Written commercial agreement

Significant imbalance

Sudden termination of established relationships

Competition investigation – French law

Civil competition action

French competition law

Competition investigation – European law

European competition law

Vertical restraints

Distribution law

Liability for defective products

Consumer law

Prohibition of measures having equivalent effect

European business law

Corruption

Compliance

Economic law

Shareholders' agreements

Removal of company directors

Abuse of voting rights

Companies

Action for infringement (counterfeiting)

Rights conferred by the trademark

Patentability

Industrial property

Commercial rent review

Renewal of the commercial lease

Despecialization (change of use)

Commercial leases

Reform of contract law

Reform of the law of special contracts

Preliminary sales agreement

Obligation to deliver goods in conformity

Classification of the contract for services (contrat d'entreprise)

Effects of the agency agreement with respect to third parties

Business contracts

Ongoing contracts

Recovery claims

Court-approved transfer plan

Bankruptcy proceedings

Personal data breaches

White collar crime

Commercial law

500 Questions - Business Law

The action brought on the basis of former Article L. 442-6, I, 2 of the Commercial Code aimed solely at compensating for damage and not at having the court deem the imbalanced clause unwritten. Therefore, the significant imbalance of the rights and obligations of the parties could not, outside of an action by the Minister of the Economy, be sanctioned by the invalidation (nullité) of the contract  …

Does a significant imbalance constitute grounds for invalidity?

Article L. 442-1, I, 2 of the Commercial Code, in its version resulting from the Ordinance of 24 April 2019 reforming Title IV of Book IV of the Commercial Code, penalizes the act of subjecting or attempting to subject the other party to obligations creating a significant imbalance in the rights and obligations of the parties. In its initial version, the text allowed for addressing any relationship of dependency or imbalance between economic partners as long as they resulted in abuse. The LME Law 2008-776 of 4 August 2008, by broadening its wording, gave a new dimension to the provision, establishing genuine review over unfair terms between professionals: the reference to the situation of dependency, difficult to establish in practice, is abandoned; it is no longer necessary to demonstrate the holding of purchasing or selling power. The review of significant imbalance is only possible for contracts concluded after the entry into force of the LME Law  or renewed since that date .

The law underwent its last development with the Ordinance of 24 April 2019, which replaces the former concept of commercial partner with that of the other party. After being primarily used in actions by the DGCCRF against large retail chains, to the extent that the doctrine characterized a dual application of the rule between large retailers, frequently and severely sanctioned, and other economic actors, subject to a rarer and more moderate application, it is now invoked against all types of operators, including the GAFA, and could eventually become a new tool to combat their practices .

The application of Article L. 442-1, I, 2 of the Commercial Code requires the meeting of two cumulative criteria : “subjecting to or 'attempting to subject to” and a significant imbalance between the rights and obligations of the parties.

Devoid of retroactive effect, the LME Law of 4 August 2008, which introduced the sanction of significant imbalance, cannot be invoked to assess the legality of an exclusivity clause contained in a contract concluded in 2002.

Cass. com., 5 July 2017, LawLex201700001194JBJ.

A contract concluded in 1984 but tacitly renewed each year is subject to the provisions of Article L. 442-1, I, 2° of the Commercial Code, as long as the alleged imbalance persisted after the entry into force of this text.

CA Paris, 8 November 2023, LawLex202300013406JBJ.

When the impossibility of negotiation is inherent to selling on an e-commerce platform like Amazon, the existence of a “subjection or attempt to subject to”  must be assessed based on the balance of power between the parties, whether the relationship is indispensable for one of them, and the feasibility of changing partners.

T. com., 2 September 2019, LawLex201900001011JBJ.

A subjection or attempt to subject a party to obligations creating a significant imbalance is characterized when Apple, which holds a leading position in the market, leaves no real room for negotiation to its contracting parties and the same clauses are found in all the contracts concluded, and this operator benefits, to the detriment of its contracting parties, from an unbalanced power relationship, without it being necessary for its position to be monopolistic.

