In a judgment of 14 October 2004, the Court of Appeal of Versailles gave an interesting application of article 442-6, I, 5 of the Commercial Code in relation to an international contract for the distribution of perfume.
Article 442-6, I, 5 of the Commercial Code states: "The following acts committed by any producer, trader, manufacturer or person listed in the trade register render the perpetrator liable and entail the obligation to redress the prejudice caused: (…) Suddenly breaking off an established business relationship, even partially, without prior written notice proportionate with the duration of the business relationship and consistent with the minimum notice period determined by the multi-sector agreements in line with standard commercial practices.(…)".
The contract, which was governed by French law, was concluded between a French supplier and a Colombian distributor for an initial period of three years. It was renewable and had a three-month notice period for termination. After sixteen years the French supplier decided to terminate the contract and gave three months notice as required by the contract.
The Colombian distributor objected that there was a “sudden breach of a contract” as set out in article 442-6, I, 5 of the Commercial Code and obtained compensation for not having received sufficient notice which the court said should have been at least one year.
The court’s decision is not new. The court stated that complying with the terms of a contract may not be enough to comply with the provisions set out in article 442-6, I, 5 of the Commercial Code.
By handing down this decision, the court effectively extended the principle set out in article 442-6, I, 5 of the Commercial Code to protect a foreign distributor. The question is whether the court states that the liability is contractual or tortious. Although we do not know for sure, the court seemed to imply that the damage was suffered in France and that it was therefore appropriate to apply French law.