French Contract Law
NAMSA Meeting
Thibault Verbiest
[email protected]
Pascal Reynaud
[email protected]
Identify the main clauses
The link between theory and practice
Not exhaustive !
– Civil Code on Internet in English:
– Books :
• Barry Nicholas, The French Law of Contract, 2nd ed, Clarendon Press
Oxford, 2002.
• - John Bell, Sophie Boyron and Simon Whittaker, Principles of
French Law, Oxford University Press, 1998, pp. 304-353.
• - David Pollard, Sourcebook on French law, Cavendish Publishing
Limited, 1998,
Characteristics of french law
• French law : law of the book and primacy of
– Universally valid
– Decisions of courts : merely an application of the law
• Common law : created by courts
– Provide solutions for individual disputes
• French court system
– TGI, Cour d’appel, Cour de cassation
– Many other courts : T.I, tribunal de commerce,
prud’homme etc…
Part. I - Theory of contract
Part. II -The formation process
Part. III- Structure of contract
Part. IV - Economy of contract
Part. V - Standard clauses
Part. 1 - Theory of contract
• Freedom of contract : formation and
– Autonomy of the will
• Formation
– Parties are free to enter into a contract and to
determine its contents, subject to the
requirements of good faith and fair dealing, and
the mandatory rules
Effect of the contract
• Art. 1134: effect towards parties
– Agreements lawfully entered into take the place of the
law for those who have made them.
– They may be revoked only by mutual consent, or for
causes authorized by law
– They must be performed in good faith.
• Art. 1165: effect towards third party
– Agreements produce effect only between the
contracting parties;
– they do not harm a third party,
– and they benefit him only in the case one stipulate for
the benefit of a third party .
Art. 1156
contract is to be interpreted according to the
common intention of the parties even if this
differs from the literal meaning of the
Decline of the free common
• Examples
• Art. 1244-1 : A judge may, defer or spread out the payment
of sums due, taking into account the debtor's position and
in consideration of the creditor's needs
• Art. 1152 :the judge may "even of his own motion"
moderate or increase the agreed penalty clause.
• Contract between professionals and consumers :
Classifications of the civil
• Contract “synallagmatic” Art. 1102
– A contract is synallagmatic or bilateral where
the contracting parties bind themselves
mutually towards each other.
• Contract unilateral Art. 1103
– It is unilateral where one person is bound
towards one, without any obligation on the part
of the latter.
– Gift
Other classifications
• A contract of benevolence Art. 1105 / A contract
for value art. 1106
• Contracts with a specific denomination or not
– Contract of sale : art. 1582-1701 / Know-how
• Contract with / without intuitus personae
• Contract for an indefinite period / with a fixedterm / instantaneous
• And many others…
Part. 2 - The formation process
• Plan
– Offer and acceptance in French law
– Offer and acceptance in electronic commerce
– Pre contractual obligation to negotiate in
good faith
– Example of contractual and not contractual
– Nullities in french law
Offer and acceptance in
French law
Offer or invitation to treat ?
The consent of the parties : art. 1108
Offer must be :
1. Precise : essentials elements of the contract
2. Firm : without reservations
– Contract of sale : agreement on thing and price
– start talks
– parties are not bound
Liability for breaking off
• Negotiations contrary to good faith :
liability (art.1382)
Advanced stage of the negotiations
The legitimate belief of the other party
Brutal and unilateral way
Legitimate reasons
• Breach of confidentiality : information
given in the course of the negotiation
Revocation of an offer
• However, a revocation of an offer is
ineffective if:
– the offer indicates that it is irrevocable;
– or it states a fixed time for its acceptance;
– or it was reasonable for the offeree to rely on
the offer as being irrevocable and the offeree
has acted in reliance on the offer.
• Must be without reservations otherwise it’s an new
• Silence is not acceptance except in specials
– Business relationship and same contract as before
• Specials rules for consumers :
– Period of time before acceptance
– to withdraw his order to buy
Formation :
offer & acceptance
• A contract is concluded if:
– the parties intend to be legally bound, and
– they reach a sufficient agreement
– without any further requirement.