T. com. Paris, 19 December 2022, LawLex202200011318JBJ.

When proof of subjection or attempted subjectionto imbalanced clauses is not established, it is not necessary to verify the existence of an imbalance. CA Paris, 20 December 2017, LawLex201700002134JBJ.

The mere imbalance of a clause is not sufficient to justify the application of Article L. 442-1, I, 2° of the Commercial Code if the existence of subjection or attempt to subjectto it is not established.

Cass. com., 14 February 2018, LawLex201800000299JBJ.

What is the regulatory context ?

Seized with a priority question of constitutionality on the concept of significant imbalance, the Constitutional Council found that it is defined in sufficiently clear and precise terms since it already appears in the Consumer Code and Directive No 93/13 of 5 April 1993 and has been clarified by case law . The constitutional judge also found that the judicial interpretation of Article L. 442-1, I, 2° of the Commercial Code, which allows for the control of prices negotiated by partners, is not contrary to the principle of legality of offenses and penalties, nor to the freedoms of contract and enterprise.

Furthermore, by refraining from drawing up a list of prohibited clauses and entrusting the court with the review of the existence of a contractual imbalance, the legislator has not disregarded the provisions of Article 7 ECHR relating to the principle of legality of offenses and penalties. Indeed, the drafting of Article L. 442-1, I, 2 allows economic operators to know that:

any significant disruption of the contractual balance in favor of one of the contracting parties is likely to be sanctioned;

the judge will conduct a review of the contract's substance, which traditionally falls within their purview.

On the other hand, the characterization of a party's state of submission may violate the principle of a fair trial enshrined in Article 6, para. 1, ECHR when it relies exclusively on anonymous statements from suppliers .

Given the pecuniary nature of the sanction and the complexity of the practices that the legislator intended to prevent and repress, the incrimination is defined in sufficiently clear and precise terms so as not to disregard the principle of legality of offenses.

Cons. constit., 13 January 2011, LawLex201100000039JBJ.

The court cannot, without violating Article 6(1) and (3) ECHR, rely decisively on anonymous statements to determine that the Minister of the Economy has provided proof of the existence of suppliers being subjected to imbalanced clauses.

Cass. com., 11 May 2022, LawLex202200002425JBJ.

Is Article L. 442-1, I, 2 in compliance with the Constitution and international agreements?

The reform of contract law resulting from the Ordinance of 10 February 2016 incorporates into the Civil Code a general rule deeming unfair terms in adhesion contracts unenforceable (Art. 1171), the scope of which was reduced by the ratification law of April 2018. Initially applicable to all unbalanced terms in adhesion contracts, the prohibition ultimately extends only to non-negotiable terms of these contracts. Thus, in the Civil Code, three regimes overlap: the one prior to the 2016 ordinance, which does not allow for sanctioning the imbalance, then, between 1 October 2016 and 1 October 2018, the regime of the initial version of the ordinance, and finally, since 1 October 2018, that of Article 1171 established by the ratification law. How does this general law on unfair terms align with the special regimes of unfair terms in consumer law and commercial law?

The concurrent or non-concurrent application of the ordinary civil law of significant imbalance and Article L. 442-1, I, 2 has divided legal scholars.

Proponents of the exclusion of the special law that Article L. 442-1, I, 2 would constitute in relation to the ordinary law of the Civil Code rely on the new Article 1105 of the Civil Code, under which general rules apply subject to specific rules.

This argument, however, is not entirely convincing. As stated in Article 1105, the general law/special law rule seems to apply only to contracts under the Civil Code. In any case, it appears to concern only contracts. However, case law has applied the former Article L. 442-6, I, 2 not only to contractual clauses but also to commercial practices. The new Article L. 442-1 further enshrines this solution since it provides that its provisions apply from commercial negotiation to contract execution. The conditions for implementing the texts differ (significant imbalance resulting from non-negotiable clauses for the Civil Code, and submission or attempted submission under Article L. 442-6, I, 2 of the Commercial Code). Finally, the actions provided by the two texts are not identical. Article L. 442-1, I, 2 of the Commercial Code sanctions the significant imbalance by holding the author liable, or even by nullifying the disputed clauses, while Article 1171 of the Civil Code deems them unwritten.

