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

Article L. 441-6 provides that the failure to justify having concluded the written agreement before 1 March is subject to an administrative fine, the amount of which may not exceed EUR 200,000 for a natural person and 1 million euros for a legal entity. These amounts are doubled in the event of a repeat offense within two years from the date on which the first sanction decision became final.

By a …

What penalties apply for non-compliance with the formal requirements of Article L. 441-3?

The rules relating to the commercial agreements, previously termed “single” (convention unique)  prior to the Hamon Law of 17 March 2014, and now referred to as “written” (convention écrite) have been developed in successive stages. Initially, the formal requirements applied to the general terms and conditions of sale. To combat refusals to sell between business professionals (professionnels) and discriminatory practices, which were prohibited per se by French law, the provision of the general terms and conditions of sale on request was made mandatory. Since the general terms and conditions of sale (GTCs) can be requested at any time, most companies found themselves practically obliged to establish them. The prohibition of refusal to sell and the per se prohibition of discriminatory practices have been repealed, but the obligation to communicate the general terms and conditions of sale has remained. The role of the general terms and conditions of sale has evolved, and they now function to protect suppliers against large retailers by serving as a basis for commercial negotiation, even though in practice, the effectiveness of this protective tool remains limited.

The Administration subsequently focused on regulating and formalizing commercial cooperation services.

The commercialization of a product may require the provision of services that the distributor is best positioned to provide and for which their suppliers compensate them. This practice, termed “commercial cooperation” as early as 1984 by the Delors Circular, is based on the principle of contractual freedom. Commercial cooperation services are thus distinct from general terms of sale and are therefore exempt from the communication obligation of the current Article L. 441-1 of the Commercial Code.

Commercial cooperation has been defined as the agreement “by which a distributor or a service provider undertakes towards a supplier to provide, on the occasion of the resale of its products or services to consumers, services aimed at promoting their marketing, which do not fall under purchase or sale obligations.”

Outside the general terms and conditions of sale, the practice has, over time, developed the habit of grouping the various agreements of the parties for the year into a single agreement system:

specific general conditions concluded based on the consideration offered under obligations related to the purchase-sale operation;

This trend apparently inspired the legislator who, in 2008, established a single written marketing contract of very broad scope.

Initially, the Chatel Law required the conclusion of a single agreement for all suppliers (producers, service providers, wholesalers, or importers involved in the distribution relationship) in their dealings with any distributor (or service provider involved in the distribution relationship) not only for sales conditions but also for services not related to purchase and sale obligations or other obligations intended to promote the commercial relationship. Subsequently, the LME Law extended the scope of application of commercial cooperation to services rendered during resale to professionals.

In 2014, the Hamon Law significantly enriched the content of the agreement. The former Article L. 441-7 specified that the written agreement aimed to indicate the obligations of the parties in order to set the price at the end of the commercial negotiation, which had to cover the obligations described by the text. To ensure that this negotiation was indeed conducted based on the supplier's general terms and conditions of sale, the former Article L. 441-7 stipulated that the agreement “indicates the price schedule as it was previously communicated by the supplier, with its general terms and conditions of sale, or the methods for consulting this schedule in the version that served as the basis for the negotiation.” The law also imposed a “duty of courtesy” on the distributor: they had to respond in a detailed manner and within a two-month period to any specific written request from the supplier regarding the execution of the agreement.

Taking into consideration the significant constraints of the legal framework for wholesalers, who are subject to dual negotiation downstream with their professional clients and upstream with their suppliers, the Macron Law of 6 August 2015 subjected the marketing agreements they conclude with their suppliers to a simplified formality.

Finally, the Sapin II Law of 9 December 2016 authorized the conclusion of bi-annual or tri-annual agreements.

The Ordinance of 24 April 2019, which reforms Title IV of Book IV of the Commercial Code, now provides for two regimes for the written agreement: a simplified general regime applicable to all relationships between suppliers and distributors, including wholesalers (Art. L. 441-3) and a stricter regime specific to fast-moving consumer goods (FMCG), not applicable to wholesalers (Art. L. 441-4). Specific provisions are also dedicated to subcontracting, as was already the case before, and to food products sold under private labels (Art. L. 441-7). According to the report to the President of the Republic on Ordinance No 2019-359, the modifications aim for better coherence and readability of the provisions applicable to written agreements, which have been subject to multiple reforms over the past fifteen years.

