Sudden termination of commercial relationships

Are you the victim of a sudden termination of a commercial relationship or is your liability being challenged? Our firm can assist you.

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Sudden termination of established commercial relationships in France: definition, consequences and sanctions

The sudden termination of an established commercial relationship is defined by Article L. 442-1, II of the French Commercial Code. It occurs when a business partner ends – even partially – a stable and recurring business relationship without sufficient written notice, taking into account the duration of the collaboration and industry practices.

This mandatory provision aims to protect businesses against unilateral and abrupt decisions that could seriously affect their sustainability.

Any person engaged in production, distribution or service activities who suddenly terminates, even partially, an established commercial relationship without written notice that takes into account the duration of the relationship, industry practices or interprofessional agreements, and, for determining the applicable price during its term, the economic conditions of the market on which the parties operate, incurs liability and must compensate the damage caused. — Translation of Article L. 442-1, II of the French Commercial Code

Which businesses are subject to the rules on sudden termination of commercial relationships in France?

The prohibition of sudden termination applies to all economic actors:

producers
distributors
service providers
manufacturers‍

This provision even protects associations engaged in economic activity as well as intellectual professions that may carry out commercial activities.

Why consult a lawyer in cases of sudden termination?

For claimants

If you are the victim of sudden termination, it is urgent to act because your turnover and margins are at risk.

In this situation, our firm can assist you to:

negotiate an amicable settlement with your (former) business partner by presenting strong legal arguments
apply for interim relief to obtain temporary continuation of the relationship if circumstances justify it
bring a full claim to obtain compensation for your losses

Note: Negotiation and interim relief may be compromised if you delay taking action. In that case, only a full claim – longer and more costly – will remain possible.

For defendants

If you wish to terminate a commercial relationship, it is strongly recommended to consult a lawyer to limit the risk of being held liable for sudden termination.

In this situation, our firm can assist you to:

conduct a detailed review of the relationship (duration and economic significance)
estimate the notice period required to secure the termination of the commercial relationship
negotiate an amicable settlement with your business partner to avoid litigation

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Frequently Asked Questions

When is a commercial relationship considered established under French case law?

An established commercial relationship implies stable, significant and recurring exchanges, allowing the business partner to reasonably rely on their continuation.

It may result from one or more contracts or from a regular business flow not formalised in writing. Duration, regularity of transactions and economic importance of the relationship are key indicators.

Conversely, occasional, precarious relationships or those subject to systematic tendering are not considered established.

When is a termination considered sudden under French case law ?

A termination may be considered sudden when it is:

abrupt: total absence of written notice or too short notice
significant: cessation or reduction of purchase orders, substantial modification of the relationship (e.g. change in pricing conditions, delisting of products)

French law provides some exceptions: force majeure, non-performance by the other party of contractual obligations, or relationships where the notice period is set by a specific statute (e.g. commercial agents).

What damages can be claimed in cases of proven sudden termination?

The sudden termination of commercial relationships engages the tortious liability of its author.

Compensation only covers the damage caused by the abrupt nature of the incident, primarily the lost profit equivalent to the margin on variable costs that would have been earned during the notice period the victim should have received.

Other recoverable losses may include: unamortised investments, redundancy costs, internal disruption, reputational damage… provided there is a direct link to the abruptness of the termination.

Are foreign companies subject to the French rules on sudden termination?

The rules governing the sudden termination of established commercial relationships in France do apply to foreign companies, but their scope depends heavily on the international context.

Each situation is unique, and a thorough analysis is essential to determine the competent jurisdiction and applicable law.