FRANCE: Abrupt terminations of commercial relationships: insufficiency of results, redeployment of the victim, prolongation of the notice period.

Didier FERRIER | FRANCE | 2013-10-15

Didier FERRIER

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French Supreme Court, Commercial Chamber, 9 July 2013, Case no. 12-21.001

French Supreme Court, Commercial Chamber, 9 July 2013, Case no. 12-20.468

French Supreme Court, Commercial Chamber, 11 June 2013, Case no. 12-21.424

In the first of the above-captioned cases, the Supreme Court ruled that an appellate court could not deny a claim for compensation under Article L. 442-6(I)(5) of the Commercial Code simply on the basis of a contract clause allowing the principal to revoke an agency agreement without compensation if the agent failed to attain at least 80% of the annual target of a given year (in the case at hand, he had only realized 40 or 60% of the targets), without ‘any finding that [the agent] had committed a material breach of his contractual obligations justifying termination of the commercial relationship without notice.’

In the second case, the Supreme Court noted that ‘the appropriate length of the notice period is to be assessed by taking into account the duration of the commercial relationship and the other circumstances present at the time the notice of termination was sent,’ such that an appellate court cannot deny a compensation claim under Article L. 442-6(I)(5) of the Commercial Code simply because the victim had immediately found a new job ‘under terms and conditions that were [not] unfavorable.’

In the third case, the Supreme Court approved an appellate court for having taken into account ‘the length of the notice period actually implemented and not that initially indicated in the notice,’ such that the terminating party could not be held liable for having given its business partner insufficient notice after a 23-year relationship, since the 12-month notice initially granted had been prolonged by 4 months with the business partner’s consent.

 

 

Didier Ferrier, agency, distribution and franchising Country Expert for France.

 

 

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