How to prove sudden termination before French judges?

The abrupt termination of established commercial relationships is a very common dispute in French business law. Provided for in Article L. 442-1, II of the French Commercial Code, the abrupt termination regime requires sufficient written notice to be given when terminating, even partially, an established commercial relationship.

But how can you prove abrupt termination and maximize your chances before the French Commercial Court? Find all the answers to your questions in this article, along with a checklist of the documents to be produced.

I. The framework established by Article L. 442-1, II of the French Commercial Code

Article L. 442-1, II of the French Commercial Code sanctions “the act, by any person engaged in production, distribution, or service activities, of abruptly terminating, even partially, an established commercial relationship, without written notice that takes into account, in particular, the duration of the commercial relationship, with reference to commercial practices or interprofessional agreements.”

A. Condition No. 1: An established commercial relationship

1. The concept established commercial relationships

The concept of “established commercial relationships” is not defined by the French Commercial Code. The relationship may be formal or informal, arising from a series of fixed-term contracts, an open-ended contract, or a series of purchase orders.

The main criteria have been established by case law:

• Regularity, importance, and stability: Including when this results from a series of one-off contracts.
• Legitimate expectations of the partner: The victim must be able to anticipate a certain continuity in the flow of business.

Please note: If the relationship is inherently precarious (e.g., systematic calls for tenders), there is no established commercial relationship.

2. Proof of established commercial relationships

Proof is free and may be provided by all means before French Commercial Courts:

• Contracts, invoices, purchase orders, correspondence.
• Order history, turnover tables over several years.
• Certificates from an accountant confirming the economic importance of the relationship.

Practical advice: Put together a chronological and comprehensive file tracing the evolution of the relationship, highlighting the regularity, duration, and economic importance of the relationship for your company.

B. Condition No. 2: Termination of the commercial relationship

The termination of an established commercial relationship is not synonymous with non-renewal or termination of a contract.

In practice, the termination of the commercial relationship may be total or partial:

• Total termination: Complete cessation of orders, unilateral termination of the contract, etc.
• Partial termination: Delisting of certain products, substantial modification of conditions (e.g., elimination of discounts), significant drop in turnover, or unilateral modification of payment terms.

Please note: There may be a termination even if the business between the parties is not interrupted (e.g., substantial modification of the terms of the relationship).

C. Condition No. 3: Absence or insufficiency of written notice

1. The concept of abrupt termination

Article L. 442-1, II of the French Commercial Code does not sanction the termination of the commercial relationship, but its abruptness.

The abruptness of the termination is characterized by the absence or brevity of written notice. The length of the notice period must take into account the duration of the relationship, but also:

• The victim's state of economic dependence.
• The time needed to redeploy or find a replacement supplier or client.

Please note:

• The contractual or interprofessional notice period is not necessarily sufficient.
• A notice period of 18 months or more is always sufficient.
• The only exemptions from giving notice are serious breach by the other party or force majeure.
• The predictability of the termination does not exempt the parties from giving formal notice.

2. Proof of abrupt termination

You must prove:

• The absence of written notice given by your business partner (if you claim that you did not receive written notice, your partner will have to provide evidence to the contrary).
• The inadequacy of the written notice by comparing the notice given with that which should have been given according to case law and commercial practices.
• The circumstances likely to influence the length of the notice period (e.g., economic dependence, difficulties in conversion or substitution).

II. Checklist of documents to be produced before French Commercial Courts

To maximize their chances of success in court, the victim of the breach must produce:

1. Any written evidence attesting to the existence of the commercial relationship (contract, purchase orders, invoices, correspondence, etc.).
2. Annual accounts (for the last three years) and intermediate operating accounts.
3. Calculation of the percentage of turnover generated with the party that terminated the commercial relationship.
4. Elements used to calculate the margin on variable costs (precise identification of variable costs).
5. Accounting documents justifying the turnover generated with the party that terminated the commercial relationship and the margin on variable costs.
6. Certificates from a accountant or auditor justifying the calculation method.
7. Documents justifying the length of the notice period (nature of the activity, time needed to regain customers).

Proving the sudden termination of established commercial relations requires a methodical, rigorous, and documentedapproach. Mastering the criteria established by case law, consistently estimating your margin on variable costs, and carefully preparing your case are the keys to maximizing your chances of success.

Need assistance with the abrupt termination of commercial relations in France? Contact our firm today for a strategic analysis of your case.