La Revue Squire

Latest news from the pilot study on the French contract law reform


Rédigé par Ronan KERVADEC le 24 Juillet 2008


The proposed reform of the French legal rules on obligations, whether pursuant to contracts, implied contracts or civil liability (i.e. tort), aims on one level to harmonise French law with that of other European jurisdictions, and on another to incorporate certain rules derived from case law into the Civil Code.

Thus, a key aspect of the changes is to reinforce the principle of good faith by making it a fundamental principle of the law of obligations, in line with other EU member states.

Another overseas-inspired example is the assignment of receivables becoming a genuinely useful form of security.

Other modifications are still being discussed within the working group.

In terms of incorporating rules developed by the Courts, there are numerous examples in the current proposals:

- the rules on the breaking off of negotiations, particularly pre-contractual, are to be modernised – parties would be free to terminate negotiations but this would potentially give rise to damages and interests if an error can be established;

- violence constituting invalid consent would apply in the event of weakness of one of the parties or where there is economic inequality between the parties;

- in terms of determining the consideration (price) due under successive continuous contracts, the decision of the Assemblée Plénière dated 1 December 1995 would be codified – failure to determine consideration would no longer affect the validity of the contract but would give rise to a right of termination or compensation.

On other matters, the new piece of legislation, as currently drafted, cuts back on the effects of some recent jurisprudence, including:

- a duty to provide pre-contractual information is established, but is limited in its scope since it only applies where the recipient is unable to obtain the information by its own means;

- new provisions on the conventional set-off mechanism, including for related debts, but without correcting the definition of “related”.

- a proposed change to the wording at the current Art 1142 of the Civil Code: the draft provides that an obligation to perform is enforceable, if possible in kind. This would be a means of extending the solution set out by the French Supreme Court on 26 May 2006, which allowed for the execution in kind of a contract granting a right of pre-emption, but in a situation where the bad faith of a third party to the contract had been characterised, a condition that the draft law does not mention expressly.





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