The ASAP Law of 7 December 2020 introduced new formal requirements regarding the remuneration of services provided by international purchasing centers, in order to combat the circumvention of French law through the relocation of entities billing for services of questionable utility. The EGalim 2 Law of 18 October 2021 introduced, in Article L.443-8 of the Commercial Code, a new specific written agreement for food products and products intended for pet food for which the general terms and conditions of sale are subject to I of Article L. 441-1-1. The EGalim 3 Law of 30 March 2023 introduced a new written agreement for logistics services and, without modifying its regime, reaffirmed a specific text for the wholesalers' agreement. Finally, the Le Maire Law of 17 November 2023, containing emergency measures to combat inflation, advanced the annual negotiation schedule to promote a quicker impact on store prices and reductions in the cost of certain raw materials.

In summary, the conclusion of a written agreement is required for the parties (comprising suppliers and distributors according to the law) whenever they agree on terms that deviate from the general conditions, which require negotiation, and provide for commercial cooperation services or other obligations intended to facilitate marketing .

The legal provisions relating to the single agreement only require agreements to be recorded in writing insofar as they exist. They do not substitute the will of the parties and do not impose an agreement on commercial cooperation services where the parties do not wish to use them.

CEPC Opinion No 10-07 of 1 April 2010, LawLex201000000021JBJ.

What is the regulatory context?

Under French law, suppliers and distributors of products are required to draw up a written document every year or every two or three years summarizing the terms of their commercial negotiations, known as a “written agreement,” (convention écrite) when they do not simply conclude on the basis of the seller's general terms and conditions (GTC) but negotiate, as is generally the case, discounts, rebates, or commercial cooperation services or other obligations. Failure to draw up this summary document by the date set by the statutory texts, or it being incomplete or irregular, can result in harsh penalties. The autonomy of the parties is severely restricted by this document since, according to the Administration, the price agreed in the written agreement (or in the GTC if they have been accepted as is) must remain unchanged for the duration of the agreement, unless an amendment is signed by mutual agreement between the parties.

The question of whether one is subject to the obligation to establish a written agreement raises interpretative difficulties. The nature of the product, the purpose of the activity, and the role played in the distribution chain are all parameters that must be taken into account. Thus, consumer goods or agricultural products mentioned in Article L. 443-2 of the Commercial Code have their own agreement. Pure service providers, such as advertising agencies, are exempt, whereas those whose services are closely linked to the purchase-resale of products, such as purchasing centers providing commercial cooperation services, fall within the scope of the written agreement. Conversely, referencing centers acting as brokers and merely connecting their members with referenced suppliers are not subject to the written agreement. The concept of a distributor remains equally vague, with processors and buyers for their own account being excluded from the obligation.

On the other hand, the distributor's position in the distribution chain and the nature of its activity are no longer, as in the past, decisive factors: they will be subject to the written agreement, whether they are wholesalers or not.

A supplier selling products to a distributor on the French market must pay particular attention to the formal requirements of commercial negotiations; otherwise, the supplier may be exposed to significant administrative fines:

if products or services are sold, the supplier must provide its General Terms and Conditions (GTC), if they have been established, to any potential buyer upon request;

if consumer or agricultural products are sold, the supplier must comply with the formal requirements applicable to agricultural agreements;

if products are sold to a buyer using them for its own needs or to a processor, the written agreement requirement will not apply, as these partners are not distributors within the meaning of the law;

if products are sold to a distributor solely on the basis of the supplier’s GTC, without negotiation, there will be no obligation to draft a written agreement;

if products are sold to a distributor or a wholesaler within the meaning of the law, a written agreement must be concluded with them;

if products are manufactured at the request of a buyer who will incorporate them into its own production, the reduced formal requirements of the written agreement applicable to subcontractors must be complied with;

if private label products (PLP) are manufactured on the basis of specific specifications, rather than catalog products, a written agreement must be drafted, as the PLP contract constitutes a contract for services;

if reciprocal obligations are undertaken with the distributor concerning logistics, the amount of the penalties incurred and the methods for determining that amount must be set out in a written agreement separate from the ordinary written agreement.