• Time of Conclusion of the Contract : the “remote” contract
1. the acceptance has been dispatched by the offeree
2. the acceptance reaches the offeror
– Choice of the first theory by the supreme court (1981)
– “Suppletive” rule
Offer in electronic commerce
• Art. 1369-4, 1369-5, 1369-6
• Information to be provided
– contract terms and general conditions in a way that allows storage
and reproduction
– an offer is not revoked until it is no more accessible
– the different technical steps to follow to conclude the contract
– the language etc…
• Contract is concluded when :
– the acceptor can check his order and can correct errors
– the offeror has acknowledge the receipt of the recipient’s
– the order and the acknowledgement of receipt are received when
the parties to whom they are addressed are able to access them.
• Exceptions for e commerce by e-mail
Example of contractual and
not contractual documents
– Agreement in principle and draft agreement
• Good faith negotiations
– Preference pact
• For a determinate party
• A right of pre-emption
– Promise
• Unilateral : often compensation for immobilization
• Bilateral : A promise of sale is the same as a sale, where there
is reciprocal consent of both parties as to the thing and the
price (art. 1589)
Nullities in french law
• Contract can be void for
– Error on the substantial (material) quality or on the person (art.
• The other party knew or ought to have known that the mistaken party,
had it known the truth, would not have entered the contract or would
have done so only on fundamentally different terms.
• Mistake must be excusable
• Mistake as to facts or law
• action for annulment : 5 years from the day when it is discovered. Art
– Deception : art.1116
– Duress : art. 1111
• Liability in damages
“Recours en garantie”
• Contract of sale
• For the seller : duty to warrant against latent
• If the buyer had known, he didn’t buy
– Rescision
– Reduction of the price
• Must be brought in short time
Part. III- Structure of contract
• Plan:
– Content, right and duties
– Non-Performance of Obligations
Content, right and duties
• Who?
• What ?
Who? Representation?
Several signatories?
Role of each others ?
Intuitus personae clause?
Subcontracting clause?
Transfer of the contract to an other party?
Binding change of partners in some special
• The common intention of the parties : who is
doing what?
• What are the contractual engagements ?
• In case of invitation to tender : do not be engaged
before checking all the services included…
• Main and additional object of the contract
• What are the duties of the beneficiary of the
contract ?
• The practical details of the operation : delivery …
• For IT project :
– Project specification
– Obligations, I.P, maintenance, bankruptcy, security
• Outsourcing and reversibility
– Organize the return towards the company
• Material, software , know-how and I.P., cost …
– Length, obligations of the parties
The issue of price
• Contract of enterprise, job contract
– Determination of price can be made subsequently and based on
elements unknown at the time of the conclusion (working hours…)
• Contract of sale
– Determination by a third person. art. 1592
– Determined by reference to a factor independent of the parties :
Market price of the day, etc. …
• Frame contract
– the absence of a fixed or ascertainable price in an initial frame
contract does not affect the validity of the frame contract.
– But excessive prices may lead to the rescinding of the contract or
to the award of damages ( C. Cass. 1er déc. 1995)
Obligation to inform
• The client must inform the service provider
– At the beginning of the process
– In case of change of his project specification
• Cassation court, 8.7.2003
• Appeal court, Nîmes : 14.12.2004
• The service provider must inform the client
– Internal computer department and obligation to inform
of the provider : Cassation court, 6.5.2003 :
– Information at the delivery : Appeal Court Rouen,
Interpretation of the contract
• Tribunal de commerce 24.3.2004
– In case of doubt, an agreement shall be
interpreted against offeror, and in favour of the
one who has contracted the obligation
Interpretation of the contract
• Appeal Court, Paris : 2.11.2004
• Standard Comprehensive insurance for
office automation (bureautic) does not cover
the loss of the data
The Non-Performance
of obligations
• Remedies
Liability : conditions of claims damages
Forced performance
Right to Withhold Performance
Right to Terminate the Contract : claim
Conditions of the liability
• Non-performance of the obligation
– reasonable care / achieve the result
• Force majeure Art. 1148
A party's non-performance is excused if it proves that it
– is due to an impediment beyond its control and that
• Due to an external cause
– it could not reasonably have been expected to take the impediment
into account at the time of the conclusion of the contract, or to
have avoided or overcome the impediment or its consequences.
