All of French Company Law: ordinary law of companies and specific regime for different types of companies

Company Law (en cours)

To exercise its rights, the company acts through one or more representatives, natural persons. Case law emphasizes that the company's representative holds a special legal power, which exempts them from having to present a mandate  and allows them to be the recipient of procedural acts directed against the company . However, not everyone has the power to represent the company, so in the absence of  …

Representation of the company with respect to third parties

To exercise its rights, the company acts through one or more representatives, natural persons. Case law emphasizes that the company's representative holds a special legal power, which exempts them from having to present a mandate  and allows them to be the recipient of procedural acts directed against the company . However, not everyone has the power to represent the company, so in the absence of a specific delegation, contracts concluded by an accountant, who does not have the power to bind the company, must be annulled , unless the company subsequently ratifies them, even tacitly . In no case, however, are third parties allowed to rely on the statutes of a legal entity to challenge the regularity of the appointment of its representative and their power to act on its behalf . Relative , the nullity incurred also requires the victim to establish the existence of a grievance .

The company is bound only by the acts that its representative performs in its name . This principle can be a source of insecurity for third parties, who are exposed to the risk of contracting with a person who does not have the necessary authority to bind the company. To avoid this drawback, the courts apply the theory of appearance, under which an act concluded with a person lacking the necessary authority nevertheless binds the company if the third party, although not having verified the extent of the representative's powers, could legitimately believe that the latter represented the company. In fact, the legitimate belief of third-party lenders in the powers of the representative of an SCI, reinforced by the intervention of a notary, allows them not to verify the exact limits of his mandate and, in particular, his capacity to bind the company to grant them a mortgage guarantee . Conversely, the contribution to current accounts made by financial investors does not bind the company when it has been prompted by a shareholder who, although a majority, lacks the qualities of a general manager or president, which alone could establish a legitimate belief in the extent of his powers under the theory of apparent authority . Similarly, a third party must verify the extent of the powers of their contracting party, “site manager,” in the absence of circumstances that would lead them to legitimately believe they are dealing with a person duly authorized to bind the company .

The fact that a person represents a company implies that they are not personally bound by the acts they conclude on behalf of the company. Thus, when a partner signs, as a manager, a loan agreement providing for the transfer of a portion of the shares constituting the capital of their company in the event of non-repayment of the debt, they do not do so in their personal name, so this clause of the contract is unenforceable against them . Furthermore, the dual capacity in which the signatory of a legal act intervenes, on the one hand personally and, on the other hand, as a representative of the company of which they are a partner, does not require a double signature as a condition for the validity of the act .

The change of representative by the company can also be a source of insecurity for third parties. To protect them, the courts have decided that it only takes effect with respect to them when the legal publicity formalities have been completed .

Finally, the cessation of the company's representative's functions terminates their power of representation , so the company is no longer bound by their actions. Therefore, the corporate officer of a company, whose cessation of functions has been duly published, can no longer enter into a lease agreement in its name . However, serving a summons to an individual, even if referred to as a “former manager,” allows for validly summoning the company if the representative is still the manager at the date of the initiating instrument .

Cass. com., 18 September 2019, LawLex202200007575JBJ.

Cass. com., 17 February 2015, LawLex202100004308JBJ.

Cass. com., 6 October 2015, LawLex202200007588JBJ.

Cass. com., 20 November 2019, LawLex202200007578JBJ.

Cass. com., 9 May 2018, LawLex202200007576JBJ.

Cass. crim., 9 September 2020, LawLex202200007590JBJ.

Cass. com., 12 May 2015, LawLex202100004481JBJ, considering that the company director, whose duties have ended due to his resignation, even if it has not been subject to legal publicity measures, cannot appear as the legal representative of the company in proceedings subsequently initiated against it before the Commercial Court.

Cass. com., 4 May 1993, LawLex202200004799JBJ.

Cass. com., 10 July 2019, LawLex202100004309JBJ.

Cass. com., 3 June 2014, LawLex202200007586JBJ.

Cass. com., 17 January 2018, LawLex202200007582JBJ.

Cass. com., 26 February 2008, LawLex202200006562JBJ.

Cass. 1re civ., 12 November 2015, LawLex202100003188JBJ establishing that the invalidity of a lease contract based on the lack of capacity of the lessor company due to the death of its manager is of a relative nature and can only be requested by the represented party.

Cass. 2e civ., 8 July 2010, LawLex202200007580JBJ, considering that the invalidity of a payment order, affected by a formal defect due to the lack of authority of the person representing the legal entity, is subject to the existence of a resulting grievance; 14 November 2019, LawLex202200007581JBJ, holding that an error in the designation of the representative of a legal entity constitutes a formal defect that only results in the invalidity of the act if the person invoking it proves the grievance caused by this irregularity.

Cass. com., 15 February 2023, LawLex202300012886JBJ, LPA July-August 2023, 76, note NIVERT, considering that the general manager of a company who endorses a promissory note issued by it is personally liable as an endorser, as long as the original bears his signature and only his name, even if he later corrected the submission to include his capacity as an agent of the legal entity.

Cass. 3e civ., 19 March 2020, LawLex202200007585JBJ.

Cass. com., 22 November 2011, LawLex202200007583JBJ.

Company Law (en cours)

50. Representation of the company with respect to third parties

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50. Representation of the company with respect to third parties

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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