Concurrent application of the two mechanisms is all the more desirable as their regimes differ. If a contracting party intends to challenge a clause related to price determination, they will have no interest in invoking ordinary law, which expressly excludes contesting the adequacy of the price to the service. If they find it difficult to argue that a standard contract offered to thousands of undertakings by suppliers themselves competing with a multitude of providers amounts to submission to unbalanced conditions, they will prefer to resort to the ordinary law of Article 1171 applicable to non-negotiable clauses in adhesion contracts. Finally, if the court seized is not specialized, they may favor the basis of ordinary law, initially invoked as a subsidiary .

However, the Court of Cassation did not adopt this solution. According to it, Article 1171 of the Civil Code can apply to relationships between professionals, but only for situations that do not fall within the scope of Article L. 442-1, I, 2° . The special law of Article L. 442-1, I, 2° thus excludes the ordinary law of Article 1171 .

The question of the concurrent application of the law on unfair terms in consumer law and the significant imbalance in the Civil Code also arises since the scope of the Civil Code is defined ratione materiae, while that of the Consumer Code is defined ratione personae . However, since the inability to challenge the subject matter of the contract and the adequacy of the price to the service is common to both regimes, which both aim to deem irregular clauses as unwritten, the interest in the option appears more limited and should, in principle, lead to fewer debates.

Advice: What are the main differences between civil and commercial law regarding unfair terms?

Article 1171 of the new Civil Code: “In a standard form contract [contrat d'adhésion], any non-negotiable clause, predetermined by one of the parties, that creates a significant imbalance between the rights and obligations of the parties to the contract is deemed void never to have been written. The assessment of the significant imbalance does not concern the main subject matter of the contract nor the adequacy of the price to the service.”

Article L. 442-1, I, 2 of the Commercial Code: “Engages the liability of its perpetand obliges them to compensate for the damage caused by the act, in the context of commercial negotiation, conclusion, or performance of a contract, by any person engaged in production, distribution, or service activities (...) 2 to subject or attempt to subject the other party to obligations creating a significant imbalance in the rights and obligations of the parties.”

Article 1171 new Civil Code: ordinary law of civil procedure.

Article L. 442-1, I, 2 of the Commercial Code: 8 specialized judicial courts or commercial courts (on appeal, the Paris Court of Appeal has sole jurisdiction), including in summary proceedings, but the dispute is arbitrable.

Article 1171 new Civil Code: general - all contracting parties

Article L. 442-1, I, 2 of the Commercial Code: author of the imbalance: any person engaged in production, distribution, or service activities. Victim of the imbalance: other party

Article 1171 new Civil Code: non-negotiable clauses in a standard form contract creating a significant imbalance.

Article L. 442-1, I, 2 of the Commercial Code: submission or attempt to submit to obligations creating a significant imbalance.

Article 1171 new Civil Code: legal definition (Art. 1110 of the Civil Code). The adhesion contract is one that includes a set of non-negotiable clauses, predetermined by one of the parties.

Article L. 442-1, I, 2 of the Commercial Code: judicial definition. Many decisions have mentioned an unfavorable balance of power for the partner or the unavoidable or obligatory intermediary nature of the author of the imbalance, but this factor is no longer sufficient and must now be combined with proof of a lack of effective negotiation of the clause.

Application to the main object of the contract and the price?

Article 1171 of the new Civil Code: no: the assessment of the significant imbalance does not concern either the main subject matter of the contract or the adequacy of the price to the service (Art. 1171, para. 2).

Article L. 442-1, I, 2 of the Commercial Code: yes: case law allows judicial review of the price when it does not result from free negotiation and constitutes a significant imbalance.

