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Competition investigation – French law

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Rights conferred by the trademark

Patentability

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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

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Commercial law

500 Questions - Business Law

First, the provisions of the Commercial Code relating to claims and restitutions apply only to movable property and not to immovables. However, the possible classification of certain goods as immovable by destination does not deprive the seller, holding a retention of title clause, of the ability to claim them . The claim procedure applies to both tangible and intangible movables: the owner of a p …

What goods can be claimed?

The action for recovery, which allows the owner of a property to have their right recognized in order to obtain its restitution, constitutes a specific action: it can only be exercised by the owner of the thing. Therefore, the following cannot bring an action for recovery:

the lessee of the item held by the sub-lessee in insolvency proceedings ;

the creditor of a sum of money, who does not have the legal status of owner of it .

Proof by the claimant of their ownership right over the property in the hands of the debtor subject to the procedure is not always easy to provide:

an assignee cannot claim an asset held by the debtor without establishing that it is included within the scope of the assignment;

a third party claiming ownership does not establish that they own the goods stored in the debtor's premises merely by producing a report that mentions their labeling in their name.

Moreover, assets belonging to the public domain of the State, assigned to a public service mission, are exempt from the real effect of collective proceedings and cannot, consequently, be included in the creditors' pledge nor be subject to sale within the framework of judicial liquidation .

Advice: Do not assume that the action for recovery is limited to the seller of the item that has not been paid for. Indeed, according to the Court of Cassation, the title or legal cause of the possession of the item by the debtor in judicial reorganization has no influence on the obligation of the owner to act for recovery within the period set by Article L. 624-9 of the Commercial Code. The action for recovery of goods, whose ownership has been reserved under a contractual clause, must therefore be exercised even if the debtor holds the item under a contract of undertaking, deposit, or movable lease.

In the absence of continuation of the sublease contract, the action for recovery aimed at the restitution of the subleased item, when necessary, can only be exercised by the owner of the item and not by the principal tenant.

Cass. com., 20 May 1997, LawLex202100003376JBJ.

A request for the return of funds held by the debtor, even as owner, cannot be made by way of a claim when the filing of a proof of claim in the debtor's insolvency proceedings is the only avenue available to a creditor seeking to recover those funds.

Cass. com., 22 May 2013, LawLex202100003370JBJ.

The assets entrusted to an undertaking in judicial liquidation for the integration of electronic maritime surveillance equipment, intended to enable the customs administration to perform a public service mission related to national security, belong to the public domain of the State, so they are not subject to the real effect of the collective proceedings.

Cass. com., 23 May 2024, LawLex202400006472JBJ.

Who can claim a movable property held by the debtor?

First, the provisions of the Commercial Code relating to claims and restitutions apply only to movable property and not to immovables. However, the possible classification of certain goods as immovable by destination does not deprive the seller, holding a retention of title clause, of the ability to claim them . The claim procedure applies to both tangible and intangible movables: the owner of a patent or a business (fonds de commerce)  is therefore not exempt from the claim requirements.

Secondly, pursuant to Article L. 624-16 of the Commercial Code, a movable asset can only be claimed if it exists in kind, in the hands of the debtor, on the date of the commencement judgment. The condition of existence in kind means the preservation of the goods in their initial state, that is, without having undergone any transformation likely to alter their substance. No longer existing in kind on the day of the commencement of the proceedings:

precious stones, whose setting prior to this date now makes any identification and individualization impossible;

the slaughter and cutting of animals delivered to the debtor before the commencement order .

sawing and fitting operations, which do not affect the substance of the goods;

the incorporation of musts provided by cooperative partners to one another and the process of evolution and vinification of the harvested crops provided;

the sole dyeing of threads delivered by the seller, before any weaving operation .

The existence of goods in kind within the debtor's assets can be established even if they are physically held by a third party or in other locations . Proof of the existence in kind of the delivered goods is facilitated by the obligation imposed on the debtor, by Article L. 622-6 of the Commercial Code, to draw up an inventory of their assets, which mentions the goods they hold that may be claimed by a third party. The text specifies, in its para. 5, that the absence of an inventory does not prevent the exercise of the claim action. Case law goes even further by establishing a reduction of the burden of proof when the procedural bodies oppose its establishment  or a reversal of this burden when the inventory proves to be incomplete, summary, or unusable .

