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

Article L. 442-1, II prohibits the “sudden termination, even if partial, of an established commercial relationship in the absence of written notice taking into account, inter alia, the duration of the commercial relationship with reference to standard commercial practices or inter-professional agreements [...] The provisions of present section II do not affect the right to cancel without notice in …

Application of Article 442-1, II of the Commercial Code to selective distribution.

Article L. 442-1, II prohibits the “sudden termination, even if partial, of an established commercial relationship in the absence of written notice taking into account, inter alia, the duration of the commercial relationship with reference to standard commercial practices or inter-professional agreements [...] The provisions of present section II do not affect the right to cancel without notice in the event of the other party failing to discharge his obligations or in the event of force majeure”. The Ordinance of 24 April 2019 introduced a waiver of liability for operators giving 18 months' notice. This time-limit is not a maximum: the court may grant a longer notice period if the terminating party does not grant 18 months' notice. The general nature of the wording of the provision, initially adopted to reestablish the balance of power in the relations between suppliers and the large retail chains has meant that it has been applied to a wide variety of areas of activity, and notably to selective distribution networks.

A supplier wishing to reorganize his selective distribution network is free to terminate contracts with distributors provided that sufficient notice is granted to them in compliance with the requirements laid down in Article L. 442-1, II of the Commercial Code . Likewise, although under no obligation to renew a distributor's contract, the network head is bound, in the case of a business relationship which is of an established nature due to the fact that contracts have been successively renewed for more than ten years, to grant that distributor a reasonable notice period which takes account of the specific nature of the luxury goods sector in which the relationship has developed . The supplier must however be careful not to lead distributors whose contracts he intends to terminate or not to renew, to believe that a new contract is to be signed . The notice period must be such as to allow the distributor to redirect his business activities . When, on the date of the termination, the distributor is selling several other prestige brands and has not made any investments specific to the supplier's brand, it cannot be regarded as being in a state of dependence justifying the extension of the notice period .

The courts, which interpret the provision broadly, often regard mere amendments to the contractual arrangement as terminations. However, granting a distributor having previously sold all the ranges of a manufacturer's products authorization to sell only some of them where it is not shown that the reduction has caused a fall in the distributor's turnover , or reducing the credit granted in order to sanction, pursuant to the terms of the contract, an authorized distributor's inadequate financial stability and withdrawing the de facto exclusivity deal that distributor has benefited from , do not constitute sudden terminations of the established commercial relationship. Further, the annual renegotiation of the terms and conditions of the relationship, as required under Articles L. 441-3 et seq. of the Commercial Code, does not constitute a unilateral modification of the commercial terms and conditions amounting to an sudden termination of the established commercial relationship . Likewise, a decrease in turnover does not reflect a partial termination of the established commercial relationship when the party claiming such a breach is unable to show that it is the result of a fault committed by the other party .

As stipulated in Article L. 442-1, II, the termination of the relationship does not require notice in the case of breach of contract. The distributor whose contract is terminated for selling non-genuine products or for refusing to carry out after-sales services in breach of his contractual obligations may not bring an action on the basis of a sudden termination of an established commercial relationship . This is also the case where an authorized distributor obtains supplies outside the network . On the other hand, the immediate termination of a selective distribution agreement is deemed “sudden” in nature where it sanctions a change in the capital ownership or management of the distribution company, provided that this does not reflect a failure to fulfill its contractual obligations  or an incident which, at the time it occurred, only resulted in a warning for the future and was even followed by the renewal of the contract . Furthermore, established commercial relationships cannot be severed for breach of contractual obligations by distributors when the supplier does not provide proof of the existence of its network . Although Article L. 442-1, II only requires a breach of contract to justify a termination without notice, the Court of Cassation has ruled that the breach must be serious and that only a serious breach may trigger the implementation of a termination clause in a contract . The termination without notice of a selective distribution contract on the ground that the authorized distributor only achieved a turnover of EUR 29,735.85 when the minimum target was EUR 30, 000 constitutes a sudden termination insofar as it is not a sufficiently serious breach . On the other hand, a serious fault is constituted where an authorized reseller is responsible for counterfeiting by imitating and reproducing the contractual products . Similarly, an authorized distributor who displays a poster covering the entire shop window stating that he is offering price reductions as part of a ”clearance sale before refurbishment”, followed by a list of brands, including that of the supplier, without obtaining the latter's prior written consent, contrary to the contractual provisions and despite the opposition it expressed, commits a sufficiently serious breach to justify termination of the commercial relationship without notice 

CA Paris, 11 April 2013, LawLex201300000700JBJ; see also CA Paris, 19 September 2014, LawLex201400000945JBJ.

CA Paris, 23 March 2011, LawLex201100000780JBJ.

CA Paris, 21 October 2010, LawLex201000001233JBJ.

CA Versailles, 19 February 2013, LawLex201300000691JBJ.

CA Paris, 10 April 2013, LawLex201300000696JBJ.

CA Paris, 15 January 2021, LawLex202100000181JBJ,

Cass. com., 9 July 2013, LawLex201300001101JBJ.

CA Paris, 30 August 2019, LawLex201900000998JBJ.

CA Paris, 8 December 2023, LawLex202300014606JBJ.

Cass. com., 7 September 2022, LawLex202200006699JBJ.

T. com. Paris, 25 September 2008, LawLex200800001934JBJ.

Cass. com., 14 May 2013, LawLex201300000831JBJ: a notice period of six months granted to a distributor having done business with the supplier for three years is sufficient where the distributor was able to reorient his activities

CA Paris, 30 September 2015, LawLex201500001190JBJ.

CA Douai, 16 March 2011, LawLex201100000696JBJ.

CA Rennes, 31 January 2012, LawLex201200000292JBJ.

CA Paris, 5 June 2019, LawLex201900000763JBJ.

CA Paris, 24 April 2019, LawLex201900000577JBJ.

CA Angers, 31 January 2006, LawLex200600002467JBJ.

French Distribution Law

234. Application of Article 442-1, II of the Commercial Code to selective distribution.

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

234. Application of Article 442-1, II of the Commercial Code to selective distribution.

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