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

According to Article L. 134-4(1) of the Commercial Code, "The relationships between commercial agents and principals shall be governed by an obligation of loyalty and a reciprocal duty of information": any failure by the principal to perform his contractual obligations results in the termination of the agency contract exclusively against him .

The principal's disloyalty, which may take different forms, is qualified where the principal prevents the agent from exercising his activity under normal conditions . Thus, the principal commits a breach where he directly sells in the agent's area , directly contacts the customers canvassed by the agent , meets one of the agent's customers in secret and makes disparaging statements about him , does not grant him a canvassing area and fails to take any steps to allow the agent to carry out his activity without encroaching upon his colleagues' customers , does not oppose the other representatives' incursions on the agent's exclusive territory, even after having been informed thereof  or ceases marketing the only products distributed by the agent, keeping him in a state of uncertainty as to whether those products are to be replaced by others . Likewise, termination of the contract is attributable to the principal even if the agent has taken the initiative thereof where a dispute relating to the brand, challenging the very existence of the agency, has been concealed from the agent . Selling contractual products at low cost online, thereby exposing the agent to the dissatisfaction of the customers canvassed, also constitutes a breach of the principal's duty of loyalty . The principal is also guilty of disloyalty when he fails to inform his agent of the transfer to a foreign company of all his activities, excluding the agency contract , or of the fact that he has asked a manufacturer to represent his brand in his prospecting territory . Lastly, a principal breaches his duty of loyalty when, faced with “catastrophic” harvests, he clearly favors distribution channels other than his agent for the marketing of his products  or when, following the contamination of his products by salmonella, he interrupts the performance of the contract, while requesting the collaboration of his agent to help manage the health crisis locally, without paying him any remuneration, and giving him misleading information about a possible resumption of deliveries . 

On the other hand, the creation of a new company by the principal  or a website  which sells specific products not intended for the same clientele and which are much more expensive than those sold by the agent, do not constitute unfair acts. The principal is also not responsible for the termination merely due to having sent to the agent's customers by mistake a catalog of products offering bigger discounts than those granted to the agent, when a correction was issued swiftly and customers were invited to place their orders directly with the agent . 

The principal must also keep the agent informed of any fact likely to favor or impact the performance of his mission. In particular, the principal breaches his duty to inform by not providing his agents with any commission statements, nor allowing them to calculate their remuneration or determine when it is due . However, letters sent to the agent's customers, without his knowledge, do not constitute a breach of the principal's obligation to provide information, when they are in response to unsolicited requests or relate to the design and technical evaluation of products, and not to distribution .

CA Nîmes, 18 January 1996, LawLex200200005527JBJ.

Cass. com., 13 October 1998, LawLex200200004908JBJ, which considers that the principal commits misconduct justifying the payment of damages to his agent where he obstructs the agent's activities.

CA Aix-en-Provence, 1 June 2004, LawLex200400001944JBJ.

Cass. com., 14 June 2005, LawLex200500006644JBJ.

CA Paris, 29 June 2023, LawLex202300008669JBJ, cited above.

CA Paris, 12 October 2023, LawLex202300012428JBJ.

CA Reims, 1 July 2014, LawLex201400002277JBJ.

CA Bordeaux, 9 July 2014, LawLex201400002275JBJ.

CA Toulouse, 25 May 2016, LawLex201600001054JBJ.

CA Paris, 3 April 2014, LawLex201400001832JBJ.

CA Grenoble, 24 June 2021, LawLex202100004097JBJ.

CA Grenoble, 14 October 1998, LawLex200200005142JBJ; CA Montpellier, 5 June 2007, LawLex200900000118JBJ.

CA Dijon, 6 September 2018, LawLex201800001267JBJ.

CA Douai, 10 January 2012, LawLex201200000265JBJ.

CA Orléans, 2 September 2004, LawLex200400002750JBJ.

CA Rennes, 1 September 2009, LawLex201000000198JBJ.

CA Poitiers, 7 May 2013, LawLex201300000814JBJ.

Cass. com., 14 June 2005, LawLex200500006645JBJ.

CA Paris, 5 November 2020, LawLex202000003047JBJ.

506. Obligation of loyalty and duty to disclose information.