Advice: Do not assume that every operation performed on the item constitutes a transformation that excludes the recognition of its existence in its natural state.

Thirdly, Article L. 624-16, para. 2, of the Commercial Code states that the claim for recovery in kind may be exercised even on movable property incorporated into another asset, when their separation can be carried out without causing damage. It is the responsibility of the claimant, not the debtor, to establish the existence in kind of the claimed assets in the latter's estate on the day of the commencement of judicial reorganization, and to demonstrate that the separation of tangible assets incorporated into another asset can be carried out without damage . This applies, in particular:

of engines, which can be easily removed from the vehicles on which they are mounted;

of milling equipment, the separation of which from the concrete floor on which it was fixed will only require a possible restoration of the latter .

On the other hand, can no longer be claimed:

heating, ventilation, plumbing, and sanitary equipment incorporated into the debtor's building ;

digital orders, the return of which would involve complex obligations ;

integrated clamps into a new assembly for which they have been specially designed and adapted, and in which each element is only useful in relation to the others and to the whole of which it is a part.

Fourthly, in accordance with Article L. 624-16, para. 2, of the Commercial Code, the claim for recovery in kind can be exercised on fungible goods when goods of the same nature and quality are in the hands of the debtor or any person holding them on their behalf. The seller's claim for recovery in kind of fungible goods is admissible, as long as they can be easily replaced by others, without requiring proof of identity between the sold good and the claimed good .

Even if professional kitchen elements assigned to the commercial operation of a business may be classified as immovable by destination, the seller, holding a retention of title clause, may claim them.

Cass. com., 10 March 2015, LawLex202100001663JBJ.

The intangible nature of a property does not exempt the owner of a patent from the obligation of claiming, which applies to both tangible and intangible properties.

Cass. com., 22 October 1996, LawLex202100001646JBJ.

The claim for the recovery of a movable asset incorporated into another is admissible, provided that it is identifiable, separable, and its dismantling only requires possible restoration, without risk of damage to the debtor company's assets.

Cass. com., 2 November 2016, LawLex202100001661JBJ.

The climate engineering contractor who installed heating, ventilation, plumbing, and sanitary equipment in the debtor's building cannot claim them, notwithstanding any clause reserving ownership, as once incorporated into the work, they no longer exist in kind within the meaning of Article L. 624-16 of the Commercial Code.

Cass. com., 2 March 1999, LawLex202100003362JBJ.

Digital controls, whose return would involve unplugging cables, extracting computer cards, dismantling the control panel, unplugging and dismantling electric motors, and backing up programs, cannot be claimed as they cannot be considered, given the complexity of the operations, as being in their original state at the time of the commencement of judicial reorganization.

Cass. com., 24 March 2004, LawLex202100001662JBJ.

A tire supplier does not have to demonstrate the identity between those that were with the debtor on the day of the opening judgment and those it delivered to them, as long as they are fungible goods, regardless of the brand or type, by nature interchangeable or substitutable.

CA Toulouse, 22 November 2017, LawLex202200003456JBJ.

The seller of a business, holding a retention of title clause, is entitled to bring an action for the recovery of the business or, failing that, for the unpaid portion of the price as of the date of the commencement of the proceedings, with the recovery not being limited to tangible movable property.

Cass. com., 29 February 2000, LawLex202100003366JBJ.

The slaughter and cutting up of animals delivered to the debtor constitutes a transformation that prevents them from being considered as being in their original state with the latter before the commencement order, within the meaning of Article L. 624-16 of the Commercial Code.

Cass. com., 22 March 1994, LawLex202100001659JBJ.

A claimant must compensate for the dyeing and rewinding operation of the wool yarn, which he had sold with a retention of title clause and which, despite a dyeing operation, is entirely identifiable and has not ceased to exist in its original form.

Cass. com., 6 March 1990, LawLex202200003841JBJ.

A company is entitled to request the return of equipment when it is established, through invoices and the general terms and conditions of sale accepted by the debtor, that they were sold under a retention of title clause and were present in kind in the debtor's assets on the day the insolvency proceedings were opened, even if these goods had been delivered to its own sites or those of third parties, as long as they were held on its behalf.

CA Grenoble, Commercial Chamber, 12 September 2024, LawLex202400006427JBJ.