This formality is both burdensome, complex, and difficult to comply with. How did we get to this point in a market economy country?

In addition to a tradition of strong economic interventionism and a constant temptation to implement mechanisms of a managed economy, the current situation of French law is largely explained by the desire to regulate the relationships between large retailers and their suppliers. To remedy certain practices of large retail chains, the legislator and the Administration have multiplied the protective measures for suppliers.

The formal requirements imposed by the Administration through invoicing and the written agreement rules  has a dual purpose: preventive, as it aims to deter large retailers from imposing obligations or remunerations that are too visibly contrary to regulations, and curative, as it allows the Administration to have the tools for information and control to ensure the application of regulations, particularly the written agreement summarizing all stages of commercial negotiation. In practice, the regulations do not produce satisfactory results because they generally subject a large part of the French economy to heavy and costly formalism without actually resolving the difficulties in relations between suppliers and large retailers.

Advice: Do not unnecessarily submit to the written agreement.

The agreement must be concluded “between the supplier and the distributor or the service provider.” Not all service providers in relation with a supplier are subject to the constraints of the written commercial agreement. The concept of service provider is understood, according to the CEPC (Commercial Practices Review Commission), as “referring to services under commercial cooperation, provided directly or indirectly by the distributor.”

What constitutes the specificity of these rules?

Article L. 441-3 artificially confines negotiation within a single document or an annual framework contract, while business life requires constant changes that are not necessarily foreseeable at the beginning of the year. These constraints have led the Commercial Practices Review Commission (CEPC) and case law to propose a pragmatic reading of the text, defining its scope of application.

From the wording of the provision stating that the agreement must set out “the reciprocal obligations to which the parties have committed themselves in order to determine the price at the end of the commercial negotiation”, it follows that the requirement of a written agreement is subject to:

a certain degree of permanence of the commercial relationship the flows of must be capable of being planned within annual commitments ;

the existence of a negotiation of the supplier's GTCs .

On the other hand, when the commercial relationship is limited to the conclusion of one-off contracts based on general or category-specific GTCs, the obligation to establish an agreement should not apply .

Similarly, must be considered exempt from the written agreement regime:

economic operators who purchase products for their own use , insofar as the concept of distributor within the meaning of Article L. 441-3 of the Commercial Code exclusively targets operators who purchase products with the intention of reselling them as is ;

economic operators who resell food products and beverages in their original state to their customers, but as an ancillary activity and not as their main activity ;

economic operators who process products before reselling them, particularly as part of a comprehensive service provision ;

economic operators acting as mere brokers  or agents, such as sales commission agents. ;

economic operators who purchase products, as an ancillary part of their distribution activity, with the intention of renting them .

The obligation to conclude a written agreement applies to a purchasing center only if it is legally a party to the sales contracts concluded with suppliers. This is the case when it acts as a purchasing agent on behalf of its affiliates or when it purchases goods for resale to them .

The establishment of an annual written agreement between a supplier and a distributor, which implies a certain permanence of the commercial relationship, is not required in the initial months of collaboration.

CA Douai, 19 January 2023, LawLex202300001385JBJ.

Each time conditions deviating from the GTC are concluded, which implies a negotiation, or each time commercial cooperation services or other obligations are agreed upon, the single agreement is required.

Opinion CEPC No 10-07 of 1 April 2010, LawLex201000000021JBA.

The drafting of a written agreement is not required when the relations between the parties consist of a series of orders based on general conditions that are not deviated from.

CA Lyon, 7 April 2022, LawLex202200002060JBJ.

Article L. 441-3 of the Commercial Code does not apply to the contractual relationship between an undertaking that designs, manufactures, and markets ready-to-wear clothing and fashion accessories and its “manufacturers” of components.

Opinion CEPC No 22-7, 18 November 2022, LawLex202300000100JBL.

Article L. 441-3 of the Commercial Code aims to formalize the conditions of the sale of a product or service between a supplier and a distributor or service provider, for resale as is, which excludes products or services intended to be transformed by the latter.

CEPC opinion No 13-01, 25 February 2013, LawLex201300000027JBA.

Operators of cinema complexes, who, as an ancillary to their main service of screening films in theaters, offer the sale of catering services and food or beverages as is, to customers who have otherwise purchased a cinema ticket, are not required to establish an annual or multi-annual agreement with their suppliers.

