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

1) Creditors of the lessor
When concluding the lease-management contract, the lessor's debts may be held immediately enforceable by the local court at the request of his creditors if the operation of the business under lease-management is likely to endanger the recovery of the debts. The action must be initiated within three months from the date of publication of the contract; otherwise it is laps …

Creditors.

When concluding the lease-management contract, the lessor's debts may be held immediately enforceable by the local court at the request of his creditors if the operation of the business under lease-management is likely to endanger the recovery of the debts. The action must be initiated within three months from the date of publication of the contract; otherwise it is lapsed (Commercial Code, Article L. 144-6). The owner of a business is liable for personal debts he has incurred before the lease-management .

Pursuant to Article L. 144-7 of the Commercial Code, the lessor is jointly liable with the lease-manager “for debts entered into by the latter during the operation of the business” until publication of the contract and for a period of six months with effect from such publication . In principle, this means publication in a legal announcements journal. A registered letter with acknowledgement of receipt that informs the creditors may replace the publication of the lease-management contract and starts the six-month period during which the lessor is jointly liable with the lessee for the debts related to the operation of the business . The joint liability is instituted only in the creditors' interest . In principle, the debtor is the lessor of the business. Where there is no written lease-management agreement, the apparent owner and the de facto manager of a business may however be considered to be the debtors of operational debts . In such a case, it is for the creditor relying on the existence of a lease-management contract to bring evidence thereof .

Joint liability relates to all the debts “necessary to operate a business under lease-management” . The existence of a link between the incurred debts and the needs of the operation is assessed at the time of the conclusion of the contract. The subsequent misappropriation of the advanced funds thus does not prevent creditors from relying on the joint liability of the lessor of the business on the basis of Article L. 144-7 . A loan taken out by the lease-manager for the acquisition of a property assigned to the operation of a business , a debt arising out of the sudden termination of an employee's contract of employment , fiscal  or social contributions  debts arising out in the context of the operation of the business are guaranteed receivables.

The joint liability of the lessor is limited to six months after publication of the contract . The debts to which the joint liability relates are not determined by their expiry date but rather by the fact that they were created between the conclusion of the contract and the end of the sixth month following its publication . In case of renewal of the lease-management contract, the lessor's joint liability regarding the debts incurred by the lease manager in the context of the operation of the business cannot be incurred where there has been no change in the nature of the exploitation or in the person of the operator since the initial publication . The entry stating that the contract is renewable in the trade and companies register is of no significance .

In order to avoid joint liability, the lessor cannot rely on the fact that the creditor was personally aware of the lease-management which has not been published . He also cannot rely on the ceditor's failure to declare his claim in the bankruptcy proceedings initiated against the lease-manager  or the cessation of his commercial activity (Commercial Code, Article L. 123-8(2)) . To be exempted, the lessor must show that the creditor was reckless when he let the lease-manager incur excessive debts . This is the case where the creditor of the lessee recklessly accepts orders which are disproportionate and inconsistent with a normal operation of the business . His joint liability is also excluded where he has clearly informed third parties by mentioning in the trade register that the lease manager was prohibited from signing conventions that exceed one year in the course of that six-month period without his consent, and the lessee committed himself for four years .

The commercial nature of the debts jointly guaranteed by the lessor is not in doubt insofar as they result from an act carried out by a merchant - the lease-manager - for the needs of his trade. Thus, in accordance with Article L. 721-3 of the Commercial Code which establishes that the commercial courts have jurisdiction to rule on claims relating to commercial transactions between all persons, actions against the lessor for payment will be brought before the commercial court even where he is not a merchant .

Cass. com., 19 October 1999, LawLex200200005242JBJ, which confirms CA Rennes, 4 July 1997, LawLex200200005033JBJ; Cass. com., 26 May 1992, LawLex200200005924JBJ, which confirms TGI Dinan, 29 September 1987, LawLex200200005706JBJ: the lessor's joint liability cannot be incurred for debts which are prior to the conclusion of the lease-management contract.

Cass. com., 11 May 1999, LawLex200200005210JBJ: the lessor's joint liability for the lease-manager's operational debts is assessed on the date of publication of the contract rather than on the date of the lease.

CA Rennes, 11 March 1999, LawLex200200005189JBJ; Administrative Court of Appeal of Nantes, 26 May 2004, LawLex200500004181JBJ.