When the judicial administrator prevents the claimant from asserting their rights by refusing to provide the inventory of the debtor's assets, the claimant may prove their existence in kind within the debtor's estate as of the date of the commencement judgment by producing purchase orders and delivery notes.

Cass. com., 13 April 1999, LawLex202100003403JBJ.

In the absence of the mandatory formality of inventory, the burden of proving that the assets claimed by a creditor, which remained in the possession of the debtor during the judicial reorganization and the execution of the continuation plan, no longer existed in kind on the day of the judicial liquidation, falls on the liquidator who represents them.

Cass. com., 1 December 2009, LawLex202100001542JBJ.

The claim made by the creditor of a greenhouse delivered to the debtor in judicial liquidation and incorporated into real estate elements, whose separation can be carried out without degrading the neighboring building by sawing the posts at the height of the walls to create no damage or by removing and unscrewing the bases of the sealed posts to avoid any lifting or deformation due to weather conditions, is admissible.

Cass. com., 5 October 1993, LawLex202100003634JBJ.

Tires mounted on vehicles can be claimed as long as their removal is not likely to cause any damage to the tires, wheels, or vehicles.

CA Douai, 5 June 2014, LawLex202100005233JBJ.

If only owners are allowed to claim, not all owners are subject to the claim procedure and its short deadlines. The owner of a property is indeed exempt from having their ownership right recognized when the contract concerning this property has been publicized before the opening judgment and according to the applicable modalities. This is particularly the case:

of the management lease contract, the publication of which exempts the owner from having to assert their ownership right over the business through the exercise of a claim action;

of the leasing, the publicity of which exempts the lessor from exercising the claim action .

In addition to a formal publication requirement, the creditor's knowledge of the right of ownership also exempts the owner from having to claim their property . However, the same consequence is not attached to the knowledge or recognition of the right of ownership by the agent .

Case law has established another exception to the obligation of claim. It considers that an action for restitution initiated before the commencement of the debtor's insolvency proceedings is not subject to the provisions of Article L. 624-9 of the Commercial Code and must only, pursuant to Article L. 622-23 of the same code, be pursued after involving the judicial representative or the administrator when they have an assistance mandate .

See, a contrario, the lessor's ownership right is not enforceable against the lessee's creditors due to the failure to carry out the publicity required by Articles R. 313-4 to R. 313-11 of the Monetary and Financial Code with the registry of the competent court.

Cass. com., 4 December 2001, LawLex202200002811JBJ.

The fulfillment of the legal publicity measures for a leasing contract or proof of the creditor's knowledge of the lessor's ownership rights over assets held by the debtor are the only factors likely to make the lessor's ownership rights enforceable against the creditor holding an individual enforcement right.

Cass. com., 14 March 2018, LawLex202100003430JBJ.

Neither the registration of a leasehold assignment contract with the tax authorities nor the recognition of a property right by a judicial liquidator exempts the owner of a property held by the debtor from taking action for recovery.

Cass. com., 5 November 2013, LawLex202100003428JBJ.

A request for the restitution of furniture submitted before the holder is placed under safeguard is not subject to the provisions of Articles L. 624-9 and L. 624-10 of the Commercial Code and continues according to those of Article L. 622-23 of the same code.

Cass. com., 31 January 2012, LawLex202200003532JBJ.

Do all property owners have to claim their property?

Pursuant to Article L. 624-9 of the Commercial Code, the owner of an asset held by the debtor in safeguard proceedings must, within a fixed period of three months, claim their ownership right over it. This period begins from the publication of the commencement judgment .

The submission to the deadline of Article L. 624-9 is not challenged when the supervising judge grants an additional period to the administrator to decide on the continuation of the leasing contract. However, the payment action directed against the sub-purchaser, which arises from the claim action without being confused with it, is not subject to the three-month deadline.

The depositary must exercise their action for recovery within the fixed period of three months following the publication of the judgment opening the proceedings, as provided by Article L. 624-9 of the Commercial Code.

Cass. com., 14 November 2000, LawLex202200001999JBJ.

What are the applicable deadlines in the recovery procedure?

The procedure takes place in one or two stages, depending on whether the first concludes favorably or not for the claimant.

