Business Contracts


Like agents, principals must perform agency agreements in good faith. 
This obligation, which has its origins in case law, is rooted in the principle of good faith enshrined in Article 1104, paragraph 1 of the Civil Code, which states that “contracts must be negotiated, formed and performed in good faith” . The duty of loyalty requires the principal to put the agent in a position to perform the c …

Obligation of loyalty and cooperation

Like agents, principals must perform agency agreements in good faith. 

This obligation, which has its origins in case law, is rooted in the principle of good faith enshrined in Article 1104, paragraph 1 of the Civil Code, which states that “contracts must be negotiated, formed and performed in good faith” . The duty of loyalty requires the principal to put the agent in a position to perform the contract properly . Thus, according to the Court of Cassation, the principal must take the concrete measures necessary to enable the sales agent to charge competitive prices, when he is informed of the difficulties encountered by the latter, due to parallel sales . The courts also consider that the principal has a duty of cooperation under the contractual obligation of good faith . 

The principal must not, by his action or omission, behave in such a way as to render the agent's performance of his mission ineffective. The manager of an undertaking is guilty of fraudulent non-disclosure with regard to the agent he has instructed to seek financial partners with a view to acquiring a stake in the company, when he conceals from the agent his extremely serious criminal record, which, had it been known to the agent, would have prevented him from entering into the contract, since knowledge of it would have rendered the acceptance of any stake in the undertaking implausible . A principal who entrusts a non-exclusive buyer-seeking agency agreement to a real estate agent is under an obligation not to conclude the sale with a potential buyer presented by the agent without notifying the agent . On the other hand, an agent entrusted with such an assignment is not entitled to reproach his principal for not having informed him that he had been put in contact with a potential buyer by another intermediary, since in the absence of an exclusivity clause, the principal's obligation to provide information under such an agency agreement is limited to the elements necessary for its proper implementation . 

A lump-sum indemnity may be contractually specified to sanction any breach by the principal of his obligation of loyalty and cooperation. For example, a post-contractual penalty clause in the event of i) a sale without the agent's assistance and without notifying him, ii) a sale to a buyer who has been informed of the sale of the property through the agent, or iii) refusal to sell to a buyer who has been introduced to the agent by the seller, should be applied when the principal has sold the property to a buyer introduced by the agent, less than two years after the expiry of his standard sales mandate, and without notifying him .

CA Douai, 10 November 2022, LawLex202300009041JBJ.

Cass. com. 24 November 1998, LawLex200200005154JB.

CA Nîmes, 7 March 2013, LawLex202300009039JBJ.

Cass. com, 7 February 2012, LawLex202300013598JBJ.

CA Douai, 10 November 2022, LawLex202300009041JBJ, holding that the intermediary, entrusted with a non-exclusive agency agreement to find a buyer, is not entitled to reproach the principal for having breached his duty of loyalty by ignoring the e-mails in which he introduced him to a potential buyer without identifying the buyer by name, who eventually turned out to be the final purchaser, insofar as he does not provide proof of having received the e-mails, which the principal refutes, and insofar as it is not disputed that the e-mails in question do not identify the purchaser by name.

CA Nîmes, 7 March 2013, LawLex202300009039JBJ. Cf. CA Douai, 10 November 2022, LawLex202300009041JBJ, ruling that the penalty clause stipulated in the event of the principal dealing directly or indirectly during the period of validity of the agency agreement or within twelve months of its expiry with a potential buyer presented by the agent, could not be enforced since the e-mails sent by the agent to the principal, even if he had received them, did not enable the latter to identify the potential purchaser and, consequently, to contact him directly in order to proceed with the sale of the shares, without going through the agent's intermediary.

Business Contracts

490. Obligation of loyalty and cooperation

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

490. Obligation of loyalty and cooperation

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise