Article L.442-1 of the French Commercial Code says: Any person engaged in production, distribution or service activities who abruptly terminates, even partially, an established commercial relationship in the absence of written notice which takes into account, in particular, the duration of the commercial relationship, with reference to trade practices or interprofessional agreements, shall see their responsibility engaged and be obliged to repair the damages caused.
This Article gives a few indications on how to benefit from it.
First, every established commercial relationship enters into the scope of application of this Article. All economic activities are concerned since it can be commercial activities, industrial relations or intellectual services and the commercial relationship can be the supply of a product or of a service.¹
Secondly, regarding the nature of the relationship, it must be an established relationship, whether pre-contractual, contractual, or post-contractual and the contract can be for a defined or indefinite period.
Finally, the breakdown of the commercial relationship may be total or partial, but it must be unpredictable, sudden and violent with insufficient written notice.² The written notice has to take into account, for example, the length of the commercial relationship, the field concerned or the state of economic dependence. However, the provisions above do not preclude the possibility to terminate the relationship without notice in the event of non-performance of the contract by the other party or in the event of force majeure.³
On a private international law level, an action for compensation based on a brutal termination of a long-established commercial relationship can be a matter of tort. However, the Court of Justice of the European Union (CJEU)⁴ recalled that Article 5(3) of the Brussels I Regulation (Article 7(2) of the Brussels I Bis Regulation) must be interpreted as meaning that an action for damages founded on an abrupt termination of a long-standing business relationship is not a matter relating to tort, delict or quasi-delict within the meaning of that regulation if a tacit contractual relationship existed between the parties, a matter which is for the referring court to ascertain. The demonstration of the existence of the tacit contractual relationship must be based on a body of consistent evidence, such as the existence of a long-standing business relationship, the good faith between the parties or the regularity of the transactions and their development over time expressed in terms of quantity and value.
When the dispute has no foreign element, it seems that the French Supreme Court bases the nature of the liability on tort law.⁵ Also, it states that the principle of non-accumulation between contractual and tort liability only prohibits the creditor of a contractual obligation from relying on the rules of tort liability against the debtor of that obligation. However, it does not prohibit the submission of a separate application based on Article L. 442-6, I, 5°, of the Commercial Code (former article) which seeks compensation for damages resulting not from a breach of contract but from an abrupt termination of an established commercial relation.⁶
¹ Brutal rupture of commercial relationships, Guidance notes, Dalloz, June 2021.
³ French Commercial Code, art. L. 442-1, II.
⁴ Court of Justice of the European Union, Granarolo, July 14, 2016, C-196/15.
⁵ Cour de Cassation, commercial chamber, 4 October 2011, 10-20.240.
⁶ Cour de Cassation, commercial chamber, 24 October 2018, n°17-25.672.
The victim will be able to obtain compensation for the damage caused by the abrupt nature of the termination but not for the damage resulting from the termination itself.
If there is a choice of jurisdiction clause, it does not matter whether the action is in tort or in contract, only the broad and comprehensive nature of the clause should be taken into account.⁷ However, jurisdictional clause must be compatible with articles D 442-3 and D 442-4 of the Commercial Code attributing exclusive jurisdictional power to certain courts to rule in the case of such an action.⁸ Also, an international jurisdictional clause drafted in such a way that it is applicable to any dispute arising out of the contractual relationship applies to an action for brutal breach of established commercial relationships.⁹
Concerning the applicable law, the Rome I Regulation is applicable when it is a contractual matter, and the Rome II Regulation is applicable when it is a tortuous matter.
When those two Regulations are not applicable, the French Supreme Court decided that the law of the State where the harmful event occurred applies,¹⁰ which represents the place where the event giving rise to the damage occurred and the place where the damage was sustained (if it is not the same). Therefore, French law applies when the activity of the author of the brutal rupture is located in France.¹¹
⁷ Court of Cassation, commercial chamber, 20 March 2012, n°11-11.570.
⁸ Court of Cassation, commercial chamber, 1rst March 2017, n° 15-22.675.
⁹ Court of Cassation, commercial chamber, 18 January 2017, n° 15-26.105.
¹⁰ Court of Cassation, commercial chamber, 21 October 2008, n°07-12.336.
¹¹ Court of Cassation, commercial chamber, 20 May 2014, n° 12-26.705.