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

Where the term of the exclusive distribution contract is fixed, none of the parties can unilaterally decide of their own motion to put an end to it before expiry of the term without serious reason . In principle, early termination of the fixed-term contract is wrongful . Only an exceptional termination may be contemplated before the term, either under an automatic termination clause, or for wrongf …

Principle of freedom not to renew.

Where the term of the exclusive distribution contract is fixed, none of the parties can unilaterally decide of their own motion to put an end to it before expiry of the term without serious reason . In principle, early termination of the fixed-term contract is wrongful . Only an exceptional termination may be contemplated before the term, either under an automatic termination clause, or for wrongful non-performance found by the court on the basis of Article 1224 of the Civil Code, or unilaterally in case of serious breach by the contracting party but at the own risks of the party at the initiative of the early termination of the contract .

The fixed-term contract includes a duration the expiry of which constitutes the normal mode of extinction. On expiry, the parties have an option: either putting an end to their contractual relationship or renewing the contract. No provision can extinguish that option .

On expiry of the contract, the parties do not benefit from any right to renew. They may freely put an end to it: there is no obligation to state reasons for the decision not to renew , and no compensation is due . Neither the length of the contractual relationship , nor the absence of serious grievances  is an obstacle to the non-renewal.

As a consequence of the principle according to which any person is free to enter into a contract, the principle of absence of right of renewal is limited by misuse of right . The right not to renew the fixed-term contract must not only be devoid of misuse, but also not be sudden. The party not wishing to renew the fixed-term exclusive distribution contract must therefore observe a sufficient notice period (unless this is a first fixed-term contract between the parties, concluded without tacit renewal, insofar as the contracting party is informed as soon as it signs the contract of its expiry date without having any expectancy of its renewal). Moreover, a party is not guilty of abuse of right by making the renewal of a contract subject to the acceptance by the other party of less favorable terms than those previously enjoyed when those terms are not impossible to achieve and the negotiations are carried out in good faith .

Cass. com., 9 July 1996, LawLex201000000498JBJ; CA Paris, 25 June 1999, LawLex200200005229JBJ: a fixed-term exclusive distribution contract cannot be terminated before its term without bringing evidence of a breach by the dealer and without summoning it to perform its obligations.

Cass. com., 14 June 1994, LawLex200200005400JBJ: the grantor which terminates before expiry of the term a contract that has become a fixed-term contract as a result of a novation, incurs its liability.

Cass. civ. 1re, 13 October 1998: “The seriousness of the conduct of a party to a contract may justify that the other party terminates it in a unilateral manner at its own risks, regardless of whether the contract is a fixed term contract or not”.

CA Paris, 16 May 2018, LawLex201800000757JBJ, holding that a clause which makes the renewal of a contract subject to prior negotiation two months before the expiry of the contract term does not preclude the freedom of one of the parties party not to renew it unilaterally.

Cass. com., 3 November 1992, LawLex200200005952JBJ: the reasons justifying the supplier's decision not to renew the distribution contract are irrelevant to assess a possible abuse; 4 January 1994, LawLex200200005362JBJ: the practice of parallel exports can be relied on as a reason for the non-renewal without it being held abusive; 3 July 2001, LawLex200200004907JBJ: the non-renewal of the distribution contract is not unfair for lack of reasons where it has been notified without the contractual time-periods; 17 December 2002, LawLex200300001164JBJ; CA Lyon, 13 March 2003, LawLex200300004120JBJ.

Cass. com., 4 January 1994, LawLex200200005362JBJ, which quashes the decision of the trial court which had granted a provisional compensation to the distributor for the harm suffered due to the non-renewal.

Cass. com., 6 January 1987, LawLex200200005702JBJ: no abuse can result from the lack of seriousness of the grievances relied upon where the supplier who has complied with the contractual time-period does not have to state reasons for its decision not to renew the distribution contract.

Cass. com., 6 June 2001, LawLex200200005011JBJ. 

CA Paris, 25 February 2015, LawLex201500000249JBJ. Also see Cass. com., 11 January 2017, LawLex201700000074JBJ, holding that a supplier is free, at the end of a fixed-term contract without tacit renewal, to propose a new contract covering a narrower perimeter, as long as that offer is made within a reasonable period of time.

French Distribution Law

131. Principle of freedom not to renew.

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

131. Principle of freedom not to renew.

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise