Business Contracts

Prior to the reform of contract law, former Article 1183 of the Civil Code  was interpreted to the effect that rescission entailed the retroactive destruction of the contract . The Court of Cassation held that the effect of rescinding a contract for services was to nullify it, and restore the parties to the state they had previously been in, with the sole exception of actual impossibility, so that …

Effects

Prior to the reform of contract law, former Article 1183 of the Civil Code  was interpreted to the effect that rescission entailed the retroactive destruction of the contract . The Court of Cassation held that the effect of rescinding a contract for services was to nullify it, and restore the parties to the state they had previously been in, with the sole exception of actual impossibility, so that when the contract's inadequate performance made it impossible to return the supplies, the deposit paid had to be returned without consideration .

Since retroactivity in respect of rescission was abandoned under the reform, Articles 1229 and 1230 now specify the consequences of rescission, thus filling the gaps left by the Civil Code, which previously only sanctioned contractual non-performance by awarding damages .

Article 1229 of the Civil Code first stipulates that “rescission brings the contract to an end”, irrespective of how it is to be implemented, with the proviso that “rescission does not affect the terms relating to the resolution of disputes, nor those intended to take effect even in the event of rescission, such as confidentiality and non-compete clauses” (Art. 1230).

Secondly, by fixing the date on which rescission takes effect, “as the case may be, either under the conditions provided for in the resolutory clause, or on the date of receipt by the debtor of the notice served by the creditor, or on the date fixed by the court or, failing that, on the date of the writ of summons”, the new text no longer gives retroactive effect to rescission. Lastly, it separates the question of refunds, which become a simple legal effect, from retroactivity, by stipulating: “When the services exchanged could only be of value through the full performance of the rescinded contract, the parties must make full restitution of what they have procured from each other . Where the services exchanged were rendered useful in the course of the mutual performance of the contract, there is no right to a refund for the period prior to the last service not received in return; in this case, the rescission is qualified as a cancellation (résiliation) . Restitution is made in application of the conditions set out in Articles 1352 to 1352-9”.

When the creditor seeks rescission of the contract, he waives his right to claim performance of the obligation, and the damages awarded to him serve to compensate for the loss that remains despite the declaration of rescission of the contract .

Former Art. 1183, Civil Code: "A resolutive condition is one which, when fulfilled, brings about the revocation of the obligation, and restores things to the same state as if the obligation had not existed.

It does not suspend performance of the obligation; it merely obliges the creditor to return what he has received, in the event that the contingency provided for by the condition occurs".

See in this respect: CA Besançon, 3 October 2007, LawLex202200006736JBJ, holding that when a bilateral contract is terminated for failure by one of the parties to perform their obligations, the situation must be restored to the same state as if the obligations arising from the contract had never existed, such that the price which the contractor is obliged to return after termination of the contract for services can only be construed as the sum he has received, with interest where applicable, and without prejudice to the court's right to also award damages.

Cass. 3e civ, 12 March 2003, LawLex202200004122JBJ.

Civil Code, former Art. 1146: “Damages are due only when the debtor is in default of fulfilling his obligation, except nonetheless when the thing which the debtor was obliged to provide or to do could only be provided or done within a certain period of time which he has allowed to elapse. Formal notice may be given by means of an ordinary letter, if sufficient notice is given”.

CA Paris, 13 May 2022, LawLex202400007562JBJ.

CA Douai, 19 September 2024, LawLex202400006906JBJ.

CA Rennes, 12 September 2024, LawLex202400007557JBJ.

Business Contracts

330. Effects

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330. Effects

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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