Cass. com., 2 July 2002, LawLex200200004230JBJ.

Cass. com., 17 December 1991, LawLex200200005883JBJ, which quashes and cancels T. com. Toulouse, 17 May 1989, LawLex200200005745JBJ: the enforcement of the lease-manager's debts which result from the end of the lease does not make the lessor of the business jointly liable for the lease-manager's debts arising out more than six months after the publication of the lease-management contract. However, the general law liability of the lessor of the business may still be incurred despite the fact that the six-month period provided for in Article L. 144-7 of the Commercial Code has been exceeded where he allowed confusion to be created and maintained between his own business and the business operated by the lease-manager: Cass. com., 22 December 1980, LawLex201000000736JBJ.

Cass. com., 25 November 1986, LawLex200200005700JBJ, which quashes and cancels T. com. Issoire, 19 October 1984, LawLex200200005687JBJ; Cass. com., 26 May 1992, LawLex200200005924JBJ, which excludes the joint liability for debts which are prior to the lease-management contract.

Cass. com., 16 January 1996, LawLex200200005524JBJ, which quashes and cancels CA Paris, 13 May 1993, LawLex200200005999JBJ.

CA Paris, 6 September 2001, LawLex200200005340JBJ.

Cass. com., 7 January 1992, LawLex200200005884JBJ; 4 May 1999, LawLex200200005207JBJ.

CA Montpellier, 18 January 1990, LawLex200200005767JBJ; CA Paris, 31 March 1994, LawLex200200005385JBJ.

See, also, CA Besançon, 30 November 2004, LawLex200500004184JBJ.

Cass. com., 17 October 1995, LawLex200200005499JBJ.

T. com. Paris, 25 January 1993, LawLex200200005970JBJ.

CA Chambéry, 11 December 1998, LawLex200200005160JBJ.

CA Paris, 28 June 2002, LawLex200300000720JBJ.

Cass. com., 22 January 1991, LawLex200200005820JBJ which confirms CA Bordeaux, 13 June 1988, LawLex200200005725JBJ. 

Cass. com., 16 January 1996, LawLex200200005524JBJ: the lease-manager cannot initiate proceedings based on Article L. 144-7 against his lessor on the sole ground that he has an interest in having him held liable for his liabilities, given his judicial reorganization.

Cass. com., 6 April 1999, LawLex200200005200JBJ.

CA Nîmes, 20 March 1997, LawLex200200005553JBJ.

Cass. com., 4 May 1999, LawLex200200005207JBJ, which quashes and cancels CA Basse-Terre, 13 January 1997, LawLex200200005625JBJ; CA Riom, 20 February 2002, LawLex200300001050JBJ: the lessor of a business is jointly liable for the debts incurred by the lease-manager for successive purchases made during the lease-management period and intended for the operation of the business; CA Angers, 27 April 2004, LawLex200400003040JBJ: debts incurred by the lease-manager in order to fund the start of the operation, and of which the lessor has been aware, are secured by the latter.

Cass. com., 15 June 1993, LawLex200200006009JBJ, which upholds CA Montpellier, 7 March 1991, LawLex200200005833JBJ: the financial body who grants the lease-manager a loan intended to finance the purchase of a property assigned to the operation of the business may rely on the lessor's joint liability even if the advanced funds have been subsequently misappropriated; CA Paris, 18 March 1981, LawLex200200005682JBJ.

CA Paris, 18 March 1981, LawLex200200005682JBJ.

CA Caen, 9 June 1997, LawLex200200004612JBJ; Cass. com., 23 May 2005, LawLex200200004664JBJ.

The lease-manager is not a party to the lease agreement between the lessor of the business and the owner of the building . However, he may rely on the contractual breaches of the owner which cause harm to him in support of a tort liability action . Likewise, the lessor of the building, within which a business is operated under a lease-management agreement, benefits from a third-party beneficiary provision (stipulation pour autrui) which allows him to directly initiate proceedings against the lease-manager in case of default of his own lessee .

