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French Consumer Law

Since Ordinance No 2004-274 of 25 March 2004, closing down sales have been subject to a system of prior declaration and no longer require prior authorization. Article 1 of the Law of 30 December 1906 made the sale of new goods in the form of a closing-down sale subject to a special authorization from the Mayor of the municipality in which the operation was to be organized. The application made inc …

Procedure

Since Ordinance No 2004-274 of 25 March 2004, closing down sales have been subject to a system of prior declaration and no longer require prior authorization. Article 1 of the Law of 30 December 1906 made the sale of new goods in the form of a closing-down sale subject to a special authorization from the Mayor of the municipality in which the operation was to be organized. The application made included an inventory of the goods in stock, meaning that the trader could not sell goods during the operation other than those for which the authorization was granted.

According to Article L. 310-1 of the Commercial Code, the closing-down sale must be the subject of a prior declaration to the administrative authority in the place of the operation. The declaration procedure is specified in Articles R. 310-2 et seq. and A. 310-1 et seq. of the Commercial Code. Until Decree No 2014-571 of 2 June 2014 and the Order of 24 June 2014, the competent authority was the prefect of the department where the sale took place. Now, the declaration must be sent by registered letter with acknowledgement of receipt or handed over to the mayor of the municipality where the sale operations are to take place two months before the start of the operation . The time-limit may be reduced to five days when the trader invokes in support of his application “an unforeseeable event liable to interrupt the operation of the establishment” .

In the same way as the administrative authorization, the declaration is a prerequisite for the conduct of the closing-down sale . No closing-down sale can take place until the receipt of the declaration has been issued by the mayor (Article R. 310-3, paragraph 3, Commercial Code). However, this obligation does not appear to comply with the provisions of Directive No 2005/29 of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market. Indeed, according to the Court of Justice, although, in some circumstances, an advance or preventive control by the Member State may prove to be more suitable and appropriate than an a posteriori control ordering the cessation of a commercial practice already implemented or imminent, it cannot result in the prohibition of a commercial practice for the sole reason that it has not been the subject of prior authorization by the competent authority, without its unfair nature having been subject to assessment. As the announcement of a closing-down sale by a professional who does not have prior authorization from the competent authority does not correspond to any of the practices listed in Annex I to Directive No 2005/29, a national court cannot order its cessation on the sole grounds that its author has not obtained prior authorization from the competent authority, without conducting an assessment of the unfair nature of the practice in the light of the criteria set out in Articles 5 to 9 of Directive No 2005/29 . French law, in preventing the conduct of a closing-down sale without the receipt of the prior declaration and without assessing its unfair nature, therefore directly goes against Union law.

According to Article A.310-1 of the Commercial Code, the declaration must contain the following mandatory information:

-  the identity or corporate name of the seller;

-  the name, address and unique identification number of the commercial establishment concerned;

-  the reason for the closing-down sale (when the event giving rise to the closing-down sale has not occurred within six months of the declaration, the declarant must inform the competent administrative authority in accordance with paragraph 2 of Article L. 310-1);

-  the start date of the closing-down sale;

-  the duration of the closing-down sale (which may not exceed two months in accordance with the provisions of Article L. 310-1, paragraph 2, reduced to fifteen days in the event of a seasonal suspension of the declarant's activity, under Article R. 310-5) .

To facilitate the formalities to be performed by traders, a “model of prior declaration of a closing-down sale” is reproduced in Annex 3-1 of Book 3 of the Orders part of the Commercial Code.

The declaration must be accompanied by a number of documents :

-  any document justifying, depending on the reason for the application, the prospect of a cessation of trade, a seasonal suspension, a change of activity or substantial change in the operating conditions ;

-  a detailed inventory of the goods concerned by the closing-down sale, containing at least the following information: nature and precise description of the items, quantities, selling price, average purchase price before tax; products with a unit selling price of less than 5 Euros may be described in homogeneous lots ;

-  a copy of the power of attorney if the declaration is made by an agent.

The mayor issues a “receipt of declaration” of the sale within a maximum period of fifteen days from the date of receipt of a complete declaration file. In the case of an incomplete file, the mayor sends the list of missing documents within seven days of receipt of the declaration. If no reply is received from the declarant within seven days, no receipt is issued. This procedure may be accelerated in the case of “an unforeseeable event” and the mayor will then issue the receipt upon receipt of the file.

The mayor must inform the territorial Chamber of Commerce and Industry of the closing-down sale declared.

Throughout the operation, consumer information at the place of sale is done by a display, necessarily visible from the public road, of a copy of the receipt of declaration issued by the town hall . In the case of mail-order sales, the information contained in the receipt must be brought to the attention of consumers.

 Article R. 310-2, paragraph 1, of the Commercial Code.

 Article R. 310-2, paragraph 2, of the Commercial Code.

 CA Paris, 10 December 2001, LawLex200400001092JBJ.

 Case C-206/11 Köck, Judgment of 17 January 2013, LawLex201300000099JBJ.

 For examples of closing-down sales declared unlawful as they were conducted outside the authorized period, see CA Paris, 8 September 1992, LawLex200300003670JBJ; CA Colmar, 18 December 1998, LawLex200300001739JBJ.

 Article A. 310-2 of the Commercial Code.

 Annex 3-1 of the Order of 9 January 2009 refers to "any document justifying, depending on the reason for the request, the perspective of a cessation of trade, a seasonal suspension, a change in activity or substantial modification of operating conditions and, in particular, in case works are planned, the corresponding estimate(s)". An extract of the certificate of incorporation may also be useful.

 On the prohibition to sell goods at reduced prices not included in the inventory, See CA Montpellier, 22 February 1994, LawLex200300003627JBJ; CA Paris, 18 May 1995, LawLex200300003669JBJ; 3 April 2007, LawLex201200001348JBJ.

 Articles R. 310-4 and A. 310-4 of the Commercial Code.

French Consumer Law

335. Procedure

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335. Procedure

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