This book provides a wide-ranging review of the European rules relating to distribution: exclusive purchase and exclusive supply, exclusive and selective distribution, motor vehicle distribution, franchises, commercial agents.

French Distribution Law

To establish the supplier's bad faith in the implementation of the termination clause, distributors frequently rely on its previous conduct. Previous tolerance is claimed as the proof of its waiver of the termination clause for the ground alleged. Case law strictly interprets the concept of waiver and refuses to assimilate the supplier's past conduct to a tacit waiver of the termination. Thus, the …

No waiver.

The exceptional termination can take place only where the conditions of implementation are met. In other words, elements forming the triggering event of the termination of the contract must have taken place for the termination clause to be implemented . Thus, the termination clause of an exclusive distribution contract by reason of a merger, absorption or dissolution is not validly implemented in case of partial business transfer . Likewise, the supplier whose allocation of capital has been modified cannot rely on the cancellation clause in order to get out of the contract in the case of a change of the shareholders of the other party . Lastly, the termination of a distribution contract on the basis of a resolutory clause covering the scenario in which the distributor “loses the right to operate in the territory,” following a governmental decision banning the importation of the contractual products, was held to be abusive, insofar as the new regulation did not prevent the distribution activity itself .

It is traditionally considered that once the condition is fulfilled, no abuse can be attributed to the supplier unless the resolutory clause is enforced in bad faith . The supplier may in particular implement a clause causing the termination of the contract for failure to employ a salesman and a foreman within a certain time-period, where the condition is met despite the fact that the deadline has been deferred . Termination for outstanding payment is not unfair where the distributor has actually not paid various invoices on their due date .

More caution is advised however in the implementation of the automatic termination clause now that the case law requires proof of a serious breach of contract for a termination without notice for “fault” in application of Article L. 442-1, II (former Article L. 442-6, I, 5°) of the Commercial Code, even where the contract contains a resolutory clause . An unreported ruling by the Court of Cassation appeared to mark a welcome shift, holding that it is not for the judge to assess the seriousness of the breach justifying the enforcement of a clause providing for automatic termination of the contract in the event of non-performance by either party of any of its stipulated obligations, even where the breach consists of a single isolated act .The proof of the seriousness of the breach would therefore appear to be a requirement with the mere compliance with the termination clause no longer being sufficient, especially if its application is not dependent on a serious breach.

According to certain trial courts, an exceptional termination notified after an ordinary termination would be abusive where it is based on the same grounds . This solution seems challengeable since, in that case, the grounds relied upon to justify the ordinary termination were superfluous, the breach alleged was not the same and the level of non-performance had worsened.

Cass. com., 25 June 1991, LawLex200200005850JBJ: a supplier cannot rely on the termination clause included in the contract where it does not refer to the exclusive distributor's alleged breach; CA Paris, 4 May 2000, LawLex200200005302JBJ: a supplier cannot implement the termination clause for non-completion of objectives whereas its conditions are not met; CA Paris, 25 May 2004, LawLex200400001923JBJ: an exceptional termination cannot take place during the notice period where the drop in sales relied upon is not established.

CA Toulouse, 11 January 1995, LawLex200200005431JBJ.

CA Paris, 16 January 2013, LawLex201300000069JBJ.

CA Paris, 16 February 2021, LawLex202100000520JBJ.

CA Aix-en-Provence, 22 June 2023, LawLex202300008402JBJ.

Cass. com., 26 November 2003, LawLex200300004409JBJ.

CA Paris, 23 October 2002, LawLex200500003782JBJ.

Cass. com., 9 July 2013, LawLex201300001101JBJ. See also Cass. com., 25 September 2007, LawLex200700001509JBJ.

Cass. com., 28 September 2022, LawLex202200008058JBJ.

T. com. Versailles, 14 November 2003, LawLex200300004429JBJ and 12 December 2003, LawLex200400000211JBJ.

Fulfillment of the event.

To establish the supplier's bad faith in the implementation of the termination clause, distributors frequently rely on its previous conduct. Previous tolerance is claimed as the proof of its waiver of the termination clause for the ground alleged. Case law strictly interprets the concept of waiver and refuses to assimilate the supplier's past conduct to a tacit waiver of the termination. Thus, the fact that, in the past, the supplier tolerated breaches by the distributor before the termination does not make the termination abusive , nor does the fact that the supplier implements the termination clause although it had threatened the distributor with another sanction . Similarly, the period of time that elapsed between the events alleged and the notice of termination cannot be interpreted as having given rise to a legitimate expectation that the resolutory clause would not be enforced . It remains that a prior formal notice is a guarantee of good faith, which is also assessed according to norms of the profession and the supplier's general conduct  and constitutes an essential procedural step .