Opinion CEPC No 19-10, 19 September 2019, LawLex201900000029JBA.

The resale of products in their original state, such as beverages, falls outside the scope of Article L. 441-3 of the Commercial Code when it appears as an ancillary element of a comprehensive service in which the customer is provided with or delivered a complete meal at home by a courier.

CEPC opinion No 16-6, 14 January 2016, LawLex201600000021JBA.

Electrician craftsmen who sell and install home automation devices are not subject to the single agreement as long as they do not merely resell these materials as is, but resell them as part of a comprehensive service including their installation and commissioning.

Opinion CEPC No 16-7, 14 January 2016, LawLex201600000006JBA.

Contracts between a wholesaler of fishery products and a HORECA (Hotel-Restaurant-Café) client are not subject to the obligation to draft a single agreement given the transformation activity of the products by the HORECA and their clientele primarily composed of individuals.

CEPC opinion No 18-10, 25 October 2018, LawLex201800000018JBA.

The writing required by Article L. 441-3 (former Art. L. 441-7) of the Commercial Code is not mandatory for the parties to a brokerage contract.

CA Paris, 21 November 2012, LawLex201200002361JBJ.

A distribution undertaking that develops an ancillary rental activity is not required to establish a written agreement with its suppliers regarding its purchases of products exclusively intended for rental, provided that they are distinct from those intended for resale and clearly identified as such.

CEPC opinion No 22-5, 18 November 2022, LawLex202300000001JBL.

A purchasing center, which procures from suppliers to resell to independent distributors, is subject to the formalities prescribed by Article L. 441-3 of the Commercial Code both in its relations with its own suppliers and with its clients who purchase for resale.

Opinion CEPC No 20-6, 17 December 2020, LawLex202000000014JBA.

What is the scope of application of the ordinary law written agreement?

Since the Ordinance of 24 April 2019, Article L. 441-4 of the Commercial Code, amended by the Law of 30 March 2023, provides specific provisions for fast-moving consumer goods (FMCG) that reiterate and further aggravate those of the former Article L. 441-7. Wholesalers are expressly excluded from the scope of the text even if they sell FMCG.

Their exact list is found in Article D. 441-9 of the Commercial Code, which targets:

food products and non-alcoholic beverages;

cleaning and maintenance products such as soaps, laundry powders, liquid detergents, scouring powders, detergents, bleach, fabric softeners, glass cleaners, drain cleaners, disinfectants, and distilled water, excluding waxes, polishes, dyes, insecticides, and fungicides;

cleaning articles such as brooms, scrubbing brushes, dustpans and hand brushes, dusters, cloths, dish towels, mops, household sponges, scouring pads, steel wool, and chamois leathers;

paper articles such as filters, tablecloths and napkins, kitchen paper, vacuum cleaner bags and cardboard tableware, including aluminum foil and plastic garbage bags;

non-electric devices such as razors and their blades, nail files, toothbrushes, excluding mechanical clippers and their blades, scissors, combs, shaving brushes, hairbrushes, nail brushes, hairpins, curlers, scales, baby scales;

personal hygiene products such as toilet soap, medicinal soap, toilet oil and lotion, soap, shaving cream and foam, toothpaste;

beauty products, perfumes, and deodorants such as lipsticks, nail polishes, makeup and makeup removal products (including powder compacts, brushes, and puffs), hair sprays and lotions, pre- and post-shave products, sun care products, depilatory products, perfumes and eau de toilette, body deodorants, bath products;

other products such as toilet paper, paper tissues, paper towels, sanitary tampons, absorbent cotton, cotton swabs, disposable diapers for babies, bath sponges.

