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

Company Law (en cours)

Article L. 210-6 of the Commercial Code provides that in the absence of a take-over, the persons who have acted on behalf of the company  are personally liable for the commitments made to the co-contractors . Thus, when an individual acting on behalf of a company in formation signs a franchise agreement that has not been expressly taken over after the company's registration, they personally retain …

Personal commitment of founders

Article L. 210-6 of the Commercial Code provides that in the absence of a take-over, the persons who have acted on behalf of the company  are personally liable for the commitments made to the co-contractors . Thus, when an individual acting on behalf of a company in formation signs a franchise agreement that has not been expressly taken over after the company's registration, they personally retain the status of franchisee . Furthermore, the purchase price of a business remains the personal responsibility of the person who made the purchase, even if the transfer deed indicates their status as a representative of a company, as long as this company is in formation and its articles of association do not mention the deed for the purpose of a take-over .

The acts performed by the founders engage their joint and unlimited liability. However, the joint liability applies only in the internal relations among the founders who personally performed the acts: it does not extend to the company once established , or to non-merchants .

The commitments likely to engage the liability of the founders are varied: subscription of a loan , opening of a current account , ordering of works , social contributions , non-compete clause ...

The principle of founders' commitment is not without limits . Indeed, a partner of a company in the process of formation cannot be held liable for contracts concluded by the company itself and not by him on behalf of the latter, even if it was indicated that it was in the process of registration . Thus, when the company itself is designated as the contracting party to a lease agreement concluded while it is in the process of registration, its partners cannot be held liable for the obligations arising therefrom .

Furthermore, the co-partners who did not participate in the acts performed incur little risk of having their liability engaged , unless the existence of a de facto company is established . The assignees of the founders' shares, even if subrogated in their rights and obligations, are also not bound by the acts performed . Finally, the loan contracted in the name of a company in the process of being formed does not bind the guarantor, in case of non-compliance with the legislative provisions related to the take-over of commitments, as it cannot guarantee the debt of a person other than the initially intended debtor .

Cass., 1re civ., 19 November 1996, LawLex202200003735JBJ, holding that a partner of a company in formation, for whom it is not demonstrated that they signed or ratified a contract on behalf of the company, is not bound by it.

Cass. soc., 18 December 1979, LawLex202200003720JBJ, deciding that the URSSAF can personally claim from the partners the payment of contributions related to the employment of employees until the date of the company's registration in the commercial register when no document related to the acts performed on behalf of the company in formation is attached to the resolution of the first general meeting and no subsequent resolution decides on the company's take-over of these commitments; Cass. com., 27 October 1980, LawLex202200003770JBJ, holding that the founder of a company in formation who opens a commercial current account must be considered liable for its debit balance when the account is registered in his own name, provisionally pending the creation of the company and without the take-over of commitments by it; 3 April 1973, LawLex202200003711JBJ; 26 April 1988, LawLex202200003706JBJ, considering that the commitments made by the partner of an SARL in the process of being formed remain his personal responsibility if they are not disclosed to the partners before the signing of the articles of association and attached to them for their take-over; 11 January 2005, LawLex202200006521JBJ; Cass. 1re civ., 9 July 2014, LawLex202200003610JBJ; Cass. 2e civ., 5 March 2015, LawLex202200003707JBJ.

Cass. com., 19 May 1992, LawLex202200003703JBJ.

Cass. com., 15 November 1983, LawLex202200003734JBJ, considering that the judge cannot merely note that the founder of a company in the process of formation personally entered into acts to require them to pay if the company is never registered.

Cass. com., 10 February 2021, LawLex202200003718JBJ.

Cass. com., 18 November 2020, LawLex202200003716JBJ.

Cass. com., 25 October 1983, LawLex202200003732JBJ, indicating that only the associate who placed the order for work in the name of the company being formed is liable for its payment when the company has not been registered; 4 May 1981, LawLex202200003731JBJ, ruling that only the persons who personally performed acts in the name of a company being formed can be declared jointly and indefinitely liable for them, and not all the persons who participated in its formation; Cass. 2e civ., 5 March 2015, LawLex202200003707JBJ.

See a contrario, Cass. com., 9 November 1987, LawLex202200003736JBJ, considering that the associates who merely completed the formalities for the company's incorporation, without having engaged with third parties or participated in any activity giving the appearance of a de facto company, cannot be held jointly and indefinitely liable for commitments made in its name; 7 April 1992, LawLex202200003750JBJ, establishing that in the absence of a de facto company, which can only be based on criteria of the duration of the factual state of its notoriety, only the persons who personally entered into acts on behalf of a company in formation are liable, when proof of a special mandate to enter into the disputed contracts is not provided; 17 May 1989, LawLex202200003745JBJ.

Cass. com., 14 January 1992, LawLex202200003749JBJ, considering that only those who have personally performed or have given a mandate to execute acts on behalf of a company in formation are bound by them, to the exclusion of the transferees of their shares, subrogated in their rights and obligations.

Cass. 1re civ., 2 October 2002, LawLex202200003650JBJ; Cass. com., 1 April 2014, LawLex202200003705JBJ.

CA Paris, 1 February 2023, LawLex202300001864JBJ.

CA Aix-en-Provence, 30 March 2023, LawLex202300005039JBJ.

Cass. com., 22 May 1991, LawLex202200003630JBJ, specifying that there is no joint liability for the repayment of a loan between the persons who committed the company in formation and the legal entity duly constituted and registered.

Cass. com., 7 July 1981, LawLex202200003738JBJ, noting that the associates of an SARL are only jointly and severally liable for acts performed in the name of the company before its registration if they have either engaged in commercial acts as a regular profession or operated a commercial undertaking.

Cass. com., 22 May 1991, LawLex202200003630JBJ

Cass. com., 27 October 1980, LawLex202200003770JBJ.

Cass. com., 25 October 1983, LawLex202200003732JBJ.

Cass. soc., 18 December 1979, LawLex202200003720JBJ.

Company Law (en cours)

38. Personal commitment of founders

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Les notions juridiques connexes

38. Personal commitment of founders

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise