Business Contracts

Revocation is governed by Articles 2004 to 2006  of the Civil Code. 
1) Notion of revocation ad nutum (at free will)
Article 2004 of the Civil Code stipulates that “the principal may revoke his power of attorney at any time and, if necessary, compel the agent to return to him either the private instrument containing it, or the original of the power of attorney, if it has been issued under patent,  …

Revocation of agency agreement

Revocation is governed by Articles 2004 to 2006  of the Civil Code. 

1) Notion of revocation ad nutum (at free will)

Article 2004 of the Civil Code stipulates that “the principal may revoke his power of attorney at any time and, if necessary, compel the agent to return to him either the private instrument containing it, or the original of the power of attorney, if it has been issued under patent, or a copy thereof, if a record of it has been kept”. Postulating that the agency agreement, conceived as a “friendly” service, is based on trust and that it is concluded in the sole interest of the principal, this law establishes the principle of the free revocability of the power of attorney by the principal. Where trust is no longer present, the principal is authorized to revoke his agent “whenever he sees fit”, without having to justify himself, thus exercising his right of revocation “ad nutum”. According to the Court of Cassation, revocation ad nutum is understood to be a decision to terminate a contract without having to specify the reasons . The revocation of an agency agreement may of course be justified by the agent's failure to meet his or her obligations  . But when the very reason for maintaining the agency agreement has ceased to exist, revocation is justified, even in the absence of fault on the part of the agent . A validly lodged objection thus entails immediate revocation of the agency agreement entrusted to the banker by the account holder . Similarly, in the absence of any stipulation to the contrary, termination of the leasing agreement puts an end to the agency agreement given by the lessor to the lessee for the exercise of the right of action in warranty against the supplier . Moreover, the stipulation of a duration to the agency agreement does not prevent the exercise of the right of revocation ad nutum . 

In the case of an agency agreement that can be revoked ad nutum, the principal may be held liable if his right of revocation has been misused . In this case, it is up to the agent to prove that the principal has abused the right of revocation and caused harm to the agent, for which the principal is liable . As the Court of Cassation recently reiterated, under Article 2004 of the Civil Code, an agency agreement may be revoked by the principal at any time and without the need to specify the grounds for such revocation. Abuse in the exercise of this right of revocation can only be upheld if the person alleging it proves the principal's malicious intent or recklessness  which may be linked to vexatious, untimely  or sudden circumstances . The revocation of an agent resulting solely from the principal's erratic behavior is abusive . A principal who suddenly terminated the agency agreement, even though he had expressed his full satisfaction with the agent's action by increasing his remuneration, and the agent had carried out his duties with great diligence until the proposed termination of the lease, which he had effectively negotiated, could be finalized, thereby obtaining his remuneration, abused his right of revocation . Similarly, where a principal, having entrusted a real estate agent with an exclusive agency agreement for a certain period in return for a commission, revokes the agreement at the end of that period and then concludes the sale with the buyer proposed by the agent, the principal is required to compensate the agent for the harm resulting from the fraudulent agreement with the third party, with the aim of evading payment of the commission . According to the Court of Cassation, the conditions for revocation of the agency agreement must be assessed as of the date on which the revocation occurred, and the trial courts are not required to take into consideration factors subsequent to this date .

In principle, revocation at the principal's discretion does not entail compensation. Consequently, the courts have ruled that, in the absence of any abuse by the principal of his right of revocation , the agent is not entitled to claim compensation if the revocation of the agency agreement was made for legitimate reasons, when it was not exercised in a sudden or vexatious manner, and if notice was given before the effective date. In the same vein, when the principal decides to dispossess one of his lawyers who, because of his age, seems to him to be the least available, and his decision does not imply any reproach towards his agent, the revocation of the agency agreement, which was neither untimely nor abusive, cannot give rise to compensation, since under the terms of Article 2004 of the Civil Code, the principal is free to revoke the agency agreement at any time, provided that he does not commit an abuse of right . The same applies to the revocation of a property manager’s agency agreement, where the latter has committed a series of faults and professional breaches in the management of the co-ownership, such as account misallocation errors or a two-month delay in sending the minutes of the general meetings .

