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

Company Law (en cours)

The case law is very strict when a de facto company is invoked by partners. It considers that the cumulative elements necessary for the existence of a de facto company between cohabitants—namely the existence of contributions, the intention to collaborate equally in the realization of a common project, the intention to share in the profits or savings as well as any resulting losses—must be establi …

Cumulative criteria

The case law is very strict when a de facto company is invoked by partners. It considers that the cumulative elements necessary for the existence of a de facto company between cohabitants—namely the existence of contributions, the intention to collaborate equally in the realization of a common project, the intention to share in the profits or savings as well as any resulting losses—must be established separately and cannot be inferred from one another . If the proof of these elements can, in the presence of a commercial activity, be provided by any means , it must, in civil matters, be based on tangible elements, such as the keeping of accounts .

A set of consistent indicators will most often be necessary to characterize a de facto company created between cohabitants . Real estate purchases made by one of the cohabitants in their personal name and reimbursed by them alone exclude any classification as a de facto company , even in the case of prolonged cohabitation and the other’s participation in common expenses . Furthermore, among professionals, the mere joint exercise of an activity is not sufficient. In fact, the joint exercise of the activity of physiotherapist, in the same premises, the existence of a joint bank account, a single accounting system, and the equal sharing of profits and clientele do not suffice to demonstrate the existence of a de facto company, as long as the existence of contributions, the willingness to contribute to losses, and the intention to associate are not established . Similarly, the existence of a de facto company cannot be characterized between two doctors if, due to the nature of their specialties as psychiatrist and neuropsychiatrist, they do not have a common clientele . Finally, the existence of a de facto company is not established in the absence of a contribution in cash or services and proof of an intention to create a true joint undertaking, but only to pool purchases within a structure likely to provide savings .

On the other hand, the mere fact that the parties intended to establish a company under law is insufficient to dismiss the existence of a de facto company if the activity they have jointly developed goes beyond the performance of simple acts necessary for the formation of the company in formation and if the other elements of the company contract are present .

Finally, according to the Court of Cassation, it follows from Articles 1871 to 1873 of the Civil Code and Article 124 of the decree of 27 November 1991  that an association of lawyers with individual professional liability must be considered as a de facto company subject to the regime of joint ventures. Consequently, the relationships between partners are governed, as appropriate, by the provisions applicable to civil companies, if the company has a civil nature .

CA Versailles, 21 September 2021, LawLex202300010059JBJ.

Cass. com., 23 June 2004, LawLex202300009307JBJ; 3 November 2004, LawLex202300010069JBJ.

Cass. com., 4 December 2001, LawLex200200000578JBJ; CA Paris, 11 March 2009, LawLex202300014402JBJ. - Cf., rejecting the classification of a de facto company when a legal company has indeed been constituted, CA Paris, 26 June 1992, LawLex202300014471JBJ.

Decree No 27 November 1991 organizing the legal profession, OJ 28 November 1991.

Cass. 1re civ., 24 April 2024, LawLex202400003315JBJ, RJDA 2024, No 470.

Cass. com., 13 March 1984, LawLex202300009678JBJ.

Cass. 1re civ., 4 June 2007, LawLex202300009722JBJ; CA Paris, 12 September 2002, LawLex202300011121JBJ.

Cass. com., 3 November 2004, LawLex202300010069JBJ, recognizing the existence of a de facto company as the partner established that he had been the tenant of the land later acquired by his partner, that during this purchase, he had taken steps with the SAFER and lending organizations, had sold livestock to finance the acquisition, had acted as guarantor for the loan taken out by his partner, that the partners had conducted various commercial activities on this land, and that the partner had a power of attorney on his partner's bank account, which she operated.

Cass. com., 30 June 1970, LawLex202300009937JBJ; Cass. 1re civ., 5 March 1985, LawLex202300014407JBJ.

Cass. 1re civ., 23 June 1987, LawLex202300014404JBJ; Cass. com., 7 April 1998, LawLex202300009314JBJ; 9 October 2001, LawLex202300009310JBJ. - Also see Riom, 4 July 2000, LawLex202300011146JBJ; CA Paris, 12 September 2002, LawLex202300011121JBJ.

Cass. com., 8 January 1991, LawLex202300009319JBJ. - See a contrario, CA Paris, 20 December 1991, LawLex202300014411JBJ.

Cass. 1re civ., 10 February 1998, LawLex202300014398JBJ.

Colmar, 18 March 2008, LawLex202300009739JBJ. - Similarly, Colmar, 9 October 2013, LawLex202300014400JBJ, holding that while the organization of replacements and the pooling of resources allow for a rationalization of the mode of practice of nursing and the achievement of savings, this circumstance is not sufficient to characterize the sharing of profits nor the intention to contribute to losses, or even the affectio societatis.

Company Law (en cours)

621. Cumulative criteria

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

621. Cumulative criteria

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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