Must an IT service provider always inform its client? When the failure to advise justifies rescission of the contract

An IT service provider's duty to inform and advise its client is a fundamental principle of contract law. This duty enables the client to make an informed decision before entering into the contract, ensuring that the product or service offered genuinely meets its expectations. In the context of software supply contracts, this requirement is particularly important given the complexity of the technical solutions offered. However, what happens when the provider fails to comply with this duty and the software delivered does not meet the client's expectations for want of clear information? This is precisely the question raised by a recent decision of the Douai Court of Appeal of 17 October 2024 no. 23/01696, which led to the rescission of a contract on the ground of mistake, owing to a failure by the provider to provide sufficient information.

In this article, we will analyse the scope of this decision, setting out the legal framework surrounding the duty of IT providers to inform and advise, as well as the consequences of a breach of this duty that may justify rescission of the contract.

The IT provider's duty to inform: a fundamental contractual obligation

When an IT provider offers a software solution, it has a duty to inform its client about the software's features, its functionalities and its limitations. The duty to inform does not concern only the pre-contractual phase but extends throughout the entire duration of the contractual relationship, including during performance of the contract. This duty to advise requires the provider to take all necessary steps to ensure that its client is fully informed of what the offer includes, of its technical specifications, and of any further adaptations or developments to be anticipated.

In the case decided by the Douai Court of Appeal, a company wished to acquire commercial and accounting management software, including a CRM. Believing that the solution offered would be turnkey, the client signed a contract with an IT provider. However, once the software had been installed, the client learned that additional configuration and development work was required to meet its needs, and that further costs would be necessary to carry out those adjustments. Caught off guard by this situation, the client refused to pay these additional costs, and it was in this context that the provider brought the matter before the courts, demanding payment of the sums owed.

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The central question: had the client been properly informed?

The crucial question raised by this case was whether the client had been sufficiently informed of the limitations of the software solution, in particular of the need for additional configuration or development work. For the judges, it was clear that the IT provider had breached its duty to inform, notably by failing to state, before the contract was signed, that modifications would be necessary for the software to meet the client's expectations.

In law, this duty rests on a fundamental principle: the IT provider, as a professional, is required to give its client all the information necessary to enable the latter to make an informed decision. In this case, it appears that the client, a company specialising in the installation of thermal equipment, was unable to appreciate the technical complexity of the product offered, and legitimately believed that the software would be operational as soon as it was installed. Yet the provider's duty was to inform the client that specific developments would be necessary to ensure the proper functioning of the software, which it failed to do.

The client's mistake: a defect in consent justifying rescission of the contract

Article 1130 of the French Civil Code provides that a mistake may give rise to nullity of the contract where it bears on an essential element that determined the consent of the person who contracted. In this case, the client signed the contract believing that the software offered fully met its needs. This mistake was legitimate, since the client did not have the technical skills required to assess the specific features of the software. Moreover, the IT provider did not draw the client's attention to the fact that adjustments were essential for the software to function properly.

The court held that this mistake was excusable in light of the circumstances. The IT provider had not taken all necessary steps to ensure that the client properly understood the solution it was purchasing. Moreover, the contractual documents did not expressly state that developments would be necessary to make the software work. This vitiated the client's consent, justifying rescission of the contract.

The duty to inform and its limits

The duty to inform and advise does not, however, extend without limit. The client also has a role to play in this contractual relationship. Indeed, for the provider to be able to inform the client properly, the client must provide it with precise specifications setting out its actual needs. Case law has thus held that the provider's duty to advise may be reduced where the client is sufficiently competent on technical matters or where the latter fails to specify certain elements essential to the design of the project. However, in this case, the Court of Appeal considered that the client, although it had not provided detailed specifications, could reasonably believe that the software solution was complete and suited to its needs.

The provider's argument that the absence of detailed specifications could exonerate it from its duty to inform was rejected by the court. As a professional, the IT provider should have ensured that the client properly understood the limitations of the product offered. It was also incumbent on the provider to inform the client of the possibility of additional developments if the solution offered did not fully correspond to the client's expectations.

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Rescission of the contract and its consequences

Rescission of the contract gives rise to mutual restitution between the parties. By virtue of the nullity of the contract for mistake, the client is released from its payment obligation. It therefore does not have to pay the sums claimed by the provider for the performance of the services. Conversely, the provider must refund the amount received for the installation of the software, since the contract is legally deemed never to have taken place.

Although the client claimed damages, the court dismissed this claim for lack of sufficient evidence as to the existence of a loss distinct from the nullity of the contract.

Lessons to be drawn from this decision

This decision highlights several key lessons for IT providers, whether they are IT services companies (SSII) or digital services companies (ESN). First, they must take care to properly understand the client's needs before entering into the contract. Even if the client does not provide detailed specifications, the provider must ensure that the solution offered genuinely matches the expectations expressed and must be entirely transparent about the software's limitations.

Next, the provider's commercial proposal must be clear and comprehensive, specifying, where applicable, whether specific developments will be necessary to meet the client's needs. In the event of a breach of this duty to inform, the provider exposes itself to rescission of the contract for mistake and to the restitution of the sums received.

In conclusion, this case is a reminder that an IT provider's duty to inform and advise is not limited to the pre-contractual phase but extends throughout the entire duration of the contractual relationship. The provider must inform its client transparently and comprehensively about the solution offered, failing which it risks having the contract rescinded in the event of a failure to inform. For any question relating to software law or digital law, do not hesitate to seek legal advice to assist you!