Therefore, a foreign trader who contracts with a French company should try not to fall under the aegis of this rule (part I) and, if it cannot, should understand and control its implementation (part II).
In a nutshell:
How can a foreign company avoid or control the risk linked to the « sudden termination of commercial relations » set by French law ? Foreign companies doing business with a French counterpart should:
– enter, as soon as possible, into a written (frame) agreement with their French suppliers or customers, even for a very simple relation and;
– stipulate a clause in favour of foreign court or arbitration and foreign applicable law while, failing to choose it, they would rather be subject to French courts and laws;
How can a foreign company master the risk linked to the « sudden termination of commercial relations » set by French law ? Foreign companies doing business with a French counterpart should:
– know that this article applies to almost all type of commercial relationship or contracts, whether written or not, fixed-term or not;
– check whether its relation/contract is sufficiently long, regular and significant and whether the other party has a legitimate belief in the continuation of this relation/contract;
– give a written notice of termination or non-renewal (or even of a major modification), which length takes mainly into account the duration of the relation, irrespectively of the length of the contractual notice;
– invoke, with cautiousness, force majeure and gross negligence of the party, to set aside “sudden termination”;
– anticipate, in case of insufficient notice, a compensation which amount is the product of the average monthly gross margin per the length of non-granted prior notice.
Christophe Héry, avocat associé