First, the claiming owner must submit their claim within three months from the date of the opening judgment, by registered letter with acknowledgment of receipt, to the administrator if one has been appointed or, failing that, to the debtor. The claim must, without any ambiguity, invite the competent person to rule on the property right of the claimant . The competent person to acquiesce has, pursuant to Article R. 624-13 of the Commercial Code, a period of one month to make a decision. The administrator, with the debtor's consent or, failing that, the debtor with the consent of the judicial representative, has discretionary power in this matter . If they acquiesce to the claim, their decision must be free of any ambiguity.

the decision of the judicial administrator to continue an ongoing contract;

the proposal of the judicial administrator to settle with the claimant invoking a retention of title clause, a value of the goods in stock significantly lower than that claimed.

In the absence of a response within a one-month period, or in the case of a negative response or dispute, a second phase of the procedure begins, which involves referral to the supervising judge. The supervising judge cannot under any circumstances be directly approached by the claimant. The supervising judge must, under penalty of foreclosure , be approached within one month following the expiration of the response period, which is also one month, as set by Article R. 624-13 of the Commercial Code. Before ruling, the supervising judge gathers the observations of the interested parties.

Advice: Adhere to deadlines to avoid enforcement of foreclosure.

The letter from the lessor asking its debtor subject to a judicial reorganization procedure to take a position on the continuation of the current contract does not constitute a claim request as long as it does not invite the debtor to express an opinion on its ownership rights over the property.

Cass. com., 12 March 2013, LawLex202100003440JBJ.

The failure of the administrator to acquiesce to a claim request cannot engage their liability as long as they have discretionary power in the matter.

Cass. com., 5 April 2016, LawLex202100003400JBJ.

The seller, who, in the absence of the administrator's acquiescence to their claim request within a one-month period, refers the matter to the supervising judge after the expiration of the one-month period available to them, must be declared time-barred.

Cass. com., 3 April 2001, LawLex202100003301JBJ.

What is the procedure?

Article L. 624-10 of the Commercial Code specifies that as a result of the waiver of the claim, the owner may demand the return of their property. The action for restitution is not subject to any of the constraints imposed on the plaintiff in the action to assert ownership, whether it concerns the time limits of Article L. 624-9 or the necessity to submit a prior request for acquiescence to the administrator . The request for restitution is made by the owner of the property by registered letter with acknowledgment of receipt to the administrator, if one has been appointed, or, failing that, to the debtor, with a copy to the judicial representative.

The return of goods held by a debtor company placed in judicial liquidation under a leasing contract that was duly published before the opening judgment does not need to be preceded by a request for acquiescence addressed to the judicial liquidator.

Cass. com., 14 June 2017, LawLex202100003433JBJ.

How can you recover property when the restitution claim procedure does not apply?

Four types of obstacles may arise for an owner who brings and action for recovery of ownership.

First, the owner may have the forefeiture enforced against them if they have not exercised the claim action within three months from the publication of the opening judgment , or, in the absence of the administrator's acquiescence within one month from receipt of the request, have not referred the matter to the supervising judge no later than one month from the expiration of the response period. The foreclosure of the owner's claim action for an asset held by the debtor does not extinguish their property right, nor does it result in its transfer to the debtor's estate. However, it renders the property right unenforceable against the insolvency proceedings and includes it in the common pledge of creditors.

Advice: Do not assume that forfeiture marks the end of all legal remedies for the supplier. Indeed, forfeiture does not prevent them from:

when their property has been seized in the hands of the debtor, requesting its removal to enforce against the right of the seizing creditor;

obtaining the restitution of their property against the third-party purchaser in bad faith;

obtaining the restitution of its property after the judgment that approves the continuation plan and ends the judicial reorganization proceedings, by the effect of the irrevocable termination of the lease that occurred before the opening judgment.

Secondly, the supervising judge may, pursuant to Article L. 624-16, para. 4, of the Commercial Code, oppose the claim for recovery by immediately paying the price due to the seller. The supervising judge may also, after obtaining the consent of the claimant, grant a payment extension to the debtor. In this case, the payment of the price is treated as that of the privileged post-petition claims of I of Article L. 622-17.

