Business Contracts

Prior to the reform of contract law, the Civil Code did not consider the right to withold performance (exception d'inexécution) or exceptio non adimpleti contractus (defense of refusal to perform) as a general remedy for the non-performance of contracts. Although already widely applied by case law , this exception was only included in the Civil Code in texts governing certain contracts, such as Ar …

Right to withold performance

Prior to the reform of contract law, the Civil Code did not consider the right to withold performance (exception d'inexécution) or exceptio non adimpleti contractus (defense of refusal to perform) as a general remedy for the non-performance of contracts. Although already widely applied by case law , this exception was only included in the Civil Code in texts governing certain contracts, such as Articles 1612  and 1653  of the Civil Code for sales. The exception of non-performance, now enshrined in Article 1219 of the Civil Code , allows a contracting party to voluntarily suspend performance of his obligations until he has received the performance due to him, without prior formal notice . Thus, in the case of a sale, the purchaser may plead the defense of non-performance against the seller by refraining from paying the price, if the latter fails to perform his obligation to deliver the goods . Similarly, the seller may refrain from delivering the goods until the buyer has paid the price .

The non-performance exception presupposes two conditions: reciprocal obligations, and the existence of a prior or simultaneous non-performance. 

With regard to the connection between obligations, the Court of Cassation considers that the obligations arising from the contract of sale are reciprocal and interdependent . This relationship may exist even in the presence of two separate contracts . Conversely, if the obligations are not sufficiently linked, there can be no non-performance exception.

With regard to the question of the debtor's non-performance, Article 1219 of the Civil Code stipulates that this must be sufficiently serious . There must be a reasonable balance between the unfulfilled obligation and the obligation suspended by the creditor . In its ex post review, the court assesses whether the non-performance is serious enough to suspend performance of the contract. Thus, a minor failure to perform does not entitle the creditor to raise a plea of non-performance. Furthermore, case law and the wording of Article 1217, which refers to “the party towards whom the undertaking has not been performed, or has been performed impartially”, equate poor or insufficient performance with contractual non-performance. The buyer may thus raise the exceptio non adimpleti contractus when the seller fails to comply with his obligation to deliver in conformity  or when the thing sold is subject to a latent defect . Moreover, contractual non-performance may be only partial  . For example, the buyer may raise a plea of non-performance and refuse to pay the seller if the latter fails to deliver an element that cannot be separated from the computer system sold .

However, this principle is limited by Article 1220 of the Civil Code , which enshrines the defense of  witholding performance, also known as the exception for risk of non-performance (exception pour risque d'inexécution), allowing the creditor to invoke the non-performance defense if it is clear that the debtor will not be performing his or her obligations.  In this case, future non-performance must entail sufficiently serious consequences to justify suspension of performance, and the other party must be notified as soon as possible. The exception for risk of non-performance is also specifically provided for in sales contracts by Article 1653 of the Civil Code. The text provides that the buyer may suspend payment of the price if he fears a mortgage claim or to establish ownership . Article 71 of the Vienna Convention on Contracts for the International Sale of Goods also provides that a contracting party may suspend performance of its obligations where it becomes apparent, after conclusion of the contract, that the other party will fail to perform a substantial part of its obligations . 

Whether the non-performance is anticipatory or manifest, the exception of non-performance leads to the suspension of performance of the contract. However, this does not mean that the contract is cancelled  , even if the non-performance continues. If the suspended obligation is the provision of a thing, the risks are not transferred to the other party .  According to the Court, the imposition of sanctions for non-performance of a contract does not preclude the application of the exception of non-performance . However, the exception of non-performance cannot be invoked if the contract has already been dissolved by a termination clause applied by the other party .

Cass. com. 27 January 1970, LawLex202200003513JBJ, noting that in a complex agreement involving reciprocal obligations, one party is entitled to invoke the right to withold performance when the other has not performed any of its obligations.

Art. 1612, Civil Code: “The seller is not bound to deliver the thing, if the buyer does not pay the price, and the seller has not granted him a time limit for payment”.

Cass. com. 16 July 1980, LawLex202200003252JBJ, requiring non-performance of sufficient gravity to release the buyer from his corresponding obligations.

Cass. com, 15 December 1992, LawLex202200000254JBJ. See Also see CA Toulouse, 3 April 2019, LawLex201900000474JBJ: since the flooring delivered to implement a storage facility did not conform to the order, as it was not suitable for bulk use and very quickly became deformed, the buyer is entitled to raise the non-performance plea.

CA Nancy, 15 June 2022, LawLex202300009851JBJ.

Cass. com. 31 May 1983, LawLex202300003729JBJ, noting that an undertaking may use the non-performance exception against its seller and suspend performance of the contract pursuant to which it was only to acquire cheeses of good quality, since some of the products delivered were not of the agreed quality, and the seller was therefore in breach of its obligations.