T. com. Paris, 22 February 1999, LawLex200200004731JBJ; CA Paris, 26 November 1999, LaxLex200300002990JBJ; Cass. com., 17 July 2001, LawLex200200004365JBJ; Cass. com., 18 December 2001, LawLex200200005024JBJ: the fact that the supplier has waived to rely on the lack of submission of a surety for a given year does not make the implementation of the termination clause referring to that infringement abusive for the following year; Cass. com., 28 September 2004, LawLex200400002202JBJ: the fact for the supplier who has first shown patience, to implement the retention of title clause and to establish a system of payment in full, in order to protect itself against outstanding amounts of the exclusive distributor is not abusive; CA Paris, 20 September 2017, LawLex201700001526JBJ; CA Lyon, 25 January 2018, LawLex201800000210JBJ; Contra, See CA Paris, 21 May 2003, LawLex200300004032JBJ: the non-achievement of minimum purchase targets for a given year does not justify the immediate termination of an exclusive distribution contract having existed between the parties for many years, even if it is a firm commitment, where the supplier has tolerated the distributor's defect.

CA Paris, 14 May 1997, LawLex200200005667JBJ, upheld by Cass. com., 18 January 2000, LawLex200200005272JBJ.

CA Paris, 25 May 2022, LawLex202200002698JBJ.
Cf. CA Besançon, 11 June 2024, LawLex202400004435JBJ, holding that the continuation of relations between the parties, despite the occurrence of an event justifying the automatic termination of the contract, constitutes a waiver by the supplier of the right to invoke it.

CA Paris, 20 May 1994, LawLex200200005397JBJ: a termination clause for outstanding payment is not implemented in good faith where the supplier does not apply to its distributor the general customs of the network and the tolerances usually granted to other exclusive distributors.

CA Paris, 17 October 2001, LawLex200400003464JBJ: the implementation of a termination clause without prior formal notice, contrary to the provisions of the contract, is wrong; TGI Paris, 30 November 2004, LawLex200500003793JBJ: the termination clause for outstanding payments is unfaithfully implemented where it takes place suddenly, right in the middle of the process of amicable termination, and without the letter of formal notice having preceded the measure has specified that the lack of payment on due date would lead to termination of relations.

Termination clauses must be implemented in good faith (Article 1104 (former Article 1134(3)) of Civil Code). The termination is in bad faith if it has its source in the supplier's conduct or action . Such is the case for a sudden termination of the supplier-credit, being the cause of outstanding payments having justified the implementation of the termination clause , the incursion of the supplier on the distributor's territory which causes insufficient results  or termination for change in the formation of the capital whereas purchasing candidates are subject to an approval procedure . By contrast, the implementation of the termination clause is incontestable where it finds its source solely in the wrongful conduct of the distributor . The termination clause in case of fraud by the exclusive distributor is not implemented in bad faith by the supplier merely because of the long period between the finding of the facts and the notification of the termination  or the mere fact that the supplier has by chance obtained confirmation of the event upon which termination was conditional . Likewise, a termination clause sanctionning the failure to comply with the standards of the brand is not implemented in bad faith purely because the control is carried out after the dealer expressed his intention of leaving the network .

CA Paris, 21 March 1997, LawLex200200005655JBJ, approved by Cass. com., 17 October 2000, LawLex200200004789JBJ; CA Paris, 11 September 1998, LawLex200200005000JBJ; CA Versailles, 17 December 1998, LawLex200200005163JBJ, approved by Cass. com., 3 July 2001, LawLex200200005003JBJ: the implementation of a termination clause for outstanding payments is abusive where they originate in the supplier's conduct, who has systematically tried to undermine the purchases of its exclusive distributor.

Cass. com., 25 March 1991, LaxLex200205837JBJ; CA Paris, 12 September 1998, LawLex200200005729JBJ. See also Cass. com., 30 November 2004, LawLex200400003466JBJ, which retains the supplier's bad faith by taking measures to ensure the continuation of the latter's activity at a lesser risk for it while knowing that it could not ensure its continuity; Cass. com., 17 July 2001, LawLex200200004999JBJ: unless the credit outstanding has not been terminated in bad faith.

Cass. com., 14 December 2004, LawLex200500003703JBJ.

CA Paris, 25 May 1992, LawLex200200005922JBJ.

CA Lyon, 31 May 2001, LawLex200400001593JBJ: the non-achievement of sales targets results in the termination of the contract in accordance with the provisions of the contract where the dealer has not challenged them and this default is not attributable to the supplier; TGI Paris, 13 May 2004, LawLex200400001275JBJ: the over-stocking of motor vehicles at the origin of the exclusive distributor's difficulties being attributable only to the latter, the implementation by the supplier of the exceptional termination clause for outstanding payments cannot be challenged.

Cass. com., 23 January 1996, LawLex200200005529JBJ, in this case, the time-period was four months and the Cass. com. had noticed that the supplier used that period to obtain more comprehensive information on the facts committed against it.

Cass. com., 14 January 1997, LawLex200200005627JBJ, quashing CA Paris, 25 January 1995, LawLex200200005438JBJ, which had held that a termination clause had been implemented in bad faith because the supplier had obtained by surprise confirmation of the event to which it was subject.

CA Paris, 24 June 2015, No 13-05845, Lawlex 20150000818JBJ.

French Distribution Law

116. No waiver.

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

116. No waiver.

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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