Serious Commercial Misconduct: Is Immediate Termination Permitted?

Seeking to immediately terminate an established business relationship due to a partner's repeated failures is understandable, but it is legally exceptional under French law. French commercial law sets a clear principle: No termination without written notice adapted to the duration and customs of the relationship, under penalty of engaging your liability.

However, two narrow avenues permit termination without notice: sufficiently serious non-performance of obligations by the other party (Serious Misconduct), and Force Majeure. Here is what international businesses and foreign entrepreneurs must know to limit their exposure in France.

I. The Legal Framework: Article L.442-1 of the French Commercial Code

Since Ordinance No. 2019-359, Article L.442-1, II of the French Commercial Code governs the abrupt termination of commercial relations.

• Duration Cap: The law provides that above 18 months of notice period, the party ending the commercial relationship cannot be held liable.
• Immediate Termination Right: The right to terminate without notice is maintained in cases of non-performance (fault) or Force Majeure.

II. What Constitutes an “Established Commercial Relationship”?

A relationship is considered established when it has been continuous, stable, and customary to the extent that the evicted party could reasonably anticipate the continuity of business flow, even in the absence of a formal framework agreement. French case law (jurisprudence) accepts that a succession of punctual contracts can suffice.

III. The Core Principle: Mandatory Written Notice

The concept of abrupt termination (rupture brutale) punishes the brutality of the termination, not the decision to terminate itself. What is sanctioned is the absence or insufficiency of the written notice period.

• Format: A clear email can serve as written notice, provided it explicitly states the final date of termination (otherwise, the notice is deemed non-existent).
• The 18-Month Cap: If the dispute only concerns the duration of the notice, 18 months secures you against an action based on insufficient duration.

IV. The Two Exceptions Allowing Immediate Termination

Only these two specific grounds allow a safe termination without observing a notice period:

A. Serious Misconduct (Faute Grave)

The breach must be incompatible with the continuation, even temporary, of the relationship.

• Examples of Serious Misconduct: Repeated payment defaults, critical non-conformities (safety/quality issues), breaches of loyalty (e.g., collusion, corruption).
• Strict Standard: The French judge demands a strict characterization of the gravity. A contractual clause allowing immediate termination is not sufficient on its own. The judge must verify the severity of the breach.

French Case Law Examples:

• ‍‍Cass. com., 7 sept. 2022, n° 21‑13.691 : A contractual clause authorizing immediate termination is insufficient; the judge must verify the gravity of the breach justifying termination without notice.

• ‍CA Paris, 4 déc. 2024, n° 22/12973 : Fraudulent collusion and disloyal acts by the commercial partner qualify as Serious Misconduct justifying immediate termination.

• ‍CA Paris, 12 nov. 2025, n° 23/17195 : Recurrent payment incidents may justify termination without notice if they reach a sufficient degree of gravity; prior tolerance of delays, conversely, may weaken the argument.

B. Force Majeure

Force Majeure requires an external, unforeseeable, and irresistible event that prevents performance.

• If the impediment is temporary, the obligation is suspended.
• If the impediment is definitive, the relationship can be terminated.

In practice, the force majeure exception is strictly construed: only situations such as a strike, a fire, an embargo, or judicial liquidation are generally accepted as cases of force majeure.

Key Takeaway: Invoking Force Majeure for immediate termination requires proving that continuing the relationship was objectively impossible, not merely difficult or costly.

V. Practical Checklist for Risk Management in France

Before initiating any termination, foreign entities must perform specific due diligence to comply with French law:

1. Map the Relationship: Assess the duration, volumes, dependency, and investments. The longer and more stable the relationship, the longer the expected notice period, unless Serious Misconduct is proven.
2. Qualify the Breaches: Document every failure (payment incidents, non-conformity, lack of loyalty). Gather proofs and issue formal notices (Mises en Demeure).
3. Review Contractual Clauses: Immediate termination or Force Majeure clauses are helpful but not sufficient without demonstrating the legal gravity of the breaches under French law.
4. Written Notice: State the precise motifs, dated facts, attached evidence, and the specific termination date (if giving notice).
5. Anticipate Indemnity Risk: If the termination is deemed abrupt (no valid exception or insufficient notice period), damages are equal to the Gross Margin on Variable Costs (Revenue – Variable Costs – Fixed Cost Savings) during the notice period that should have been granted.

🏛️ Seeking French Legal Counsel for Litigation & Risk

Navigating Article L.442-1 of the French Commercial Code is a major risk area for international businesses operating in France and even for business operating abroad but dealing with French companies. An error in characterizing the fault or calculating the notice period can lead to significant liability.

Are you seeking French counsel to assess litigation risk or secure an immediate contract termination under Article L.442-1 ? Contact us today for advice and risk assessment.