In addition to the conditions set by Article L. 441-3, I, agreements relating to fast-moving consumer goods must indicate the schedule of unit prices as previously communicated by the supplier, with its general terms of sale or the methods of consulting this schedule in the version that served as the basis for negotiation, as well as the price reductions . The EGalim 3 law has further strengthened the constraints on the parties since now, the unique FMCG agreement must also mention “each of the reciprocal obligations to which the parties have committed at the end of the commercial negotiation and their unit price.” This mention seems to require an individualized motivation of the agreed obligations and a quantification of the advantage obtained in return. It will allow for the control of the existence of any discriminatory practices, which this same law extends the prohibition of, previously limited to food products, to all FMCGs (Art. L. 442-1, I, 4). Furthermore, the EGalim 3 law introduces an obligation to negotiate in good faith the conditions of the written FMCG agreement, in accordance with Article 1104 of the Civil Code. This obligation is sanctioned by a new restrictive practice inserted in Article L. 442-1, I, 5, which incriminates the failure to conduct commercial negotiations in good faith, resulting in the failure to conclude a contract by the deadline of 1 March, exceptionally advanced, for the year 2024, to 15 January for small and medium-sized enterprises or intermediate-sized enterprises and to 31 January for large industrial companies by the Le Maire law of 17 November 2023.

The FMGC agreement must also specify the projected turnover, the business plan of the commercial relationship, and the terms for revising the projected turnover (Art. L. 441-4, IV).

The conditions under which promotional benefits are granted to consumers are subject to mandates given to the distributor or service provider, subject to Article 1984 of the Civil Code (Art. L. 441-4, VII).

Article L. 441-4, V also requires a concurrence between the effective date of the obligations mentioned in 1° to 3° of Article L. 441-3 and the effective date of the agreed price.

Finally, the GTC must be provided no later than three months before 1 March, that is, before 1 December, with the distributor having a reasonable period to notify in writing the reasons for their refusal of the GTC, their acceptance, or, if applicable, the provisions of the GTC they wish to submit for negotiation (Art. L. 441-4, para. VI). For the 2024 negotiations, the Le Maire law has exceptionally moved these dates to 5 December 2023 for large manufacturers, and to 21 November 2023 for SMEs.

Advice: Ensure compliance with the formal requirements and timeline.

Suppliers subject to the written FMGC agreement must, if they have established them, send their GTC to their partners before 1 December under penalty of being liable for any delay in concluding the agreement before 1 March. Even if the exercise may seem tedious and unnecessary, it is advisable to comply and adhere to all the required information.

A reduction allegedly granted by the distributor on the price of its service is enforceable against it only if it is included in the written contract.

CA Paris, 18 January 2017, LawLex201700000122JBJ.

Is a written agreement required for consumer goods?

Article L.441-1-2 of the Commercial Code defines a wholesaler as “any natural or legal person who, for professional purposes, purchases products from one or more suppliers and resells them, primarily, to other merchants, wholesalers or retailers, processors, or any other professional who procures them for the needs of their activity.” The text equates wholesale purchasing or referencing centers with wholesalers. However, this definition does not include undertakings or groups of natural or legal persons operating, directly or indirectly, one or more retail stores, as well as purchasing or referencing centers for retail trade companies.

The application of the written agreement regime to wholesalers has experienced numerous developments. Initially subject to the ordinary law agreement by the Chatel Law, wholesalers were excluded by the Macron Law to benefit from a simplified procedure within a special agreement, before being reintegrated into the scope of the ordinary law agreement by the Ordinance of 24 April 2019. In an effort to protect and centralize the regime applicable to wholesalers, the EGalim 3 Law once again dedicates a special text to the written wholesaler agreement.

In fact, Article L. 441-3-1 stipulates that a written agreement must be concluded either between the supplier and the wholesaler, or between the wholesaler and the distributor or service provider , which sets out the reciprocal obligations to which the parties have committed at the end of the commercial negotiation, in compliance with Articles L. 442-1 to L. 442-3. The regime is the same as the ordinary law agreement, except that wholesalers are not subject to the formal requirements of the single agreement specific to consumer goods and the single agreement specific to food and pet food products, even where they market such products for both purchase and resale (Art. L.441-1-1, V Commercial Code).

The transformation of products by the café,-hotel-restaurant sector (CHR), combined with a clientele consisting mainly of private individuals, leads to the rejection of the formalities of the single agreement in the relationship between a wholesale warehouse operator and CHR.

CEPC opinion No 18-10, 25 October 2018, LawLex201800000018JBA

Are wholesalers bound by the formal requirements of the written agreement?

