Business Contracts

The parties' freedom to determine the price results from the interplay of Article 1591 and Article 1102  of the Civil Code, which, since the reform of the law of obligations, has codified the principle of contractual freedom. The seller and buyer must come to an agreement on the thing and the price and consent to it in a free and informed manner, and neither must be forced to sell or acquire the t …

Duress/Economic coercion

The parties' freedom to determine the price results from the interplay of Article 1591 and Article 1102  of the Civil Code, which, since the reform of the law of obligations, has codified the principle of contractual freedom. The seller and buyer must come to an agreement on the thing and the price and consent to it in a free and informed manner, and neither must be forced to sell or acquire the thing at a price to which they would not have agreed.

Article 1130 of the Civil Code states that duress (violence) vitiates consent when, in the absence of such duress, one of the parties would not have contracted or would have contracted on materially different terms. Under Article 1140 of the Civil Code, “ there is duress when a party enters into a commitment under the pressure of a constraint which causes him or her to fear exposing his or her person, fortune or that of his or her close relations to considerable harm”. Duress may take the form of moral constraint, but to justify invalidity of the sale, it must be such as to deprive the party invoking it of his or her right to consent freely .

Since the reform of the law of obligations, economic coercion has been recognized as a defect in consent. New Article 1143 of the Civil Code stipulates: “ There is also duress when a party, abusing the state of dependence in which his co-contracting party finds himself, obtains from him a commitment which he would not have entered into in the absence of such constraint, and derives from it a manifestly excessive advantage”. To justify the invalidity of a sale on the basis of this provision, the abusive exploitation of a situation of dependence must be established . To do this, the courts must identify the risk and economic consequences which have had the effect of placing a party in a situation of dependence on its co-contractor. For example, an airline is not entitled to invoke economic coercion to justify the invalidity of an aircraft maintenance contract, since it does not specify how the risk of having to delay the operation of a single aircraft until another maintenance provider could be found to take it over, would have led it to terminate its agreements, and would have had such economic consequences that it would have placed it in a situation of dependence on its co-contractor, forcing it to sign an amendment imposing an increase in its rates . On the other hand, the courts must characterize the exploitation of the fear of the person invoking economic violence “of an undesirable effect threatening its legitimate interests” and which would have forced it to contract. For this reason, an employee who has transferred to his employer his copyright in a dictionary he has developed is not entitled to have the transfer invalidated on the grounds of duress, unless it can be shown that his employer exploited his fear of being made redundant as part of a staff downsizing plan, forcing him to transfer his rights . According to the Court of Cassation, the principles guiding the legal profession, in which lawyers swear an oath to perform their duties “with dignity, conscience, independence, probity and humanity”, cannot deprive one of its members, when in a situation of dependence on his client, of the right, available to any contracting party, to invoke consent vitiated by duress, and to avail him/herself of the invalidity of the fee agreement entered into with that client .

The Paris Court of Appeal has clarified that economic duress, constituting vitiated consent, requires proof of abuse of dependence enabling the victim to obtain a commitment from the other party that they would not otherwise have made and which generates a manifestly excessive advantage, whereas abuse of economic dependence, referred to in Article L. 420-2, paragraph 2, of the Commercial Code, requires proof, in addition to the reality of economic dependence, of the abusive exploitation of that dependence where it is likely to affect the functioning or structure of competition . The vitiated consent resulting from the abuse of the transferors' dependence on the transferee of their securities is therefore not established when it results from factors concurrent with or subsequent to the signing of the deed that they had retained the option not to comply with the transferee's demands .

The sanction for consent tainted by duress is found in Article 1131 of the Civil Code, which stipulates that if a price has been fixed unfairly for reasons of duress or economic coercion, the agreement is subject to relative invalidity, the action being subject to the ordinary civil law statute of limitations of five years. However, a seller whose consent has been vitiated by duress or economic coercion may, pursuant to Article 1182 of the Civil Code, maintain the sale once the duress has ceased.

“Everyone is free to contract or not to contract, to choose his or her co-contractor and to determine the content and form of the agreement within the limits set by law. Freedom of contract does not permit derogation from rules of public policy”.

Cass. 3e civ. 29 April 1998, LawLex202200001275JBJ.

Only the abusive exploitation of a situation of dependence, made to take advantage of the fear of an harm directly threatening the legitimate interests of the person, can vitiate his consent due to duress, Cass. 1st civ. 3 April 2002, LawLex202000001879JBJ.

Cass. com. 9 July 2019, LawLex202200001741JBJ.

Cass, 1re civ, 3 April 2002, LawLex202000001879JBJ.

Cass. 2nd civ. 9 December 2021, LawLex202200001742JBJ.

CA Paris, 17 January 2024, LawLex202400000539JBJ.

Cass. com., 10 July 2024, LawLex202400005212JBJ.

Business Contracts

23. Duress/Economic coercion

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23. Duress/Economic coercion

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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