Thirdly, the disappearance of the item may hinder the claim for recovery. This is particularly the case when:

the property is no longer in its original form in the hands of the debtor on the day of the claim for recovery;

the asset was included in the undertaking's asset disposal plan, after the claim was exercised within the legal deadline;

the property was resold before being paid for;

the property was destroyed in the event of a loss.

In the first two scenarios, the claiming owner may seek restitution in value . In the third, expressly referred to by Article L. 624-18 of the Commercial Code, the right of claim is transferred to the resale price of the item that is no longer materially present in the debtor's assets. In terms of price claims as well as claims of goods, a preliminary procedure before the administrator or, failing that, before the judicial representative, is a mandatory prerequisite. However, it is not required that the item whose price is claimed exists in kind in the debtor's assets at the date of the opening judgment, but only at the time it is delivered to the sub-purchaser . The owner may claim the price of the item from the debtor if this price has been paid, or from the sub-purchaser if not, without the latter being able to enforce against him the exceptions he could have raised against the debtor .

In the fourth scenario, the owner may claim the insurance indemnity, subrogated to the property that has disappeared or been destroyed , provided it has not been paid to the debtor before the commencement of the proceedings .

Lastly, when the property of the claiming owner is in the hands of a third party, who holds it on their own behalf, the latter may invoke the provisions of Article 2276, para. 1, of the Civil Code, which states that in matters of movable property, possession is equivalent to title, to oppose the claim for recovery. To benefit from this advantage, the third party must, however, be in good faith, meaning they must be unaware that the debtor was not the owner of the property . Article 2286 of the Civil Code also establishes a right of retention in favor of the person to whom the item was delivered until the payment of their claim, or whose unpaid claim arises from the contract obliging them to deliver it, or whose unpaid claim arose during the possession of the item or for those who benefit from a pledge without dispossession. A real right, enforceable against all, the right of retention under Article 2286 allows holders of an item acquired by the debtor, for which the sale price has not been fully paid by the latter, to legitimately oppose its return, as long as they have not been fully paid for their claim for occupancy indemnity, which arose during the possession of this item.

The sales contract with a retention of title clause, for which the price has been paid, must be considered fully executed before the judgment opening the reorganization proceedings, so that the claim for recovery submitted more than three months after this judgment is barred by foreclosure.

Cass. com., 28 September 2004, LawLex202200001322JBJ.

When goods that existed in kind on the day of the commencement of insolvency proceedings have, after the claim made within the legal time limit, been included in the company's asset disposal plan, the administrator cannot proceed with their sale without paying their value to the owner.

Cass. com., 11 December 2001, LawLex202100003436JBJ.

The supplier's claim to the receivable for the price subrogated to the asset, when it has been resold by the debtor placed in judicial reorganization, does not require proof of the asset's physical existence on the date of the opening of the insolvency proceedings, but rather its existence in its initial state on the date it was delivered to the sub-purchaser.

Cass. com., 14 June 2017, LawLex202100003641JBJ.

The sub-purchaser cannot enforce against the initial seller claiming exceptions based on the defectiveness of the equipment for which he has not fully paid the price that he could assert against his own seller, placed in judicial liquidation, as the resale, by the effect of real subrogation, transfers into the initial seller's estate the price or the part of the price unpaid by the sub-purchaser on the day of the opening of the debtor's insolvency proceedings.

Cass. com., 5 June 2007, LawLex202100003667JBJ.

The owner of property lost or destroyed after the commencement of insolvency proceedings is not required to initiate the recovery action provided for in Article L. 624-9 of the Commercial Code in order to exercise their rights over the insurance indemnity substituted for this property.

Cass. com., 16 September 2008, LawLex202200003710JBJ.

The insurance indemnity subrogated to equipment destroyed in a fire cannot be claimed, pursuant to Article L. 624-18 of the Commercial Code, when it has been paid to the debtor before the commencement of insolvency proceedings.

CA Chambéry, 4 December 2012, LawLex202200003698JBJ.

The claim for recovery by the bank subrogated to the rights of the seller with reservation of title on a property transferred to the debtor, directed against the sub-purchaser who was aware of its prior possession by a person who was not the owner, is admissible as long as only possession free of defects by the sub-purchaser themselves or by another can prevent the recovery.

Cass. com., 5 March 1996, LawLex202100001721JBJ.

500 Questions - Business Law

478. What goods can be claimed?

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478. What goods can be claimed?

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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