In practice, the principle of revocation ad nutum without compensation is subject to a number of exceptions. Apart from abuse of the right of revocation, which entitles the agent to claim compensation, and excluding the special case of common interest mandates, which are not freely revocable and can only be revoked without compensation by mutual consent of the parties or for a legitimate reason recognized by a court of law , the parties may have stipulated an irrevocability clause, which contrary to its name, does not exclude the principle of revocation, but the fact that it takes place without compensation. According to case law, as the provisions of article 2004 of the Civil Code are suppletive, the stipulation of an indemnity in the event of revocation of the agency agreement represents no more than the price of the unilateral termination option, without any requirement of non-performance, so that it does not have the character of a penalty clause . To be valid, an irrevocability clause must be express and cannot result simply from the stipulation of exclusivity or the special nature of the representation . However, the courts exclude the application of such a clause, and hence the contractual indemnity, when the revocation of the agency agreement is made necessary by a breach attributable to the agent  without this constituting serious misconduct (faute grave) . According to the Court of Cassation, the agency agreement, even if irrevocable, does not deprive the principal of the right to abandon the transaction, so that revocation of the agency agreement produces all its effects, subject to the principal's liability to the agent . The courts have also ruled that if a penalty clause has been included in the agreement, the revocation of the agency agreement, even if irrevocable, renders it ineffective .  

Article 2005 specifies that “revocation notified to the agent alone cannot be enforced against third parties who have acted in ignorance of such revocation, except for the principal's remedy against the agent”. Consequently, a court of appeal cannot decide that a principal is not bound by a settlement agreement concluded by his agent, after revocation of the agency agreement, on the grounds that it was up to the third party to ensure that the agent had the power to negotiate a settlement from the principal, even though it found that the third party had not been informed of the revocation .

In this respect, it is up to the principal to establish that the third party who dealt with his agent was informed of the revocation of the authority . Furthermore, revocation of the agency agreement is enforceable against the agent only on the day when the latter became aware of the principal's intention, and not on the day when that intention was expressed . Consequently, the principal must assume all obligations resulting from acts concluded by the agent, in his name, before the revocation of the agency takes effect . Where the principal places restrictions on the powers previously granted to the agent, this constitutes a partial revocation of the agency, which, in accordance with Article 2004 of the Civil Code, may take place at the principal's discretion, so that the restrictions are binding on the agent as soon as they have been formulated, without having to be accepted by the latter , even if the latter has the option of withdrawing from the agency agreement thus modified . Furthermore, an agency agreement between several undivided co-owners cannot be revoked by one of them without the agreement of the others, unless otherwise agreed .

Article 2006, which does not give rise to any litigation, stipulates that if a new agent is appointed for the same case, the first agent is revoked with effect from the date of notification.

Cass. com. 7 July 1992, LawLex202300014140JBJ.

Cass. 1st civ. 28 January 2003, LawLex202200008696JBJ; Cass. com. 11 March 2014, LawLex202300014149JBJ; Cass. 2e civ. 10 November 2021, LawLex202300014150JBJ. 

Cass. 1re civ. 11 December 1973, LawLex202300014139JBJ.

Cass. com. 11 March 2014, LawLex202300014149JBJ. Cf. Cass. 2e civ., 10 November 2021, LawLex202300014150JBJ: in the absence of a situation of economic dependence, the lawyer, whose agency has been revoked without the termination being characterized as sudden, cannot claim compensation, in the absence of abuse of right on the part of his principal.

Cass. 1re civ, 22 June 1976,LawLex202300014157JBJ.

Cass. 1re civ, 28 January 2003, LawLex202200008696JBJ.

Cass. 1re civ, 2 May 1984, LawLex202200008831JBJ.

