer's
contractual partner and the insurer's agent.
(19) Civ. 1st, November 14, 1995, D. 1996. Jur. 436, Note M. Billiau; Defrénois
1996. 750, Obs. P. Delebecque; RTD Civ. 1997. 122, Obs. J. Mestre; RGDA 1996.
410, Note J. Kullmann, March 31, 1998, 1998 RGDA. 700, Note J. Kullmann; H.
Groutel, The Borrower and the Starting Point of the Biennial Requirement: A New
Foundation, RCA 1998. Chron. 12, G. Courtieu, About Insurance related to a Loan:
Stipulation on Behalf of Third Parties or Assignment of Claim?, JCP 1998. Chron. 28,
P. Sargos, Setting the Starting Point of Limitation Periods in Insurance, JCP 1998. I.

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130, Civ. 1st, March 27, 2001, RGDA 2001. 355, Note J. Kullmann, March 5, 2002,
RGDA 2002. 442, Note J. Kullmann.
(20) See not., Civ. 1st, Dec. 5 1978, D. 1979. Jur. 401, Note C. J. Berr and H.
Groutel; June 7, 1989, 1989, Defrénois. 1989. 1057, Obs. J.-L. Aubert; H. Groutel,
The End of the Hostages, RCA 1989. Chron. 27. Adde Civ. 1st, Jan 20, 1993, RGAT
1993. 336, Note J. Kullmann.
(21) Civ. 1st Civ., March 9, 1983, RGAT 1983. 526, Nov. 13, 1996, 1997 RGDA.
221, Note L. Mayaux, RCA 1997. 109, Note G. Courtieu, November 25, 1997, Bull.
Civ. I, No. 324; RGDA 1997. 1066, Note J. Kullmann, who sees the credit institution
as "a third party in relation to an insurance contract binding the insurer to the
insured member" Civ. 1st Civ., March 2, 2004, RGDA 2004. 347, Note L. Mayaux.
Adde Civ. 2nd, March 18, 2004, RGDA 2004. 486. See also the cases that have
equated the credit institution to a third party on the question of the starting point of
the biennial limitation, when the cause of the insured's action against the insurer was
the appeal by a third party: Civ. 1st, Nov. 4, 1992, RGAT 1992. 837, Note J. Bigot;
RCA 1992. Chron. 3, H. Groutel, May 26, 1993, RCA 1993. 281, Obs. S. Bertolaso;
May 9, 1996, RGDA 1996. 615, Note J. Kullmann, and November 25, 1997, prev.
(22) "(...) enrollment in the group insurance contract, although the consequence of
a stipulation on behalf of third parties, nevertheless creates, between the member
and the insurer, who approves him, a direct contractual relationship of a bilateral
nature (...)."
(23) In this sense, V. Bourdon, prev. thesis, Note 79, Pg. 205. Adde H. Groutel, RCA
1989. chron. 27, Pg. 3.
(24) Civ. 1st, June 7, 1989, prev., Adde, Civ. 1st, Nov. 29, 1988, RGAT 1989. 400,
Note J.-L. Aubert.
(25) D. R. Martin, The Stipulation of a Contract on Behalf of Third Parties, D. 1994.
Chron. 145. Adde, from the same author, Change of Contracting Party, D. 2001.
Chron.. 3144; and prev. Note, D. 2008. Jur. 1954.
(26) D. R. Martin, prev. chron., D. 1994. 145.
(27) D. R. Martin, ibid.
(28) D. R. Martin, ibid., Pg. 146.
(29) D. R. Martin, ibid., Pg. 147.
(30) D. R. Martin, ibid., Pg. 145.
(31) In this sense, J. Kullmann, prev. Note, RGDA 1997. 1066, prev. Art., RGDA
1998. 526.
(32) V. Bourdon, prev. thesis, No. 407, Pg. 202.
(33) Ibid. Professor M. Picard had already foreseen this particular nature of group
insurance (in The Stipulation on behalf of Third Parties and its Main Applications,
Proceedings of the Association H. Capitant, V. II, 1952, Pg. 277). Contra, M.

