Business Contracts

According to settled case law, prior agreement on the cost of work or the exact amount of remuneration is not an essential element of a contract for services . This principle, taken up by the preliminary draft of the law on special contracts, which states that “a contract for services is validly formed without prior agreement on the price”  , was recently reiterated by the Court of Cassation in a  …

Optional price setting

According to settled case law, prior agreement on the cost of work or the exact amount of remuneration is not an essential element of a contract for services . This principle, taken up by the preliminary draft of the law on special contracts, which states that “a contract for services is validly formed without prior agreement on the price”  , was recently reiterated by the Court of Cassation in a ruling dated 19 January 2022 . Furthermore, as a contract for services is not subject to any particular requirement in terms of formalities, the fact that no price has been agreed at the time of its conclusion does not constitute grounds for invalidity, let alone for being declared non-existent . A contract for services is formed when the parties reach an agreement as to its subject matter, so that the price can be determined at a later date, after the work has been completed . Payment for work carried out by the contractor may validly consist of a promise by the project owner to pay the contractor, by way of remuneration, half of the sale price of the business to which the work relates . The parties may also agree to set a flat-rate price . In this way, the formation of a contract for services between two companies is characterized by exchanges of correspondence attesting to their agreement to build a real-estate program for a lump sum of EUR 6 million exclusive of tax .

In the absence of prior agreement between the parties on the exact amount of the payment, it is up to the trial court to determine it on the basis of the facts of the case, subject to its sole discretion . The judge's decision is based on the justifications provided, the particular circumstances of the case  or objective factors, such as market prices . This is the case in the absence of a fixed amount for an architect's fees or reference to an official scale , when it is not clear from the correspondence exchanged between the parties that the service provider had agreed to collaborate on the project free of charge during the tendering phase, or that it had been agreed to make his remuneration subject to the suspensive condition of concluding a subcontract , or in the event of disagreement between the parties .

New Article 1165, paragraph 1, of the Civil Code, resulting from the reform of contract law, has not taken up this case law, which allowed the price to be set by the courts.  This article now lays down the principle that “in all contracts for the provision of services, in the absence of agreement between the parties prior to their performance, the price may be fixed by the creditor, who must give reasons for the amount in the event of a dispute”. It has thus been held that the principles of the parties’ freedom to determine their agreement and the binding force of the contract preclude review by the courts of the price agreed between the parties on the grounds of one party’s dissatisfaction arising after the conclusion and normal performance of the contract, in accordance with the provisions of Article 1165 as amended of the Civil Code, since the parties to a contract remain free to propose and accept a high, even excessive, price for services, provided their consent is free and informed in light of the applicable legal provisions . However, according to the Court of Cassation, this text is not applicable to services provided by a chartered accountant, who, according to Article 151 of Decree 2 of 30 March 2012 on the exercise of the activity of chartered accountant, must draw up a written agreement with the client defining the assignment and specifying the rights and obligations of each of the parties .

Paragraph 2 of Article 1165 further provides that in the event of abuse in the unilateral fixation of this price, the court has the power to award damages to the injured party and, if necessary, to order the rescission of the contract.

The drafters of the preliminary draft reform of the law of special contracts are in favor of abolishing the option of unilateral determination of the price provided for in Article 1165, paragraph 1, with a view to reintroducing the principle of judicial determination of the price. It therefore provides that “in the absence of an agreement on the price, the court shall fix it "on the basis of the quality of the work performed, the legitimate expectations of the parties, usage and any other relevant factor” .

Article 1762 of the preliminary draft also stipulates that “when the price is in the nature of a fee and was agreed before completion of the work, the court may, notwithstanding any clause to the contrary, reduce the amount if it considers it excessive in relation to the work carried out” .

Cass. 1re civ. 15 June 1973, LawLex202200003844JBJ; 24 November 1993, LawLex202200003660JBJ; Cass. 3e civ. 18 January 1977, LawLex202200008827JBJ; 19 January 2022, LawLex202200003661JBJ; Cass. com. 28 November 2000, LawLex202200000806JBJ; 31 January 2006, LawLex202200008829JBJ.

Preliminary draft reform of the law on special contracts, Art. 1760 para. 1.

Cass. com, 28 November 2000, LawLex202200000806JBJ; CA Rennes, 11 January 2018, LawLex202200008828JBJ, stating that notwithstanding the fact that a prior agreement on the exact amount of remuneration is not an essential element of the contrat de louage d'ouvrage (works and services), the cost of the work covered by the contract for services must be determined by a sovereign assessment of the objective elements drawn from the prices prevailing on the market, since the estimates produced in the legal arguments cannot, in the absence of the project owner's approval and signature, be considered as documentary evidence.

Cass. 3e civ, 3 December 1970, LawLex202200004205JBJ.

CA Paris, 5 September 2007, LawLex202200004260JBJ.

CA Riom, 27 April 2021, LawLex202200008830JBJ. See also CA Caen, 29 January 2008, LawLex202200004254JBJ, noting that in the absence of a prior agreement on the exact amount of the remuneration, it is up to the trial court to set the remuneration taking into account the facts of the case, if there is a serious dispute.

CA Bourges, 18 January 2024, LawLex202400001367JBJ.

Cass. com. 20 September 2023, LawLex202300012684JBJ.

Preliminary draft reform of special contract law, Art. 1760 paragraph 2.

Article 1762, paragraph 2, states that “This is not the case when the fees have been paid after completion of the work, in full knowledge of the work carried out”.

Cass. 3e civ, 19 January 2022, LawLex202200003661JBJ, holding that prior agreement on the exact amount of remuneration is not a condition for the formation of a contract for works (louage d'ouvrage).

CA Paris, 30 June 2010, LawLex202200004200JBJ, upholding the contractor's claim for payment where the disputed work was carried out in accordance with the client's request, and the figures given in the work description are consistent with the various items detailed and the prices usually charged.

CA Riom, 27 April 2021, LawLex202200008830JBJ.

Cass. 1re civ., 20 February 1996, LawLex202200003663JBJ, further specifying that (former) article 1129 of the Civil Code is not applicable to the determination of price in the case of a contract for undertaking services. See, in the same vein, Cass. com. 29 January 1991, LawLex202200002066JBJ, stating that in contracts not involving an obligation to give, prior agreement on the exact amount of remuneration is not an essential element in the formation of such contracts.

The draft law on special contracts codifies this practice in Article 1761, excluding (as is logical) the application of the regime of unforeseeability: “The parties may agree on a fixed price, in which case Article 1195 does not apply”.

CA Grenoble, 8 July 2021, LawLex202200004283JBJ.

Cass. 3e civ, 3 December 1970, LawLex202200004205JBJ; 15 June 1973, LawLex202200003844JBJ.

Cass. 1st civ. 15 June 1973, LawLex202200003844JBJ; 15 November 1993, LawLex202200003660JBJ; Cass. com. 28 November 2000, 2000, LawLex202200000806JBJ.

Business Contracts

292. Optional price setting

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

292. Optional price setting

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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