Subcontracting agreements are subject to significant formal requirements. Article L. 441-5 thus provides that a written agreement is established in compliance with Articles L. 441-1 and L. 442-1 to L. 442-3 of the same code, “for any purchase of manufactured products, made to the buyer's order to be integrated into their own production.” However, this obligation only applies to transactions whose amount exceeds a threshold set by decree at EUR 500,000 (Art. D.441-2 Commercial Code).

The DGCCRF note from October 2014 on the application of the provisions under consumer law (Hamon Law) specifies that these provisions apply in the context of subcontracting production relationships concerning (i) purchases of products excluding service contracts and (ii) purchases of manufactured products made to the buyer's order, that is, according to their specifications, which excludes purchases of standardized products sold from a catalog.

Without requiring all the mentions listed in Article L. 441-3 of the Commercial Code, the text provides that the written agreement includes:

the subject of the agreement and the respective obligations of the parties;

the price or the terms of its determination;

the respective responsibilities of the parties and the guarantees, such as, where applicable, the terms of application of a retention of title;

the rules governing intellectual property between the parties, in compliance with applicable legislative provisions, when the nature of the agreement justifies it;

the duration of the agreement as well as the terms of its termination;

the methods of dispute resolution regarding the execution of the agreement and, if the parties decide to resort to it, the methods for establishing mediation;

the terms for revising the agreed price when it is concluded for a duration of two or three years.

Failing that, Article L. 441-6 provides for the imposition of an administrative fine of EUR 75,000 euros for a natural person and 375,000 euros for a legal entity, with the amount doubled in the event of a repeat offense within two years from the date on which the first sanction decision became final.

Is a written agreement mandatory in subcontracting?

Article L. 441-7 of the Commercial Code, in its version resulting from the Ordinance of 24 April 2019, does not strictly speaking extend the mechanism of the written agreement to contracts concluded between a supplier and a distributor concerning the design and production of food products according to the specific needs of the buyer and sold under a distributor's brand.

The provision only requires, when the sale of agricultural products is the subject of a written contract, that the contract state the price or the criteria and terms for determining the purchase price of the agricultural products that are part of those food products. This obligation also applies when the seller is an agricultural cooperative company within the meaning of Article L. 521-1 of the Rural and Maritime Fishing Code.

Must food products manufactured under a distributor's brand be subject to a written agreement?

The EGalim 2 law required the parties, for food products and those intended for pet food, to draft a specific written agreement that must mention the reciprocal obligations to which the parties have committed following the commercial negotiation, as well as their unit price (Art. L. 443-8 Commercial Code).

When the “buyer” is a distributor, the agreement must comply with the conditions applicable to the ordinary law agreement and the FMCG agreement, in addition to those of Article L. 443-8. Under this provision, commercial negotiation must not in any case concern the portion, in the supplier's price list, of the price of agricultural raw materials and processed products composed of more than 50% agricultural raw materials. When, in accordance with the freedom granted by Article L. 441-1-1, the supplier has chosen to include in its general terms of sale (i) the share represented by each of the agricultural raw materials and each of the processed products composed of more than 50% agricultural raw materials in the composition of the product, in the form of a percentage by volume and a percentage of the supplier's price list, or (ii) the aggregated share of these agricultural raw materials and processed products composed of more than 50% agricultural raw material that are part of the product composition, in the form of a percentage by volume and a percentage of the supplier's price list, the unique agreement must reproduce them as they are and specify the terms for considering their purchase price in the development of the agreed price.

Article L.443-8 also requires the inclusion of a clause for the automatic revision of contract prices based on the fluctuation of the cost of agricultural raw materials, whether increasing or decreasing, that are part of the product's composition. The parties remain free to determine, according to the production cycle duration, the revision formula as well as the indicators used. However, when the acquisition of the agricultural raw material by the supplier is subject to a written contract pursuant to I of Article L. 631-24 of the Rural and Maritime Fishing Code, the revision clause must mandatorily include indicators related to agricultural production costs.

Any amendment to the agreement must be in writing and mention the new element justifying it.

On the other hand, the provision of the written agreement does not concern perishable agricultural products, referred to in Article L. 443-2, which provides for the drafting of a written contract including volume commitments, price determination methods, and the setting of a price, as well as the price advantages granted to the distributor.

fruits and vegetables - except for ware potatoes - intended to be sold fresh to the consumer;

fresh, frozen, or deep-frozen poultry and rabbit meats.