Article 1171 of the new Civil Code: clause deemed unwritten; according to part of the doctrine, possibility of an additional action for liability. No action by the Minister, no civil fine.

Article L. 442-1, I, 2 of the Commercial Code: part of the case law had accepted the voidance and even the substitution of another clause; the new Article L. 442-4 expressly opens the action for invalidity to the victim; action possible by the Minister of the Economy (or the public prosecutor or exceptionally the president of the Competition Authority) for the cessation of practices for the future even without the victims' authorization, but subject to informing them, in the case of an action for invalidity, restitution and/or compensation for damages; imposition of a civil fine that may reach a maximum of three times the amount of the undue benefits received or 5% of the turnover excluding tax achieved in France by the perpetrator of the practices or EUR 5 million.

A termination clause may be declared unwritten based on Article 1171 of the Civil Code, in the absence of applicability of Article L. 442-1, I, 2° of the Commercial Code by a non-specialized court, when it allows only one of the parties to terminate the contract for reasons that do not correspond to instances of contractual breaches by the other party.

CA Lyon, 27 February 2020, LawLex202000000281JBJ.

Article 1171 of the Civil Code applies to contracts, even those concluded between producers, merchants, industrialists, or persons registered in the trade directory, which do not fall under Article L. 442-1, I, 2° of the Commercial Code, such as financial lease contracts concluded by credit institutions and financing companies.

Cass. com., 26 January 2022, LawLex202200000629JBJ.

Contracts for advertising promotion concluded between merchants fall under the provisions of Article L. 442-1, I, 2° of the Commercial Code and not those of Article 1171 of the Civil Code.

CA Douai, 19 October 2023, LawLex202300013411JBJ.

For the application of this code, the following definitions apply: - consumer: any natural person acting for purposes that do not fall within the scope of their commercial, industrial, artisanal, liberal, or agricultural activity; - non-professional: any legal entity acting for purposes that do not fall within the scope of their commercial, industrial, artisanal, liberal, or agricultural activity; - professional: any natural or legal person, public or private, acting for purposes within the scope of their commercial, industrial, artisanal, liberal, or agricultural activity, including when acting in the name or on behalf of another professional.

(Civil Code, introductory Art. created by Ord. No 2016-301 of 14 March 2016).

Can Article L. 442-1, I, 2 of the Commercial Code on unfair terms between professionals be invoked concurrently with the Civil Code unfair terms provisions ?

No, Article L. 442-1, I, 2 punishes the act, for a person engaged in production, distribution, or service activities, of imposing or attempting to impose unfair terms on the other party. These provisions do not apply only to the distribution sector .

The scope of Article L. 442-6 of the Commercial Code, which extends beyond the retail sector and does not necessarily involve a purchase and sale transaction, covers the hotel reservation sector.

CA Paris, 21 June 2017, LawLex201700001094JBJ.

Article L. 442-1, I, 2 (former Article L. 442-6, I, 2) of the Commercial Code applies not only to the retail sector but also to the industrial sector.

CA Paris, 12 June 2019, LawLex201900000793JBJ.

Does the contract necessarily have to be concluded in a supplier-distributor relationship?

By targeting the concept of commercial partnership, former Article L. 442-6, I, 2 of the Commercial Code required relations characterized by a common intention to jointly carry out production, distribution, or service activities .

The condition relating to the existence of a commercial partnership implied that the contract formed part of a long-term relationship and was intended to develop the activity of the parties .

The Paris Court of Appeal ultimately required the existence of non-occasional relationships generating a stable flow of business, displaying all the characteristics of an established commercial relationship between the party imposing the clause and the party upon whom it was imposed .

Former Article L. 442-6, I, 2 therefore did not apply:

to the first contract concluded between the parties;

when the parties were only bound by occasional contracts;

in the absence of current relations between the partners .

New Article L. 442-1, I, 2, resulting from the Ordinance of 24 April 2019, applies from the negotiation or conclusion phase of the contract. The requirement for prior or current relationships should therefore disappear. Furthermore, it removes the requirement for a commercial partnership.