The lease-manager may undertake to directly pay the rents to the owner of the premises , but the lease-manager's refusal to commit himself under a contract to pay the rents and costs to the lessor of the property on equal footing with the lessor of the business, does not constitute a serious fault that justifies the termination by the court of the commercial lease . On the other hand, only the owner of the business may ask for the renewal of the lease. In case of refusal to renew and maintenance of the lease-manager in the premises, an occupancy indemnity must be paid by the lessor .

In case of seizure of the property from which the business is operated, the issue of the future of the lease-management arrangement has been raised. Since the property assigned to the exploitation is not part of the business, the lease-manager has no right to use the property or stay in the premises . The Court of Cassation has applied the same fate to lease-management as to leases granted after seizure . 

The owner may include in the lease of the building a clause that expressly bans the lease-management or subjects it to his consent, unless the lease-management is organized as part of a bankruptcy procedure (Commercial Code, Article L. 642-14).

Cass. com., 6 October 2006, LawLex200700000159JBJ.

Cass. com., 27 May 2003, LawLex200300002277JBJ.

CA Paris, 19 June 2002, LawLex200300000940JBJ.

Cass. com., 21 January 1998, LawLex200200005092JBJ: the lessor of the property may only demand compensation of the lessor of the business in respect of negligence resulting from the maintenance in the premises of the lease-manager. 

Except for the case where he is waiting for the payment of the compensation for eviction to which he is entitled, see, inter alia, Cass. com., 24 March 1998, LawLex200200005109JBJ.

Cass. 2e civ., 5 June 1996, LawLex200200005571JBJ which quashes and cancels CA Toulouse, 16 November 1993, LawLex200200005347JBJ: "leases which have no determined date before order may be cancelled and those subsequent to the order must be so where, in neither case, the creditors or the tenderer ask for it […] these provisions apply to lease-management".

Owner of the building.

The placement under lease-management requires the transmission of the components of the business (goods, equipments, trade name, patents, right to lease, administrative authorizations, etc.), but does not entail the effects of novation or a change in debtor. Thus, a non-compete clause in the lessor's favor, which is not ancillary to the business, cannot be relied on by the lease-manager . In principle, the transfer to the lease-manager of ancillary agreements concluded by the owner of the business is subject to an agreement . In particular the lease-manager cannot hold materials leased by the lessor where a clause of the rental agreement prohibits them from being lent or subleased to third parties . However the rule has one exception: the contracts of employment of the lessor's employees which, according to Article L. 1224-1 of the Labor Code, are automatically transferred . The commercial agency contract may also be transferred to the lease-manager despite its intuitu personae character. This is the case where the lease-management agreement mentions, among the obligations relating to staff, the list of commercial agents and the lease-manager acts as a true principal and still pays commissions . On the other hand, the lessor who has granted a lease that specifies that the business is rented without staff and free from any contract of employment must guarantee the lease-manager against any obligation with respect to the employees of the former lease-manager .

Cass. com., 1 October 1996, LawLex200200005599JBJ which quashes and annuls CA Nîmes, 26 May 1994, LawLex200200005398JBJ.

See Cass. com., 20 March 2001, LawLex200200004669JBJ, as regards an exclusive supply agreement; Cass. com., 28 April 2004, LawLex200400000993JBJ which confirms CA Paris, 13 October 2000, LawLex200400002174JBJ, as regards a maintenance contract.

Cass. com., 5 October 2004, LawLex200400002410JBJ which confirms CA Versailles, 22 June 2000, LawLex200400003478JBJ.

Labor Code, Article L. 1224-1: "Where a change occurs in the employer's legal position, in particular by estate, sale, merger, conversion of the business, incorporation of the undertaking, all contracts of employment that are on-going on the day of the change remain between the new employer and the staff of the undertaking". See Cass. com., 9 December 2008, LawLex200900000141JBJ which quashes and cancels CA Douai, 28 February 2006, LawLex200900000190JBJ. See also Cass. com., 19 November 2002, LawLex200300000553JBJ which confirms CA Paris, 16 June 2000, LawLex200300000719JBJ: the non-compete obligation of an employee remains after the transfer of his/her contract of employment resulting from the placement of the business under lease-management.

CA Paris, 5 December 2001, LawLex200200004971JBJ; CA Bordeaux, 13 November 2002, LawLex200300003094JBJ.

Cass. com., 8 December 2009, LawLex200900003608JBJ.

French Distribution Law

546. Creditors.

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546. Creditors.

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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