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

Company Law (en cours)

For a de facto company to be established, the partners must have intended to associate on an equal footing for a common enterprise. The affectio societatis required of the parties often absorbs, although the courts deny it, the other conditions. Indeed, the courts often characterize the intention to associate in terms of pooling contributions and the willingness to share profits and participate in …

Affectio societatis

For a de facto company to be established, the partners must have intended to associate on an equal footing for a common enterprise. The affectio societatis required of the parties often absorbs, although the courts deny it, the other conditions. Indeed, the courts often characterize the intention to associate in terms of pooling contributions and the willingness to share profits and participate in losses .

Between cohabitants, the intention to associate cannot be reduced to merely living together, even for an extended period , or to the financial participation of one cohabitant in a real estate project , such as acquiring a house through the formation of a real estate civil company  or building a house by taking out a loan . Indeed, the affectio societatis goes beyond merely pooling interests inherent to cohabitation. Pooling the cohabitant's income and carrying out work, at shared expense, on the property acquired by the cohabitant through a loan guaranteed by the other cohabitant, therefore, does not demonstrate an intention to associate distinct from the pooling of interests inherent to marital life . Even more so, the individual acquisition of real estate by one of the cohabitants often excludes the characterization of an intention to associate . Conversely, a genuine intention to associate is justified by the cohabitant who acts as a mortgage guarantor for the repayment of the loan granted to the other cohabitant for the purchase of the business assets and works in its various sales outlets . A willingness to associate on equal terms and share profits and losses is also demonstrated by spouses who create and develop a racehorse breeding operation together and, for the needs of this activity, enter into leases and take out several loans, pool the income from the operation, and acquire, in joint ownership, a residential house , or by cohabitants who borrow funds to acquire the building in which they set up an inn, each contributing to the expenses related to its restoration and operation, covering losses by taking out loans, and indicating in a letter that seeking profit is the objective of the joint operation .

In relations between professionals, the mere joint exercise of an activity does not indicate the existence of a de facto company, but only the partners' concern to best organize the independent exercise of their profession, in the absence of proof of an intention to associate or share profits . Similarly, the participation of two consultants in the drafting and execution of a contract, joint commercial efforts, one using the term "partner" to present the other, the presence of both parties' names on the firm's presentation document, which gave it a more structured appearance, and the registration of a trademark in both parties' names, are insufficient to demonstrate an unequivocal intention to associate, necessary for the creation of a de facto company, when the parties have never, due to their hesitations, realized their common project . The mere reference to a person's status as a partner in certain commercial documents intended for third parties does not suffice to prove the existence of an affectio societatis . Conversely, spouses demonstrate the intention to associate on an equal footing for the exercise of a common activity and to contribute to profits and losses when, from the time of their marriage, they jointly practice their profession as dental surgeons by keeping a single income register, without distinguishing between each other's income, filing a single tax return for three consecutive years, or merging their assets through payments and transfers without maintaining accounts between them .

Dissensions or disagreements between the alleged partners also allow for the exclusion of the existence of an affectio societatis, and therefore, of a de facto company. Thus, when, at the end of a partnership agreement for the operation of a quarry, and after disagreements have arisen over its management, one of the partners alone enters into a new drilling agreement and notifies the other that he does not recognize any rights for him over his new activities, no de facto company can be invoked . Similarly, the existence of a radical disagreement between the partners of an SNC regarding the advisability of extending its term excludes any affectio societatis between them .

See notably Cass. com., 4 March 1970, LawLex202300010067JBJ; Cass. 1re civ., 27 April 1977, LawLex202300010072JBJ; Cass. com., 9 November 1981, LawLex202300011019JBJ; 1 December 1981, LawLex202300010068JBJ; CA Paris, 26 June 1992, LawLex202300014471JBJ; CA Grenoble, 8 January 2002, LawLex202300010986JBJ; CA Paris, 29 September 2020, LawLex202300010080JBJ.

Cass. 1re civ., 5 March 1985, LawLex202300014407JBJ; 18 July 1995, LawLex202300009317JBJ.

Cass. com., 8 February 2000, LawLex202300009312JBJ.

Paris, 21 June 2002, LawLex202300009724JBJ. - See also, regarding a couple of taxi artisans, Cass. com., 12 February 2002, LawLex202300010854JBJ.

CA Paris, 16 October 2014, LawLex202300010817JBJ.

Cass. com., 27 February 1996, LawLex202300010441JBJ.

Cass. 3e civ., 22 June 2023, LawLex202300009661JBJ.

CA Nîmes, 4 June 2009, LawLex202200009988JBJ.

Cass. com., 3 April 2012, LawLex202300009719JBJ; CA Rouen, 8 February 2017, LawLex202300010811JBJ; CA Poitiers, 26 April 2023, LawLex202300010798JBJ. - Cf., previously, Cass. 1re civ., 26 June 2001, LawLex202200003085JBJ.

Cass. 1re civ., 12 May 2021, LawLex202300009302JBJ.

Cass. 1re civ., 20 January 2010, LawLex202300009303JBJ; Cass. com., 23 June 2004, LawLex202300009306JBJ. - Cf. Cass. 1re civ., 11 February 1997, LawLex202300010177JBJ.

Cass. 1re civ., 12 May 2004, LawLex202300009308JBJ. - See also CA Paris, 12 September 2002, LawLex202300011121JBJ.

Cass. 1re civ., 20 January 2010, LawLex202300010406JBJ.

Cass. com., 23 June 2004, LawLex202300010066JBJ.

Cass. 1re civ., 21 October 1997, LawLex202300009315JBJ.

Cass. com., 8 July 2003, LawLex202300009781JBJ; Cass. 1re civ., 4 November 1987, LawLex202300010174JBJ. - See also, a contrario, Cass. 1re civ., 3 December 2008, LawLex202300009938JBJ, holding that the existence of a common intention of the spouses to associate on an equal footing by sharing profits and losses cannot result solely from the constant presence of the wife in her husband's store and her effective assistance, when the commercial account of the undertaking operated only under the signature of the latter, who was the sole registrant in the commercial register and signatory of the franchise agreement, that the tasks performed by the wife did not relate to the responsibility of managing the business, that the spouses married during their activity under the regime of separation of property, and that the husband acquired several real estate properties without the involvement of his wife.

Company Law (en cours)

617. Affectio societatis

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617. Affectio societatis

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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