• The fault of aggrieved party excused totally or partly the
party's non-performance
Obligation to achieve the result
• Appeal Court, Paris 29.6.2004
• Contract on development, maintenance and
delivery of a software
• Obligation to deliver the system in good
operating condition
The Non-performance of
obligations to do or not to do
• Art. 1142
Any obligation to do or not to do
resolves itself into damages, in case of nonperformance on the part of the debtor.
• The judge can not forced a party to do the
obligation, only to pay “astreinte”
Penalty clauses
Art. 1226 : A penalty is a clause by which a person,
in order to ensure performance of an agreement,
binds himself to something in case of nonperformance.
Art. 1152, al 2 : Nevertheless, the judge may "even
of his own motion" moderate or increase the
agreed penalty, where it is obviously excessive or
ridiculously low. Any stipulation to the contrary
shall be deemed unwritten.
Limitation of liability
Art. 1150 :
• A debtor is liable only for damages which
were foreseen or which could have been
foreseen at the time of the contract,
– Unforeseen damages are excluded
• where it is not through his own intentional
breach that the obligation is not fulfilled.
Clause limiting liability
• Validity in principle but :
• If the obligation unperformed is an essential
one, a clause limiting liability may be held
ineffective although the breach itself is not
deliberate or gross
Right to Withhold
• A party who is to perform simultaneously with or after the
other party may withhold performance until the other has
tendered performance or has performed.
• The first party may withhold the whole of its performance
or a part of it as may be reasonable in the circumstances.
• A party may similarly withhold performance for as long as
it is clear that there will be a non-performance by the other
party when the other party's performance becomes due.
Forced performance
• Direct forced performance: obligation to
pay the price / seizure
• Indirect forced performance: imposition of a
periodic penalty (astreinte)
• (L. 9 juillet. 1991 art. 31 à 37)
Right to Terminate the
• In principle, termination must be applied for in
– Art. 1184 al 3
• Non judicial termination
– Fixed-term contract
– Intuitus personae contract
– Resolutory clause with or without notice of
– if the other party's non-performance is fundamental.
Part. IV - Economy of contract
• Assignment of claims (art. 1689 et ss. Only
for a civil person)
• Simplified mode of assignment in
commercial law
• No assignment of debts
Part. V - Standard clauses
Title, preamble, heading, number of copies
Meaning of terms and interpretation clauses
Divisibility of the contract : partial avoidance ?
Link between contracts
List of contractual documents ?
Prior statement, undertakings or agreements :
part of the contract ?
Other clauses relating to
• Change of circumstances :
– performance more onerous or excessively more
– Bound to enter into negotiations for the parties
• Confidentiality of information
– given during and after the term of the contract
• Intellectual property and know-how
– Licensing ?
Other clauses relating to
• Professional common standard
– INternational COmmercial TERMS
• Linguistic Discrepancies
– Two or more language versions
– Which one is stated to be authoritative ?
• Performance by a third person
– Contract require personal performance ?
– Assent of the party ?
• Non competition clauses
In case of judiciary procedure
• Choice of the law :
– Convention on the law applicable to contractual
obligations : Rome Convention 19 June 1980
• Choice of jurisdiction
– Council Regulation n° 44/2001, of 22 December 2000
on jurisdiction and the recognition and enforcement
of judgments in civil and commercial matters
• Arbitration
Thank you

French Contract Law