In the absence of an established agreement for these products, a distributor or service provider cannot benefit from discounts, rebates, and refunds or provide for the remuneration of services rendered during their resale, aimed at promoting their commercialization and not related to purchase and sale obligations, or services with a distinct purpose. However, agreement or not, Article L. 443-2, I of the Commercial Code excludes the possibility for a buyer, distributor, or service provider to benefit from discounts, rebates, and refunds for the purchase of fresh fruits and vegetables. Price reductions resulting from a qualitative or quantitative non-compliance of the delivered product with the order remain possible, if an agreement concluded by a recognized interprofessional organization has specified the conditions.

Which food products are subject to the written agreement requirement?

The EGalim 3 Law added a new obligation to formalize contractual relationships within the framework of logistics services to the arsenal of specific written agreements. The new para. I bis of Article L. 441-3 of the Commercial Code indeed provides that the reciprocal obligations in logistics to which the supplier and the distributor or service provider commit, including the amount of penalties mentioned in Article L. 441-17 and the methods for determining this amount, must be the subject of a written agreement, separate from the ordinary law written agreement. No details have been provided on the content of the logistics agreement and its scope. The term “logistics” is not even defined. However, it should not be limited to logistical penalties alone: the text refers to “reciprocal obligations” and includes the term “including.”

Contrary to the written agreement, the logistics agreement is not subject to the drafting obligation on 1 March. Furthermore, paragraph 3 specifies that the termination or expiration of the logistics agreement cannot lead to the automatic rescission of the ordinary law agreement.

While this two-tiered contractual arrangement complicates and slows down negotiations and their formalization, everything suggests that it was most certainly introduced to discourage distributors from imposing excessively high logistical penalties on their suppliers, or at least to regulate them more strictly, especially since non-compliance with this provision is sanctioned by an administrative fine of up to EUR 750,000 .

Do logistics services require a written agreement?

Freely negotiated, the marketing agreement must be the subject of a written contract between the supplier and the distributor (Art. L. 441-3 Commercial Code). Before this requirement was expressly stated in the text, case law had already decided early on that in the absence of a written document, the commercial cooperation agreement could be considered nonexistent. Invoices, letters, or exchanges of correspondence are not sufficient to establish it .

The agreement must take the form of a single document or a set consisting of a framework agreement and implementation contracts.

Advice: Closely monitor legislative developments.

The law of commercial negotiation changes almost every year.  It was reformed in 2014 by the Hamon Law, in 2015 by the Macron Law, at the end of 2016 by the Sapin II Law, in 2018 with the EGalim Law, in 2019 with Ordinance No 2019-359, in 2021 with the EGalim 2 Law, in 2023 with the EGalim 3 Law and the Le Maire Law.

Any irregularity in the written commercial contract is equivalent to its non-existence.

Cass. crim., 6 December 2006, LawLex200700000017JBJ.

Must the agreement necessarily in writing ?

The ordinary law agreement must be drafted no later than 1 March of the year in which it takes effect, and for companies whose products or services are subject to a specific marketing cycle, within two months following the start of the marketing period. According to the Commercial Practices Review Commission, the exception allowing the drafting of the agreement to be deferred by two months only concerns “products or services whose intrinsic characteristics constrain [...] to a seasonality of marketing” .

Consequently, an undertaking cannot rely on its accounting and tax schedule to justify that the agreement is not signed within the legal deadlines and that the agreed price is not applied on that same date.

The absolute deadline is March 1st. A party does not commit a fault by requiring that the agreement be signed before this deadline . In theory, both parties can be held responsible for exceeding the deadline , even though most often, the breach is attributed to the distributor.

The same rules apply to the “wholesalers” single agreement and the FMCG agreement. However, for the year 2024, the latter has been subject to specific adaptations aimed at allowing an anticipated pass-through of the decrease in raw material costs to consumer prices in a context of rampant inflation. The Le Maire Law of 17 November 2023 indeed provided for a two-speed advancement of annual negotiations, depending on the size of the industries concerned. For suppliers with a turnover of less than 350 million euros, the conclusion of the “fast-moving consumer goods” agreement was brought forward to 15 January 2024. For those with a turnover exceeding EUR 350 million, the deadline was set for 31 January.

