Business Contracts

Under Article 1591 of the Civil Code, “the sale price must be determined and designated by the parties”. 
The price is considered as determined when it is fixed on the day of the sale, including, in the case of non-immediate payment, when its amount is likely to vary over time in application of a price indexation clause . According to the Court of Cassation , the sale price of securities making up …

Determination of price by the parties

Under Article 1591 of the Civil Code, “the sale price must be determined and designated by the parties”. 

The price is considered as determined when it is fixed on the day of the sale, including, in the case of non-immediate payment, when its amount is likely to vary over time in application of a price indexation clause . According to the Court of Cassation , the sale price of securities making up the capital of several undertakings is sufficiently determined by a global price, without the need to break this price down between each of the companies sold.

If it is not determined, the price must be capable of being determined (determinable). This principle is now implicitly stated in Article 1163, paragraph 2, adopted following the reform of the law of obligations, which provides that “[the obligation] must be possible and determined or determinable”. According to case law, the price is capable of being determined when it is fixed in the agreement by reference to external factors that do not depend solely on the will of either party. The sale price of a vehicle at the “price in force on the day of delivery” is capable of being determined independently of the seller's will, when it refers to the price set by the manufacturer and passed on by the importer to the dealer . Similarly, the price of shares to be acquired as part of a sale staggered over time is capable of being determined when the parties' agreement refers to an objective criterion beyond their sole control, such as the undertaking's real value and the evolution of its results . On the other hand, in a market where prices are likely to vary according to economic circumstances and fashion, a price clause that does not refer to a corresponding market price, nor to a tariff accepted by all the brand's distributors, is null and void since it depends solely on the will of the manufacturer . Furthermore, the price cannot be considered capable of being determined on the basis of contractual stipulations alone, if its final determination requires a new agreement between the parties . Nor can the determined or determinable nature of the price of a sale result from a transaction previously concluded between the seller and a third party . Furthermore, the court has no role to play in setting the price. It cannot take the place of the parties once their agreement has been declared null and void, and impose a new method for determining the price , nor can it set the price of a share transfer in the event of disagreement over the contractual methods for determining it . In addition, it may not set the price by reference to elements external to the deed of sale .

In the case of the transfer of shares or even a customer base, the parties sometimes decide to tie the price to the profitability of the asset. Where the interests of the contracting parties are distinct, it is thus possible to make the share price partly dependent on sales and rents received, without attaching a potestative condition to the transaction . Similarly, the transfer price of a consultancy firm can be determined by a minimum fee in the case of cash payment, and for the remainder, depend only on the contingency of the firm's business foreseen and accepted by the parties in the interest of the transferee, if he does not pay cash . 

Lastly, Article 1593 of the Civil Code stipulates that the costs of deeds and other incidental expenses are to be borne by the buyer. If not specified in the deed, are they included in the price? According to the case law  , an offer to sell a fleet of vehicles that does not stipulate a price exclusive of tax or all taxes must be considered, in accordance with business practice, as a sale at a price exclusive of tax, unless otherwise agreed.

Cass. com., 31 May 1988, LawLex202200001835JBJ, for an example of an ambiguous clause.

Cass. com., 8 April 2008, LawLex202200001848JBJ.

Cass. com. 15 June 1982, LawLex202200000861JBJ.

Cass. 1re civ. 28 June 1988, LawLex202200000807JB.

Cass. com., 9 January 2001, LawLex202200000799JBJ.

Cass. 1re civ. 2 December 1997, LawLex202200000074JBJ. See already, Cass. 1re civ., 8 November 1983, LawLex202200001219JBJ, having held that the sale price of a vehicle of which the order form mentions that it will be that in force on the day of delivery, is capable of being determined independently of the will of the parties, when the dealer merely resells the vehicle at the price imposed by the manufacturer under the dealership agreement, in the determination of which he takes no part.

Cass. com. 10 March 1998, LawLex202200000804JBJ.

Cass. com., 11 June 1981, LawLex202200000810JBJ.

Cass. com., 14 December 1999, LawLex202200000802JBJ; 7 April 2009, LawLex202200001839JBJ: the provisions of Article 1591 of the Civil Code do not require that the deed itself indicate the price, but only that this price be capable of being determined, including when the price is linked to the occurrence of a future event which does not depend solely on the will of one of the parties, or on subsequent agreements between them.

Cass. com., 12 November 1997, LawLex202200000809JBJ, overturning an appeal ruling which held that the sale was complete between the parties who had verbally agreed on the item and the price, in accordance with the practices of the publishing industry, on the grounds that the price of the works, which could be determined on the day of the sale, could not be lower than a figure accepted by the seller in a previous transaction.

Cass. com., 29 June 1981, LawLex202200000076JBJ.

Cass. com., 14 December 1999, LawLex202200000802JBJ.

Cass. 1re civ, 24 February 1998, LawLex202200000079JBJ, for a transfer of shares; 19 January 1999, LawLex202200000094JBJ: a court which sets the price of sand delivered according to the market rate is determined by factors external to the parties' agreement, in violation of Article 1591 of the Civil Code.

Business Contracts

17. Determination of price by the parties

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

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

17. Determination of price by the parties

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

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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