The Court of Cassation applied the new version of the law in advance by considering that the commercial partner is the party with which the other party is engaged, or is about to engage, in a commercial relationship and that it is no longer necessary to seek a spirit of collaboration between the parties .

Henceforth, the scope of the text is limited to production, distribution, or service activities .

The party that imposes or attempts to impose imbalanced obligations on the other is understood to be any professional engaged in production, distribution, or service activities, including:

Also excluded from the scope of Article L. 442-1, I, 2 are all relationships that are subject to specific provisions , even when they concern distribution activities. This is particularly the case for banking activities, which fall under the provisions of the Monetary and Financial Code .

The Court of Cassation specified that credit institutions and finance companies are excluded from the scope of Article L.442-1, I, 2 .

The prohibition of significant imbalance does not apply to relationships between parties bound by a photocopier leasing contract, which did not involve a mutual and reciprocal intention to jointly undertake production, distribution, or service activities.

CA Paris, 21 September 2016, LawLex201600001561JBJ.

The contract between a self-employed entrepreneur and the company responsible for creating their website does not make them an economic partner within the meaning of former Article L. 442-6, I, 2° but a simple contracting party.

CA Aix-en-Provence, 10 March 2016, LawLex201600000636JBJ.

Two entities become partners either by signing a partnership agreement that formalizes the parties' intention to build an ongoing relationship, or because their behavior reflects the intention to develop stable and established relationships in compliance with competition rules to cooperate on a joint project.

CA Paris, 27 September 2017, LawLex201700001542JBJ.

The former Article L. 442-6 of the Commercial Code does not apply to the relationships between a merchants' association and one of its former members.

Cass. 3e civ., 11 October 2018, LawLex201800001532JBJ.

By stating that a partner is defined as the professional with whom a commercial undertaking maintains business relations to conduct any activity, which implies a common and mutual willingness to jointly perform acts together in production, distribution, or service activities, as opposed to the broader concept of an economic agent or the narrower one of a contracting party, the court of appeal adds conditions to the law that it does not contain.

Cass. com., 15 January 2020, LawLex202000000076JBJ.

The dispute concerning the performance of a commercial lease does not fall within the scope of Article L. 442-1, I, 2° of the Commercial Code, which only covers production, distribution, or service activities.

Cass. 3e civ., 15 February 2018, LawLex201800000287JBJ.

The provisions of Article L. 442-1, I, 2° of the Commercial Code, which apply only to production, distribution, or service activities, cannot be invoked to assess the methods of determining the sale price of a business.

CA Paris, 10 April 2019, LawLex201900000537JBJ.

The terms of withdrawal of a member from an economic interest group (EIG), as provided by the constitutive contract or by a clause in the internal regulations of this group, are excluded from the scope of Article L. 442-1, I, 2° of the Commercial Code.

Cass. com., 11 May 2017, LawLex201700000866JBJ.

The provisions of I, 2° and II of Article L. 442-1 of the Commercial Code do not apply to the relationships maintained by a cooperative company of retail traders with its members.

Cass. com., 18 October 2017, LawLex201700001744JBJ.

The activities of a payment and electronic money institution are governed solely by the special provisions of the Monetary and Financial Code.

T. com., Paris, 2 September 2019, LawLex201900001011JBJ.

Article L. 442-1 of the Commercial Code does not apply to credit institutions and finance companies for their banking operations, which are governed by the specific provisions of the Monetary and Financial Code.

Article 1171 of the Civil Code applies to contracts, even those concluded between producers, merchants, industrialists, or persons registered in the trade directory, which do not fall under former Article L. 442-6, I, 2° (current Art. L. 442-1, I, 2°) of the Commercial Code, such as financial leasing contracts concluded by credit institutions and financing companies.

Cass. com., 26 January 2022, No 20-16.782.

In what types of relationships is imbalance prohibited?

Article L. 442-1, I, 2 of the Commercial Code punishes the subjection of another party as well as the attempt  to subject a party to an imbalance in the contract. Therefore, the court is not required to measure the precise effects of the identified imbalance .