Cass. 1re civ. 19 November 1996, LawLex200500008706JBJ, adding on the other hand that the buyer's obligation to pay the full purchase price can only arise from the seller's full performance of his obligation to deliver.

Art. 1220, Civil Code: “A party may suspend performance of his obligation where it is clear that his co-contractor will not perform when due, and where the consequences of such non-performance are sufficiently serious for him. This suspension must be notified as soon as possible”.

Cass. 3e civ, 26 May 1992, LawLex202300003833JBJ, specifying that the right to suspend payment of the sale price, in application of Article 1653 of the Civil Code, may not be exercised by the buyer who has not enabled the seller to exercise the option, recognized by that article, to cease or to provide security, but has made real offers of payment after receipt of a formal demand for payment.

Cass. com. 20 February  2007, LawLex200700000345JBJ: in accordance with Article 71 of the Vienna Convention of 11 April 1980 on the International Sale of Goods, applicable to sales contracts concluded under a framework distribution agreement, anticpatory breach (exception d'inexécution) may be invoked against requests for delivery made, during the notice of termination, by a distributor who has experienced numerous payment incidents in the past.

Cass. com. 3 December 1979, LawLex202300009859JBJ.

In principle, the buyer acquires ownership of the thing sold and bears the risks arising from it solo consensu, i.e. by the mere exchange of consent, as soon as the contract of sale is concluded, independently of delivery, which merely constitutes the physical act of making it available. 

Art. 1653, Civil Code: “If the buyer is concerned or has just cause to fear being troubled by an action, whether for a mortgage foreclosure or a claim to establish ownership, he may suspend payment of the price until the seller has put an end to the trouble, unless he prefers to give a guarantee, or unless it has been stipulated that, notwithstanding the difficulty, the buyer shall pay”.

Cass. 3e civ. 14 February 2019, LawLex202300004851JBJ: a court of appeal cannot order the seller of a building in a future state of completion to compensate the purchaser for late delivery, on the grounds that the stipulation of contractual penalties for late delivery prevents the seller from raising the exception of non-performance against the purchaser's late payments, in order to suspend performance.

Cass. 3e civ, 18 January 2006, LawLex202200003505JBJ: a court of appeal cannot reject the seller's claim for payment for an apartment in a future state of completion, on the grounds that the purchaser's non-performance is serious, in view of the bailiff's report, which notes the lack of completion, defects and non-conformities, that the purchaser had initiated proceedings on the merits, seeking the seller's contractual liability, and had sequestered the sum claimed, even though the court did not investigate whether, within the one-month time-limit set by the payment order, the purchaser had requested suspension of the effects of the automatic termination clause. See also. Cass. 3e civ, 28 January 2015, LawLex202200003489JBJ: The purchaser of an apartment, a parking lot and a garage in a future state of completion who has not paid, and not applied to the court for suspension of the effects of the resolutory (termination) clause recalled in the order to pay, within one month of this order as authorized by article L. 261-13 of the Construction and Housing Code, cannot rely on a non-performance exception to challenge the application of the termination clause.

Art. 1219, Civil Code: “A party may refuse to perform his obligation, even though it is due, if the other party does not perform his and if this non-performance is sufficiently serious”.

Cass. com. 27 January 1970, LawLex202200003513JBJ: the party invoking the non-performance defense is not required to give prior notice.

For an application, CA Douai, 16 February 2023, LawLex202300008976JBJ.

Cass. com. 28 May 1991, LawLex200500004333JBJ, specifying however that the buyer's failure to pay part of the price for a product containing latent defects does not authorize the seller to claim the exception of non-performance.

Cass. 3e civ, 26 November 2020, LawLex202300008927JBJ: pursuant to Articles 1612 and 1651 of the Civil Code, the obligations arising from the sale, i.e. delivery of the thing by the seller and payment of the price by the buyer, are reciprocal and interdependent, so that payment cannot be conceived without delivery and vice versa.

Cass. com, 12 July 2005, LawLex200500009784JBJ : even if the non-performance of an agreement may be justified if the other party has not fulfilled a contractual obligation arising from a separate agreement, insofar as the performance of the latter is linked to that of the former, a franchisee cannot, in the absence of a connection between the obligations invoked, invoke the non-performance exception to the franchisor's action for payment of the goods delivered, since the obligation to pay the price of the goods is not the consideration for the proper performance of the franchise contract, but only for the delivery of a thing in conformity with the order in performance of the sales contract.

For an application, see CA Nancy, 15 June 2022, LawLex202300009851JBJ.

Business Contracts

239. Right to withold performance

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

239. Right to withold performance

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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