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Tchendjou, Contemporary Applications of the Stipulation on behalf of Third Parties,
Thesis, Paris I, 1995, No. 432 s., Pg. 408 s.
(34) V. Bourdon, prev. thesis, No. 407, Pg. 202.
(35) Ibid.
(36) V. Bourdon, prev. thesis, No. 399, Pg. 199.
(37) RGAT 1983. 526.
(38) Report C. Cass. for 1986, RGAT 1987. 630 (emphasis added).
(39) L. Mayaux, Personal Insurance, op. cit., No. 888, Pg. 717.
(40) See the cases cited supra, Note 21.
(41) In this sense: J.-L. Aubert, prev. obs., Defrénois 1989. 1057.
(42) In this sense, H. Groutel, The End of the Hostages, RCA 1989. chron. 27, Pg. 3,
L. Mayaux, Personal Insurance, op. cit., No. 888, Pg. 717, D. R. Martin, prev. note D.
2008. Jur. 1954.
(43) This is the reason why some authors prefer the qualification of the contract
stipulation on behalf of third parties to that of double brokerage concerning
referencing contracts in distribution (M. Behar-Touchais and G. Virassamy, Treaty of
Contracts, Distribution Contracts, LGDJ, 1999, No. 1451, Pg. 795 f.): it alone can
explain that suppliers are already committed with regards to members concerning
the purchasing terms negotiated by central purchasing.
(44) V. Bourdon, prev. thesis, No. 407, Pg. 202.
(45) J. Kullmann, News of Group Insurance for Borrowers, LPA, June 17, 1998. 45,
spec. Pg. 49.
(46) It is well known, in fact, that the stipulator can bring against the promisor an
action to carry out the stipulation on behalf of third parties in respect of the
beneficiary. See not. Civ. 1st, July 12. 1956, D. 1956. Jur. 749, Note Radou.
(47) Prev.
(48) See Bourdon, prev. thesis, No. 421, Pg. 208. In contrast, if the insurer has
waived selecting the risks, enrollment gives birth to the insurance contract and to
the related coverage.
(49) In this sense, Civ. 1st, December 15, 1978, prev.
(50) This is true of Art. L. C. 141-4 Insur. C.: Indeed, this law makes subsequent
amendments to the group contract binding on members without their consent.
Specifically, the member has a choice: remain in the group while suffering the
amendment or leave the group by renouncing his enrollment. The text does not
apply, however, to group insurance whose purpose is to guarantee repayment of
loans that are governed by special laws.

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(51) This would involve a clause by which the member would agree, in advance,
that subsequent amendments to the group contract agreed to between insurer and
underwriter are applicable to him. See on this issue, V. Bourdon, prev. thesis, No.
431 f., Pg. 213 f.
(52) In this sense, Civ. 1st, June 7, 1989, prev.
(53) Contrary to what the Court of Cassation held (Civ. 1st, Jan. 20, 1993, prev.,
which admits that the occurence of a loss with respect to one member authorizes the
termination of the group contract in its entirety).
(54) In this sense, L. Mayaux, Personal Insurance, op. cit., No. 817, Pg. 654.
(55) Bull. Civ. I, No. 71; Defrénois 2002. 771, Obs. E. Saval; RGDA 2002. 351, Note
J. Kullmann; RTD civ. 2003. 90, Obs. J. Mestre and B. Fages; D. 2002. AJ. 1346.
(56) See on this issue, J. Kullmann, Unreasonable Clauses and Insurance Contracts,
RGAT 1996. 33; Personal Insurance, op. cit., No. 955, Pg. 786 f.; M. Bruschi, The
Elimination of Unreasonable Clauses in Insurance Contracts, in Liability and
Insurance, Studies offered to Hubert Groutel, Litec, 2006, Pg. 73; L. Mayaux,
Personal Insurance, op. cit., No. 809, Pg. 645 f.
(57) Emphasis added.
(58) In this sense, J. Ghestin, C. Jamin and M. Billiau, The Effects of the Agreement,
op. cit., No. 719, Pg. 760 f.
(59) In this sense, C. Larroumet, Three Person Legal Transactions, Thesis,
Bordeaux, 1968, Nos. 161 and 171. Rappr. E. Gaudemet, General Theory of
Obligations, Sirey, 1965, Pg. 254.
(60) This has probably led a ruling by the Court of Cassation of May 15, 2008 (Civ.
2nd, No. 07-14430) to refuse to apply the legislation on unreasonable clauses to
borrowers group insurance contracts.
(61) See not. Civ. 1st, May 4, 1999, Defrénois 1999. 1004, Obs. D. Mazeaud;
Contracts, conc., Consum. 1999, No. 124, Note L. Leveneur, and No. 134, Note G.
Raymond; D. 2000. Summ. 48, Obs. J.-P. Pizzio; JCP 1999. II. 10205, Note G.
Paisant, and E 1999. II. 1827, Note C. Jamin, RTD Civ. 2000. 107, Obs. J. Mestre
and B. Fages, who declared inadmissible an action by consumer associations for the
removal of certain clauses from the act, because the contract was not concluded
between a professional and a consumer.
(62) Contrary to what the Court of Cassation decided in the judgment mentioned
above, See not. D. Mazeaud, prev. Note; G. Paisant, prev. Note, J.-P. Pizzio, Obs.
prev., J. Calais-Auloy, F. Steinmetz, Consumer Law, Dalloz, 7th Ed., 2006, No. 1781.
(63) Rappr. Civ. 1st, June 7, 1995, JCP 1995. I. 3893, Obs. G. Viney, Contracts,
Conc., Consumers. 1995, No. 159, Obs. L. Leveneur; D. 1996. Jur. 395, Note D.
Mazeaud, and Summ. 14, Obs. O. Tournafond; RDI 1996. 74, Obs. P. Malinvaud and
B. Boubli; RTD Com. 1996. 74, Obs. B. Bouloc, who decides that the manufacturer of