However, case law requires a precise and individualized analysis of the “subjection”, thus ruling out any global approach 

In the large -scale retail sector, after having considered that it could result from the imbalance of bargaining power between suppliers and large retail chains, case law now considers that this element is only one indicator among others, and focuses more on the lack of effective negotiation of the clause .

La soumission consists notably of imposing a contractual terms without negotiation. It does not imply pressure or threat, but the alleged victim must establish that they were compelled to accept the conditions they are challenging  or that they unsuccessfully attempted to renegotiate them .

Subjection to imbalanced terms may, for suppliers, result:

from the systematic refusal or failure of the distributor to respond to their requests for modifications or to their reservations, which gives the agreements the nature of adhesion contracts;

of the systematic prevalence, without possible negotiation, of the distributor's general purchasing conditions over the supplier's general sales conditions ;

due to the fact that the clause appears not in the general conditions of the suppliers, but in the annex of the standard contract established by the distributor, initialed without modification by all its partners;

from the absence, unlike the other provisions of the contract, of free space to modify its content;

the lack of genuine negotiation given the uniformity of conditions applied to all suppliers.

On the other hand, the mere request for an additional price reduction made by a distributor during the performance of the contract is not sufficient to constitute an attempt to subject its partner to unbalanced obligations as long as it is accompanied by freely negotiated counterparty .

Advice: Allow negotiation by not imposing standard form contracts.

The absence or conduct of negotiations is a determining factor in establishing or excluding significant imbalance.

Advice: Avoid granting yourself unnecessary advantages.

The negotiator will focus on the clauses that are truly important to them, without attempting to obtain systematic advantages that are of no real use for their daily practice.

The court is not required to assess the individual contracts concluded by each supplier and may rule based on the standard contract offered to all of them, as the attempt to submit is punished in the same way as submission.

Cass. com. 4 Oct. 2016, LawLex201600000635JBJ

The non-execution of threats to de-list, or even the granting of certain compensations by a super central that demands a renegotiation of rates during the year, does not affect the assessment of the existence of a significant imbalance, as Article L. 442-1, I, 2° of the Commercial Code sanctions the attempt alone.

T. com. Paris, 31 May 2021, LawLex202100005080JBJ.

The absence of effect of the practices on the suppliers, who show positive results and benefit from an increase in their sales to the distributor, does not constitute an element for assessing the significant imbalance.

CA Paris, 25 October 2023, LawLex202300012903JBJ.

The existence of subjecting a parnter to a significant imbalance must be established by concrete evidence.

The existence of an imbalanced power relationship alone cannot demonstrate the submission of the other party, but must be supplemented by other indicators establishing the absence of negotiation.

Cass. com., 20 November 2019, LawLex201900001423JBJ.

The fact that a significant number of distributors who jointly contested the supplier's contract clauses had to resort to legal action due to the supplier's refusal to modify them establishes the existence of subjecting or attempting to subject a trading partner to a significant imbalance.

Cass. com., 18 October 2023, LawLex202300012835JBJ.

A party cannot invoke a significant imbalance in the context of contract renewal negotiations when genuine negotiations have taken place, respecting the expression and rights of each party, without pressure, threats, or abusive demands.

Cass. com., 11 May 2022, LawLex202200002543JBJ.

The “subjecting” or'attempting to subject'  aspect involves demonstrating the absence of effective negotiation of the clauses at issue, or an obligation to contract with a particular operator, in the absence of any other alternative for the other party.

CA Paris, 28 February 2018, LawLex201800000359JBJ.

The Minister of the Economy does not demonstrate that the suppliers were “subjected” to a significant imbalance when he only produces five pre-drafted contracts by the distributor, without demonstrating that the criticized clauses constitute an intangible component of these and were not subject to any effective negotiation.