CA Versailles, ch. civ., 16 October 2024, No 22/01202, LawLex202400007955JBJ; CA Paris, 7 February 2024, LawLex202400001143JBJ.

Cass. com, 11 October 2005, LawLex200500009780JBJ. The case law recognizes as legitimate grounds for revocation of an agency agreement in the common interest, the need for the principal to reorganize his undertaking (Cass. com, 13 November 1969, LawLex200200004834JBJ), a serious ethical violation on the part of the agent, coupled with a repeated breach of the obligation to render accounts (CA Paris, January 31, 2003, LawLex200300002326JBJ), or the agent's inadequate performance, well below acceptable standards (Cass. com., 17 March 1987, LawLex200004831JBJ). On the other hand, a principal cannot dismiss an agent of a common interest mandate without committing abuse, after having required heavy investments from the agent (Cass. com., 18 January 2000, LawLex200004849JBJ).

Cass. 1re civ, 23 May 1979, LawLex202300014156JBJ.

Cass. 1re civ, 6 March 2001, LawLex202300014155JBJ.

Cass. 1re civ, 11 March 1963, LawLex202300014158JBJ, stating that under Article 2004 of the Civil Code, the principal may revoke the power of attorney whenever he sees fit, so that a court of appeal cannot hold that an undertaking may not revoke the exclusive agency agreement for the sale of apartments that it has entrusted to two real estate agents, on the grounds that certain agency agreements are considered irrevocable by virtue of their special nature, and that this is the case in the case of an exclusivity agreement, without investigating whether, in the case in point, the parties had agreed that the principal could not, of his own free will, withdraw the exclusivity of the transactions from his agent.

Cass. 1re civ., 23 May 1979, LawLex202300014156JBJ, stating that even if the parties are free to stipulate that the agency agreement cannot be revoked without the agent receiving compensation, this derogation from the principle laid down in Article 2004 of the Civil Code does not apply where revocation of the agency agreement is necessitated by a fault attributable to the agent, so that in this case the principal is no longer bound to the agent by the promise of compensation.

Cass. 1re civ., 6 March 2001, LawLex202300014155JBJ, stating that when the revocation of the agency agreement is justified by a breach by the agent without constituting serious misconduct,  the agent is not entitled to the contractual indemnity.

Cass. 1st civil, 5 February 2002, LawLex202200008479JBJ.

Cass. 1re civ. 30 May 2006, LawLex202200008468JBJ, holding that an agency agreement, even if irrevocable, to find a buyer for the sale of a property does not deprive the principal of the right to renounce the transaction, so that the resulting revocation of the agency agreement deprives the penalty clause in it of effect.

Cass. 3e civ, 10 January 1984, LawLex202200008692JBJ.

Cass. com, 17 June 1997, LawLex202200008691JBJ.

Cass. 3e civ, 28 February 1984, LawLex202200008464JBJ.

Cass. 1re civ. 8 November 1994, LawLex202200008853JB.

Cass. com, 21 December 1981, LawLex202300007958JBJ.

Cass. 1re civ, 8 January 1968, LawLex202300014142JBJ.

Cass. 1re civ, 25 February 2010, LawLex202200008738JBJ.

Cass. 1re civ, 17 July 1973, LawLex202300014143JBJ.

Cass. com. 20 June 1977, LawLex202300014152JB.

Cass. com. 11 July 2006, LawLex200600001985JBJ.

Cass. 3e civ, 27 April 1988, LawLex202200009666JBJ, holding that despite the stipulation of a specific duration, an agency agreement may be revoked at any time.

Cass. 1re civ, 11 December 1973, LawLex202300014139JBJ.

Cass. 1re civ, 14 March 1984, LawLex202200008598JBJ.

Cass. com, 4 October 2023, LawLex202300012139JBJ.

Business Contracts

508. Revocation of agency agreement

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

508. Revocation of agency agreement

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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