Overview of French contract law

The reform of contract law through the ordinance of February 10, 2016 and the ratification law of April 20, 2018 modified the definition and completed the typology of contracts (Business law). The new article 1101 of the Civil Code defines the contract as “an agreement of wills between two or more persons intended to create, modify, transmit or extinguish obligations.”

Among the old types of contracts there is the classic distinction between unnamed contracts and named contracts (article 1105 of the Civil Code). Specific rules, as company law, can apply to the named contracts in addition to the rules of ordinary contract law. Innomed contracts have no specific regime and are therefore only subject to the rules of ordinary contract law.

Without mentioning them all, there are other distinctions. We find synallagmatic contracts, creators of reciprocal obligations between the parties, and unilateral contracts, without reciprocal commitments between the parties (article 1106 of the Civil Code). Article 1107 of the Civil Code makes a distinction between contracts for consideration and those for free, depending on whether a benefit is provided to the other party with or without consideration. Finally, article 1108 of the Civil Code explains the difference between commutative contracts and random contracts.

The reform allowed for the recognition of a new distinction between negotiable contracts and pre-formulated standard contracts. Article 1110 of the Civil Code defines negotiable contracts as a contract “whose stipulations are negotiable” between the parties, and pre-formulated standard contracts as a contract “which includes a set of non-negotiable clauses”. There is no specific provision for negotiable contracts. On the contrary, pre-formulated standard contracts are subject to two special rules of the Civil Code :
– Firstly, in case of doubt, it is interpreted against the person who proposed it (article 1190 of the Civil Code).
– Secondly, article 1171 of the Civil Code sanctioning unfair terms only applies to pre-formulated standard contracts.

There is therefore a very varied typology of contracts, however whatever their classification, contracts respond to a common core of rules which govern their existence and their execution.
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The existence of the contract

According to article 1113 of the Civil Code, the meeting of an offer and an acceptance allow the formation of the contract. Once formed, the contract must meet certain conditions to be valid.

The formation of the contract

Prior to the conclusion of the contract, relations between the parties may take the form of a preliminary contract or a negotiation phase.
The negotiation phase, which is not compulsory, allows the parties to agree on the contractual content.

In principle, article 1112 of the Civil Code recalls that the breakdown of négociation is free. However, the break is abusive if it is done in bad faith. Jurisprudence establishes this bad faith through evidences, most often showing that the negotiation had reached an advanced stage and that it was abruptly broken down, without legitimate reason.

In addition, the parties may conclude various preliminary contracts in order to prepare the contract to be concluded, such as the preference pact or the unilateral promise. The Belot Malan and associates law firm is made up of lawyers specializing in contract law and regularly assist clients to find contract agreements.

These preliminary contracts should not be confused with offer and acceptance which are unilateral legal acts and not contracts. These acts demonstrate the will of their authors to be bound by the terms of the offer. They can take the form of a declaration but also of unequivocal behavior (Article 1113 of the Civil Code).

Conditions of validity of the contract

According to article 1128 of the Civil Code, there is three conditions of contract validity.
First, there must be free and informed consent from the parties. Consent is not free when it is coerced by violence. It is not informed when given in error or obtained by fraud. If affected by one of these defects, the injured party may obtain the nullity of the contract if he demonstrates that without this defect, he would not have contracted or would have contracted on substantially different conditions (Article 1130 of the Civil Code).

Then, the parties must have the capacity to contract. In principle, unprotected adults and emancipated minors have the capacity to contract. A party may decide to grant a representative the power to contract on his behalf. Be careful because if the representative acts beyond his given power, the represented may still be committed to the third party because of the appearance theory. (Article 1156 of the Civil Code)

Finally, the contract must have legal and certain content. The content is lawful when it respects public order. It is certain when it sets up possible and determined or determinable obligations.

Performance of the contract

Effects of the contract

The contract first produces effects between the parties. By virtue of the binding force of the contract, the stipulations binds the parties. This means that the parties are bound to perform the obligations planned in the contract. In addition to the obligations stipulated in the contract, there are obligations added by case law such as the security obligation or the information obligation. The binding force of the contract also presupposes that the parties cannot, in principle, unilaterally modify or revoke the contract. However, they may include a withdrawal or hardship clause in the contract.

In principle, the contract has a relative effect, which means that it has no effect on third parties. Therefore a contract cannot create an obligation for the benefit of, or against, a third party. However, this principle is limited by various recognized practices. For instance, in a chain of contract transferring a title, a member of this chain can act against another member on a contractual basis even if he is not contractually bound with him.

Sanctions for non-execution

Sanctions for non-execution are listed in article 1217 of the Civil Code. Before examining these sanctions it is necessary to clarify what is meant by non-execution.
The non-execution occurs whenever the obligation has not been fully and correctly executed. It is up to the creditor to demonstrate that this obligation exists before invoking the sanctions of article 1217 of the Civil Code. In this case, the debtor must consequently prove that he has properly performed his obligation. If the obligation is of result, he must demonstrates that he has achieved the result requested. If it is an obligation of means, he must demonstrate that he has implemented the means necessary to achieve the requested result.

Based in Paris the lawyers of Belot Malan and associate are business contract lawyers that can assist a party involved in such contract law cases.

In the event of proven breach of the contract, article 1217 sets out several sanctions:

• refuse to perform or suspend the performance of its own obligation;
• seek enforcement of the performance by the other party;
• obtain a decrease in the price;
• seek the contract termination;
• claim damages.