An automobile distribution contract negotiated with the European and then French representatives of the distributors, who praised, at the end of the discussions, the clear improvement in the drafting of the contract, is not subject to the complant of subjection to significant imbalance especially when the distributors invoking it do not justify any personal attempt to engage in direct negotiation with the importer.

CA Paris, 17 January 2024, LawLex202400000497JBJ.

The mere reference to a standard form contract is not sufficient to establish the subjection to a significant imbalance when there is no justification for any attempt to negotiate certain clauses.

CA Paris, 8 November 2023, LawLex202300013419JBJ.

The main manufacturer of high-power gas turbines in the French market, which is among the five global leaders and generates by far the largest turnover in France in the sector, subjects about 60% of its suppliers to imbalanced obligations when it presents its general purchasing conditions as non-negotiable and their acceptance as a prerequisite for entering into relations.

Requests for credit accompanied by offers of consideration, such as the distribution of the supplier's products in new distribution networks and the integration of new references, or the guarantee of the continuation of the relationship without a call for tenders, which secures the relationship, do not constitute an attempt at subjection.

How is 'subjecting' (soumission) defined?

Significant imbalance implies an absence of reciprocity that is unjustified or unnecessary , a lack of consideration , or even a disproportion between the rights and obligations of the parties .

The absence of reciprocity cannot be established between obligations of a different nature. The nature of the obligation may also justify the absence of consideration. This is the case with the penalty clause, which is common in contractual relations and subject to the judge's moderating power, or the landlord's unilateral termination option in the event of tenant default, as long as the lack of reciprocity is justified by the instantaneous nature of the obligation to make the leased item available, whereas the obligation to pay rent is successive in execution .

As soon as a consideration exists or a clause can be enforced by both contracting parties, the imbalance is excluded .

The imbalance between the rights and obligations of the parties does not result:

nor from the fact that a clause is favorable or very favorable to one of the parties;

nor the greater number of obligations of one party compared to the other.

On the other hand, the significant imbalance is established when the application of a clause is left to the sole discretion of one of the parties .

Advice: Refrain from stipulating unilateral or arbitrary application clauses that subject the co-contractor to excessive and disproportionate obligations.

There is a significant imbalance in the rights and obligations of the parties when the conditions for implementing a price revision clause do not provide for any reciprocity.

Cass. com., 3 March 2015, LawLex201500000283JBJ.

The absence of reciprocity in certain prerogatives offered to the importer does not constitute a sign of a significant imbalance when it is justified by the difference in the nature of the parties' obligations and the interests they derive from the performance of the contract.

The asymmetry in the conditions for implementing an early termination clause, which imposes a compensatory indemnity only on one of the parties, does not indicate the existence of a significant imbalance as long as it results from the contract's economy, which involves the necessity to protect the party that has borne the initial investments.

Cass. com., 31 March 2021, LawLex202100000975JBJ.

Obtaining price reductions in the form of year-end rebates by a distributor who provides no consideration, calculated on a turnover far exceeding the one to which it committed, and paid in installments before it has settled the price of the goods, reflects the existence of a significant imbalance between the rights and obligations of the parties.

Cass. com., 25 January 2017, LawLex201700000176JBJ.

The sole guarantee of maintaining the relationship without calls for tenders does not constitute sufficient consideration to justify repeated and substantial credit requests.

The clause in a concession agreement that penalizes a non-payment by suspending the maintenance service on all client contracts managed by the distributor, including those whose payments have been settled, and requires the distributor to pay the invoices related to the operations whose execution is suspended, constitutes a significant imbalance, as long as no technical impossibility prevents the supplier from ceasing the execution of the service solely for the affected user account.

The fact that one party can terminate the contract without compensation while the other is required to pay compensation if it initiates the termination does not indicate an imbalance, as long as this lack of reciprocity in the conditions is justified by the overal balance of the contract, with the beneficiary of the compensation having made prior investments to help its co-contractor start its business.

500 Questions - Business Law

34. Does a significant imbalance constitute grounds for invalidity?

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34. Does a significant imbalance constitute grounds for invalidity?

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