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

Two main hypotheses must be distinguished in the case of the pursuit of contractual relations depending on whether it is subject to a specific agreement or a tacit renewal.
In the case of a specific agreement, the parties may agree to extend the contract before its expiry, simply by amending its term and in deciding to pursue the same contract by joint agreement (extension), or decide to renew the …

Continuation of contract by new agreement or tacit renewal.

Two main hypotheses must be distinguished in the case of the pursuit of contractual relations depending on whether it is subject to a specific agreement or a tacit renewal.

In the case of a specific agreement, the parties may agree to extend the contract before its expiry, simply by amending its term and in deciding to pursue the same contract by joint agreement (extension), or decide to renew the contract by concluding a new contract which is identical to the previous one (renewal).

The conclusion of a new contract has considerable consequences, in particular the loss of the guarantees attached to the first contract. 

Most often in matters of distribution, provided that neither of the parties has terminated the contract before its term, they do not establish a specific agreement but continue their relations on expiry of the first.

Does a commercial relationship that carries on after the termination of a fixed-term distribution contract give rise to a new master agreement, or only to successive sales contracts? Three assumptions should be distinguished.

Where the contract provides for a tacit renewal clause, the continuation of the relationship gives rise to a new master agreement under the initial conditions, particularly regarding the term. The parties' obligations remain the same except for those exclusively related to the first contract. Tacit renewal cannot be reduced to a mere extension of the term of the initial contract, but gives rise to a new contract . This principle is particularly important where a surety guarantees the performance of the obligations: in effect, the guarantee owed by the guarantor is limited to transactions related to the initial contract .

Where the contract expressly excludes any tacit renewal, subsequent relations are analyzed as mere successive sales. In such a case, the non-renewal of the exclusive distribution contract does not incur the supplier's liability, according to the traditional rules of contract law . The clause must however be clear and detailed and it is not sufficient to provide that the contract will “automatically” end .

Where the contract does not make any provision with regard to renewal, it is deemed to be tacitly renewed if the business relationship is carried on after its expiry . The parties' will to renew the contract may result from the maintenance of signs, the display by the former distributor of motor vehicles bearing the supplier's brand, supplies made by the latter or the opening by the distributor of a bank account with a subsidiary of the supplier.

To put an end to the tacitly renewed master agreement, the supplier must of course comply with a reasonable notice period . This principle of the general law of contracts must be applied in connection with the provisions of Article L. 442-1, II of the Commercial Code which lay down that a reasonable written notice period, which takes account of the duration of the relationship, must be observed. In effect, if a fixed-term contract does not in principle create an established commercial relationship , this is not so in the case of a succession of contracts . In such a case, the terms and conditions of negotiated termination between the parties, and in particular the duration of the notice period to put an end to the fixed-term contract, must comply with Article L. 442-1, II of the Commercial Code . Thus, it has been held that the non-renewal of a one-year fixed-term contract is a sudden termination of an established commercial relationship, even if it expressly excludes tacit renewal where it has been renewed for twenty-three consecutive years .

Where an exclusive distribution agreement is renewed by tacit agreement, it is in the interests of the parties to take care in the drafting of the terms of the new contract.

If the initial contract fixes the duration of the new contract in the event of a tacit renewal, it goes without saying that the new contract will have a fixed term .

In the absence of clear stipulations, particularly when the tacit renewal stems from the continued performance of the contract, the duration and the terms and conditions of the new contract may give rise to disputes and generate much legal uncertainty. It was generally accepted that tacit renewal gave rise to the formation of a new contract generally with the same content as the former, except for its term now of open-ended durationt , subject where applicable, to the exclusion of clauses separable from the rest of the contract. A controversial judgment of the first civil chamber of the Court of Cassation has created some legal uncertainty concerning this rule by holding that “subject to provision or intention to the contrary, the tacit renewal of a fixed-term contract, of which expiry of the term has produced its effects, gives rise to a new contract, of indefinite duration, and of which the other elements are not necessarily identical” . The subsequent case law of the commercial chamber of the Court of Cassation seems to show a certain reticence with regard to this solution by referring, relative to the question of the determination of a renewed contract, to the discretion of the courts ruling on the merits, which must look to the parties' intention . Under these conditions, parties would be advised to ensure that the slightest details relating to terms and duration of a contract stemming from the tacit renewal of an earlier agreement are adjusted accordingly.

See, on that principle, Cass. com., 13 March 1990, LawLex201000000931JBJ.

For an illustration, see CA Paris, 17 January 2024, LawLex202400000604JBJ.

Cass. civ. 1re, 15 November 2005; Cass. soc., 13 December 2007, Bull. civ., V, n° 2017; Cass. soc., 13 December 2007, Bull. civ., V, No 2017. See also CA Dijon, 22 February 2024, LawLex202400001790JBJ, holding that a fixed-term exclusive distribution agreement becomes an open-ended contract when it is tacitly renewed by the parties, with the exclusivity maintained where  the parties continued to discuss the protection of the distributor's territory.

Cass. com., 11 April 2012, No 10-20.505, RDC, 2012, 755.

Cass. com., 14 December 2004, LawLex200400003516JBJ.

CA Versailles, 14 May 1996, LawLex200200005567JBJ: the distribution contract cannot be suddenly terminated without abuse after it has been tacitly renewed.

Cass. com., 30 November 1993, LawLex200200005355JBJ: a supplier cannot suddenly terminate a distribution contract tacitly renewed; CA Lyon, 7 May 1999, LawLex200200005209JBJ: a fixed-term contract cannot be unilaterally terminated by the supplier after having been tacitly renewed.

T. com. Alençon, 8 October 2007, LawLex200700001582JBJ, which reminds that where there is not succession of contracts, the termination of a fixed-term contract upon expiry of its term is not sudden.

CA Lyon, 10 April 2003, LawLex200300002497JBJ, succession for approximately 35 years of various exclusive distribution contracts; T. com. Paris, 3 November 2004, LawLex200500005651JBJ; CA Nancy, 10 March 2004, LawLex200400002728JBJ; CA Versailles, 15 March 2007, LawLex200700001811JBJ, succession of contracts for 57 years; CA Paris, 29 November 2007, LawLex200800002226JBJ, succession of contracts for 21 years. Contra, see CA Paris, 29 May 2008, LawLex200800002248JBJ: the renewal twice of a fixed-term distribution contract which expressly excludes any tacit renewal does not allow the dealer to rely on the existence of an established commercial relationship due to the hazard existing at the expiry of each contract.

CA Lyon, 10 April 2003, aforementioned: insufficient 12-month notice period, need to comply with a 20-month notice period given the term of the relationship; CA Versailles, 7 December 2006, LawLex200800000189JBJ; CA Lyon, 8 October 2009, LawLex201000000021JBJ.

CA Paris, 6 May 2009, LawLex201000000091JBJ. Cf. CA Caen, 23 April 2009, LawLex200900001496JBJ: whether Article L. 442-1, II of the Commercial Code applies to all types of relationships, including fixed-term relationship, it is on condition that the party which relies upon it could have reasonably expected the partnership to continue, which is not the case where the contract expressly excludes any tacit renewal after two renewals; CA Rennes, 22 May 2002, LawLex200400002727JBJ: the non-renewal of a one-year fixed-term contract concluded without possibility of tacit renewal does not constitute a sudden termination of an established commercial relationship.

French Distribution Law

137. Continuation of contract by new agreement or tacit renewal.

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137. Continuation of contract by new agreement or tacit renewal.

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Les décisions de justice citées dans ce paragraphe :

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