Business Contracts

According to Article 1591 of the Civil Code, in principle the sale price must be determined and specified by the parties. However, by way of derogation, new Article 1164 provides, specifically for framework agreements  that “it may be agreed that the price shall be fixed unilaterally by one of the parties, on condition that reasons are given for the amount in the event of a dispute”. Paragraph 2 a …

Abusive pricing

According to Article 1591 of the Civil Code, in principle the sale price must be determined and specified by the parties. However, by way of derogation, new Article 1164 provides, specifically for framework agreements  that “it may be agreed that the price shall be fixed unilaterally by one of the parties, on condition that reasons are given for the amount in the event of a dispute”. Paragraph 2 adds that “in the event of abuse in the fixing of the price, an application may be made to the court for damages and, where appropriate, rescission of the agreement”. While recognizing the right of a party to set the price in a framework agreement, the law reverses the burden of proof by imposing an obligation to state reasons. In concrete terms, instead of requiring the distributor to prove abuse in setting the price, it places on the supplier the burden of proving the validity of the price or its variation for the duration of the limitation period.

Article 1164 was codified during the reform of contract law, of the general legal regime and of proof of obligations by Ordinance No 2016-131 of 10 February 2016. It perpetuates a body of case law established by four rulings of the Plenary Assembly of the Court of Cassation, handed down on 1 December 1995, in reaction to the expansion of the field of invalidity for non-determination of price, initially based on Article 1591 of the Civil Code  by equating distribution contracts with sales contracts, in that they presuppose successive sales, and then on the former Article 1129 of the Civil Code , which is more general in scope. These important regulations set out a number of principles. Firstly, the provisions of former Article 1129 of the Civil Code, reproduced in Article 1163, cannot be applied to the determination of price . Secondly, when a contract provides for the conclusion of subsequent contracts, the fact that the price of these contracts has not been determined in the initial agreement does not affect the validity of the latter, except in the case of specific legal provisions . Thirdly, abuses in pricing can only give rise to termination or compensation .

It is therefore clear, according to the courts, that the implementation of a price-fixing procedure by reference to general terms and conditions does not invalidate the agreement in the absence of a finding of abusive pricing . Similarly, a seller is not entitled to claim invalidity of a contract on the grounds of price indeterminacy, since the price can be determined on the basis of factors which do not depend solely on the buyer's will, but by reference to official market quotations known to professionals . In addition, there can be no pricing abuse when the price is set by reference to the supplier's price list, which takes into account the cost price of the goods .

On the other hand, a supplier abuses its right to unilaterally set the selling price of goods delivered to its customer by charging excessive prices from the outset, which make it impossible for the supplier to compete . The Court of Cassation considers that abuse of the right to set the price gives rise to compensation, particularly when it is impossible to restore the goods to the state they were in prior to the cancelled sales .

New Article 1111 of the Civil Code defines a framework agreement as “an agreement by which the parties agree on the general parameters of their future contractual relations”, with implementing contracts specifying the terms and conditions of their performance.

CA Paris, 30 mars 1984, LawLex200200004618JBJ, for an application in the field of exclusive procurement.

Cass. com., 17 December 2003, LawLex200400000028JBJ.

The former article 1129 of the Civil Code, which is essentially taken up by the new article 1163, stipulated that: “The object of an obligation must be a thing which is at least determined as to its kind. The amount of the thing may be uncertain, provided it can be determined”. See, for an application, Cass. com. 30 November 1983, LawLex202200000095JBJ, which censured, on the basis of Article 1129, the appellate court's refusal to declare invalidity on the grounds of indeterminacy of the price of lubricant supply agreements between the parties. See, in the same vein, Cass. com, 12 January 1988, LawLex200200001927JBJ.

Cass. ass. plenum, 1 December 1995, LawLex202000001850JBJ. As a general rule, this means that undefined prices can no longer be challenged on this basis, and, incidentally, that the validity of a framework agreement cannot be called into question on the grounds of undefined prices.

Cass. ass. plén., 1 December 1995, LawLex202000001849JBJ and LawLex200700000976JBJ.  See also Cass com, June 11 1996, LawLex200200005575JBJ, stating that the grantor's right to unilaterally amend the price of goods does not affect the validity of the dealership contract.

Cass. Ass. plén, 1 December 1995, LawLex202000001849JBJ and LawLex200700000976JBJ, cited above, and LawLex200200004345JBJ.

Cass. com, 6 May 2002, LawLex200004600JBJ.

Cass. 1re civ, 14 December 2004, LawLex202200001202JBJ.

Cass. com., 26 January 1999, LawLex200005175JBJ.

Cass. com., 4 November 2014, LawLex201400001228JBJ.

Business Contracts

27. Abusive pricing

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

27. Abusive pricing

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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