Latest news on contract law

In October, the Cour de cassation handed down several important rulings on contractual practice:

  • Termination: no requirement of formal notice if notice is in vain

In a ruling handed down on October 18, 2023, the Commercial Chamber of the Cour de cassation reiterated that unilateral termination of a contract may be requested without prior formal notice when circumstances show that such notice would have been futile. This is the case when the defaulting debtor’s behavior is “so serious as to make it manifestly impossible to continue the contractual relationship“.

In this case, the manager of the company to which the termination was opposed had “made insulting and contemptuous remarks about one of the contractor’s employees“, “calling into question his ability to carry out” the contract, and had given “direct orders to one [of their employees] without informing his superiors“, which “made it impossible to carry out the work under acceptable conditions and justified the withdrawal of their teams“.

The Cour de cassation ruled that, given the “context of extreme pressure and of a break in relations, [the service provider] was not in a position to continue its intervention“, and exempted the instigator of the unilateral termination from the requirement of prior formal notice.

Alongside urgency, as provided for in article 1226 of the French Civil Code, this is another exception to the requirement of prior formal notice.

Com., 18 October 2023, n° 20-21.579

  • Professional practice: between professionals and third parties

In another ruling handed down on October 4, 2023, the Commercial Chamber of the Cour de cassation specified that the practices (usages) developed by a profession are intended to govern relations not only between its members, but also with persons outside the profession, provided it is established that the latter were aware of and accepted said practices. In this case, the professional practice in force in the framework industry was that a lump-sum indemnity is payable in the event of cancellation of an order.

Com., 4 October 2023, n° 22-15.685

  • Hidden defects: enforcement of a contractual provision excluding this warranty

In a recent ruling handed down on October 19, 2023, the Cour de cassation clarified that the seller of a building who has himself carried out work on his property (sometimes referred to in doctrine as a “beaver”) is assimilated to a professional seller, and as such cannot rely on a contractual provision excluding the warranty for the hidden defects which he is presumed to have knowledge of.

In this case, a company had sold a house to an individual, who complained of defects and sued the company for compensation under the warranty for latent defects. The seller argued that the deed of sale contained a clause excluding any warranty against latent defects.

Considering that “the SCI had itself carried out the work causing the defects affecting the property sold“, the Cour de cassation ruled that its knowledge of the defect was presumed, so that the benefit of the exclusion clause could not be applied.

Civ. 3e, 19 October 2023, n° 22-15.536




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