For agreements to be concluded before 1 March, it is stipulated that the supplier must communicate its general terms and conditions of sale to the distributor within a reasonable time before 1 March or, for products or services subject to a specific marketing cycle, before the start of the marketing period. It is generally considered that 1 December at the latest constitutes an appropriate date. Under the Le Maire law, SME suppliers were required to communicate their general terms and conditions of sale by 21 November 2023 at the latest, and large companies by 5 December 2023 at the latest.

Annual until the Sapin II Law, the agreement can now be multi-annual. In order to reduce the burden on undertakings, Article L. 441-3 para. IV provides that “[t]he written agreement (...) is concluded for a duration of one year, two years, or three years, at the latest by 1 March of the year in which it takes effect or within two months following the start of the marketing period for products or services subject to a specific marketing cycle.” However, it cannot under any circumstances be concluded for an indefinite duration .

Advice: Retain proof that you sent your general terms and conditions of sale to the distributor within a reasonable time frame and document your good faith in the negotiation proposals, so that you are not held jointly responsible for exceeding the deadline, should this occur.

This may concern both the availability of products or the seasonality of marketing, occurring during a specific period (for example, Christmas decorations).

CEPC opinion No 17-7, 27 April 2017, LawLex201700000016JBA.

The supplier may require its distributor to sign the written agreement before 1 December, with 1 March being only a deadline.

CA Paris, 6 November 2019, LawLex201900001343JBJ.

The mere fact that a supplier, who sent its general terms and conditions of sale to the distributor within the legal deadlines, did not make, on 19 February of the current year, proposals that exactly matched the latter's requests, is not sufficient, in the absence of other elements, to make it jointly responsible for exceeding the deadline for concluding the written agreement, especially when this distributor has also been convicted for 149 other offenses involving other suppliers.

CA Versailles, 21 December 2023, LawLex202400000077JBJ.

The mandatory nature of the prescribed formality limits the duration of the written agreement to a maximum of three years and excludes any possibility of concluding an agreement for an indefinite period.

CEPC opinion No 21-2, 18 March 2021, LawLex202100000011JBA.

Is there a specific deadline for drafting the agreement?

The agreement must specify the obligations to which the parties have committed in order to set the price at the end of the commercial negotiation:

the conditions of the sale of products or the provision of services, including price reductions, and where applicable, the types of situations in which and the terms under which derogatory conditions of the sale operation may be applied;

the commercial cooperation services that the distributor or service provider renders, specifying the purpose, the scheduled date, the terms of execution, as well as the remuneration for these services and the products or services to which they relate, and the total remuneration related to all of these obligations;

other obligations intended to promote the commercial relationship between the supplier and the distributor or service provider, specifying for each the purpose, the scheduled date, and the terms of execution, as well as the remuneration or the overall price reduction related to all these obligations;

the object, date, terms of execution, remuneration, and products to which it relates for any service or obligation under an agreement concluded with a legal entity located outside French territory, with which the distributor is directly or indirectly connected.

The purpose of this last mention is to ensure transparency regarding the practice of relocating “service” centers that charge suppliers for services of questionable utility, often aiming to circumvent French law to impose significant price reductions without compensation. It is therefore necessary to indicate in the single agreement applicable to commercial negotiations in France all amounts paid to international entities directly or indirectly linked to the distributor concerned, as long as they are attributable to products marketed in a sales area of the distributor located in France. This new mention will facilitate administrative controls, allowing verification of whether these international agreements are illicit, particularly with regard to the provisions of Article L. 442-1 of the Commercial Code, which address undue or disproportionate advantage and significant imbalance, and to draw all necessary consequences. The EGalim 3 law has introduced new provisions to enhance the effectiveness of this deterrent system: Article L. 444-1 A now indeed provides that all rules relating to price transparency and restrictive practices, which it grants the status of mandatory public policy provision, apply to any agreement concerning products or services marketed on French territory. Furthermore, any dispute regarding their application now falls under the exclusive jurisdiction of French courts .

500 Questions - Business Law

19. What penalties apply for non-compliance with the formal requirements of Article L. 441-3?

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19. What penalties apply for non-compliance with the formal requirements of Article L. 441-3?

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