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

Company Law (en cours)

The de facto company borrows from the rules governing the partnership . Pursuant to Article 1872-1 of the Civil Code, each partner generally contracts in their own name and is solely liable to third parties . However, if the participants act as partners in the view and knowledge of third parties, each of them is liable to those third parties for obligations arising from acts performed in this capacity by one towards the others, with joint liability if the company is commercial, without joint liability in other cases .

To benefit from joint liability, third parties must demonstrate that they dealt with a de facto company, whose existence can be inferred from mere appearance , as it suffices that their contracting parties acted "in the sight and knowledge of third parties" as partners. Jurisprudence is particularly lenient towards third parties, because unlike partners who must establish the cumulative elements referred to in Article 1832 of the Civil Code, they are only required to establish an appearance that is assessed globally, independently of the revelation of the various constitutive elements of any company . The signing of a sublease contract between two professionals is therefore not sufficient to dismiss the appearance of a de facto company between them . The existence of an apparent de facto company is established when, after the death of one of the partners, the company continued to operate with his son, who contracted with a third-party company and accepted bills of exchange issued by the latter . Similarly, a lease jointly concluded with a third party by two persons, both of whom conduct their activities under the same trade name, is sufficient to create the appearance of a de facto company towards third parties . However, a person's participation in a de facto company cannot be inferred solely from the fact that it bears their name, if it is not established that they acted in the sight and knowledge of third parties as a partner of this company . Similarly, the status of habitual notary for numerous programs marketed by a real estate development company cannot establish the appearance of a de facto company between them, as long as he was never presented as a partner .

The appearance of a de facto company entails several consequences. First, individuals who have acted openly and knowingly as partners of the company in formation and have personally acted within the framework of the de facto company are jointly liable for the price of orders placed in its name . Next, a judgment rendered against the company can be enforced against the partners who have allowed the appearance of a company among them to prosper, by issuing pay slips, a work certificate, and a salary certificate to an employee dismissed without real and serious cause . Furthermore, in the context of an accounting audit procedure, the audit notice notified to one of the partners of a de facto company, when it could not be served to the company itself, is enforceable against all others, as, like any partnership, it is validly represented by each of its partners . Conversely, when an agreement is signed in the name of two intermediaries by only one of them, the contracting party, entitled to believe in the appearance of a de facto company, can validly discharge its debts into the hands of a single partner .

For applications, See Cass. 3e civ., 28 June 1989, LawLex202300010064JBJ, Rev. sociétés 1989, 718, obs. GUYON, considering that a landlord cannot notify a de facto company of the termination of the lease granted to one of its partners, since the company does not have legal personality with respect to third parties; 24 November 2021, LawLex202300009717JBJ, holding that the partners of a de facto company who were not personally parties to the lease contract signed by a co-partner have no action against the landlord.

Paris, 11 March 2009, LawLex202300014402JBJ, specifying however that the mere fact of having placed an order in the name of the company being formed, on its letterhead, is not sufficient to establish that a person acted as a partner of the de facto company.

Cass. 2e civ., 22 May 2008, LawLex202300009305JBJ.

Cass. com., 26 March 2002, LawLex202300009309JBJ.

Cass. com., 10 December 1991, LawLex202300009318JBJ.

For an application, See CA Dijon, 18 November 2021, LawLex202300010268JBJ, emphasizing that the repayment of the loan, not assumed by the company that became a de facto company and does not have a commercial nature, is the responsibility of the three founding partners, each jointly for one-third.

Cass. 1re civ., 26 January 1986, LawLex202300010073JBJ.

Cass. 1re civ., 13 November 1980, LawLex202300011017JBJ; Cass. com., 3 November 1988, LawLex202300009677JBJ; 29 March 1994, LawLex202300014409JBJ.

Cass. 1re civ., 13 November 1980, LawLex202300011017JBJ.

Cass. com., 8 July 2003, LawLex202300009783JBJ.

Cass. com., 29 March 1994, LawLex202300014409JBJ.

Cass. com., 21 February 2012, LawLex202300010018JBJ and LawLex202300010030JBJ.

Paris, 17 February 2023, LawLex202300010799JBJ.

622. Effects with respect to third parties