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the thing sold has the right to enforce against the sub-purchaser exercising a
contractual action every defense that he is entitled to enforce against his own cocontracting party. The ruling does not directly address the application of the
legislation on unreasonable clauses to chains of contracts, but it can be inferred that
the sub-purchaser-consumer should not be able to take advantage of the
unreasonableness of a clause against the manufacturer-professional, since the
latter's co-contracting party was himself a professional.
(64) The clause could also exist in contracts in which the member has the status of
professional. But it is unlikely that some group members are consumers and others
are professionals. Members, in group insurance, must indeed be bound to the
underwriter by a relationship of the same nature.
(65) In this sense, Civ. 2nd, March 18, 2004, prev.
(66) Com. Ch., Juris-Data No. 2004-251959. The Court of Appeal decides that the
officer, who only had the capacity of third party to the contract, could not invoke the
provisions of Art. L. 132-1 Consum. C. because these are reserved solely for the
contracting consumer, the only legal entity that entered into the contract who is
entitled to claim the application of this law.
(67) In this discussion, See not. F. Terré, P. Simler, Y. Lequette, The Obligations,
Dalloz, 9th Ed., 2005, No. 1310 s., Pg. 1247 f.; J. Ghestin, C. Jamin and M. Billiau,
The Effects of the Agreement, op. cit., No. 1053, Pg. 1138 f.; P. Malaurie, L. Aynès
and P. Stoffel-Munck, The Obligations, op. cit., No. 917 f., Pg. 487 f.; J. Carbonnier,
Civil Law, V. 4, The Obligations, PUF, 22nd Ed., 2000, No. 324, Pg. 573 f.; M. FabreMagnan, The Obligations, PUF, 2004, No. 181, Pg. 480 f.
(68) Art. L. C. 132-8 Com. C.: "The waybill forms a contract between the shipper,
the carrier and the recipient or between the consignor, consignee, forwarder and the
carrier." See not. on this point P. Delebecque, Article L. 132-8 (former Article 101) of
the Commercial Code, Studies offered to B. Mercadal, Francis Lefebvre, 2002, Pg.
443; from the same author, The Recipient of the Goods: Third Party to the
Transportation Contract?, Dalloz Business 1995 189, concerning the situation of the
recipient before the Law of Feb. 6. 1998; F. Collart Dutilleul, P. Delebecque, Civil and
Commercial Contracts, Dalloz, 8th Ed., 2007, No. 774, Pg. 698; C. Paulin,
Transportation Law, Litec, 2005, No. 435, Pg. 225.
(69) Art. L. 132-8 Com. C. is specifically limited to domestic land transportation and
to international road transportation. These provisions should be extended to air
transportation in accordance with Art. L. C. 321-1 Aviat. C. (P. Delebecque, Article L.
132-8 (former Article 101) of the Commercial Code, Prev. Art., Pg. 446).

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