French Contract Law

Question 1

What is the purpose of French Contract Law?

Answer 1

More than just market transactions. Contractual justice, proper balance between parties. To protect consumers, good faith.

Question 2

What is the scope of application of general provisions of contract law?

Answer 2

The scope of general provisions had decreased and the Reform of 2016 did not put an end to this. The general rules remain as a recidial set of rules, only applicable in the absence of other applicable rules, like consument or commercial law.

Question 3

What is the purpose of general rules?

Answer 3

Symbolic function with general principles

Question 4

What is the difference between common and statutory law regarding general provisions?

Answer 4

General law of contract remains dominated by the common law, whereas the statutory regulates only those aspects seen of needing a special rule

Question 5

What is the Sale of Goods Act of 1979?

Answer 5

Specified some particular points without giving a broad view of the special contract. Symbolic for the differences between French law and English law. English law does not have the same strong philosophy of the special contract as French law and the general provisions are of more importance there.

Question 6

What are the key features of the contract in French law?

Answer 6

The freedom of contract, the binding force of contract, and that the contract must be negotiated, formed and performed in good faith

Question 7

What is the general definition of the contract?

Answer 7

Art 11:01 CC A contract is a concordence of wills, two or more persons intented to create, modify, transfer or estinguish obligations

Question 8

What is the standard form of contract?

Answer 8

Art 11.10 CC Form of contract whose general conditions are determined in advance by one of the parties without negotiation

Question 9

How does the Civil Code protect parties from standard form of contract?

Answer 9

Art 11.71 protects when there is a clause determined in advance by one of the parties which creates a significant imbalance between the rights and obligations of the parties, and makes the clause of the contract deemed unwritten. Also protection in Consumer Code Art L202 and Commercial Code Art 442

Question 10

How does English law view standard form contracts?

Answer 10

Standard form of contract is as binding as any other contract, except some exceptions for Consumer Contracts

Question 11

What is the importance of good faith in French law?

Answer 11

Good faith is a governing, counter principle of the binding force in French law. Art 11.04 CC say contracts must be formed and performed in good faith.
From google: Good faith is a sincere intention to be fair, open, and honest, regardless of the outcome of the interaction.

Question 12

How do English law view good faith?

Answer 12

Does not view good faith as a counter principle to the binding force of contract. It undermines the contractual certainty

Question 13

What does the Anthropolitic view of the contract in the Civil code mean?

Answer 13

That we usually present the birth of the contract with some special rules, its effects and then its termination

Question 14

In the precontractual period, before the meeting of the wills, how does one create a valid contract?

Answer 14

The main rule is full contractual freedom with consent from the parties. Three defects of consent were codified in 2015:
- Fraud (bedrägeri)
- Duress (olaga tvång)
- Mistake

Question 15

What are the conditions of negotiations in the creation of valid contract?

Answer 15

Art 11.12 CC: Initiative, conduct and termination of precontractual negotiation are free. They must satisfy the requirement of good faith.

Question 16

What happens if there is a wrongful termination of a contract obligation?

Answer 16

Art 11:12.1 Wrongful termination gives rise to compensation
Case Memokin Vs. Stock: Negotiation had been going on for months to prepare a huge M&A. Stock left the negotiations. Memokin could be compensated for the loss of time and fees for lawyers, but not for the loss of advantage to buy shares (due to freedom of contract)
Case Baldus shows the consequences of withholding information is this precontractual phase. No duty disclose the artist’s fame, no matter if it was sold under market-value.

Question 17

Why is it necessary to codify offer and acceptance?

Answer 17

For instance to when you have two offers, then you are bound to the first offere, even if at lower price.
Other example, is for knowing what happens when one makes offer and then dies. If you are dead you are no longer bound, neither are your hiers.

Question 18

How does does the Civil Code use offer and acceptance?

Answer 18

Article 11.16
1 §: “ The offer may not be withdrawn before the expiry of the time limit set by the offered or fading that, after reasonsable period”
2 §: “Withdraw of the offer in violation of this prohibition prevents the conclusion of the contract”
3 §: “The offered should be liable under the conditions of ordinary law without being obliged to compensate for the loss of the benefits accepted from the contract”

Article 11.17
1 § “The offer lapses on expiry of the period set by the offeror, or failing that, after a reasonable period”
2 § “It shall also laps in the event of the incapacity or death of the Offerer or the death of the Offeree”

Article 11.18
2 § “As long as the acceptance has not reached the Offerer, it may be freely withdrawn, if the withdraw reaches the Offerer before the acceptance”

Question 19

What is the definition of a precontract?

Answer 19

There is a meeting of two wills in order to create legal effect, in particular preparing a future contract

Question 20

What is a NDA?

Answer 20

A will of keeping a secret and the other accepts. It is a genuine contract even if it is preparing another contract. Not considered a pre-contract

Question 21

What are the two types of pre-contract in the Civil-Code reform?

Answer 21

Art 11.24 Unilateral promise = A contract by which one party, promiser, grants to the other benificary, the right to opt for the conclusion of a contract which essential elements are determined and for the formation of which only the benificiary’s consent is missing
Art 11.23 Preemption agreement = A contract by which a party undertakes to offer its benificiary priority to deal with it in the event that it decides to contract, or
where a contract is concluded witha third

Question 22

What are the two types of pre-contract in the Civil-Code reform?

Answer 22

Art 11.24 Unilateral promise = A contract by which one party, promiser, grants to the other benificary, the right to opt for the conclusion of a contract which essential elements are determined and for the formation of which only the benificiary’s consent is missing
Art 11.23 Preemption agreement = A contract by which a party undertakes to offer its benificiary priority to deal with it in the event that it decides to contract, or
If concluded with third party in breach of preemption, beneficiary may obtain compensation
Possible tobring action of novality or ask court to substitute him of a third party in contract concluded

Question 23

What has the legislator done wrong with precontracts?

Answer 23

• Would be better placed as a special contract
• Do not include all kinds of precontracts like NDA
• Badly named section, would be better to call it prepartitory contract, since it is actually a contract

Question 24

What are precontracts like in English law?

Answer 24

They call them Option-contracts. Unlike French law, they require a financial compensation for this commitment.

Question 25

What is defect in consent?

Answer 25

When consent has not been given freely or in an informed matter. Three kinds of defect in consent:
- Fraud (bedrägeri)
- Duress (olaga tvång)
- Mistake
Art 11.30 CC Without them the parties would not have contracted, or would have contracted on substantially different terms

Question 26

What is fraud?

Answer 26

Art 11.37 CC The contracting party obtain the consent of the other party by deceit or lies,
or if one of the parties intentionally conceils information he knows is decisive for the other party (fraudulent concealement)

However not if one party does not reveil information for the other party his estimate of the value of the performance
3 types:
- Lies
- Deceit
- Fraudulent concealement

Question 27

What are the conditions for fraud?

Answer 27

• Freudulent scheeming: must have caused a mistake in the victim
• Material element: like lies, magnation, staging, artifuse, concealement of information
• Intention to deceive
• Perpritrator must be the other contracting party

Question 28

What can be said about fraud committed by a third party?

Answer 28

Art 11.38 CC Only fraud if this third party acts in collusion with the contracting party

Question 29

What are the two conditions regarding fraudulent concealment in fraud?

Answer 29

• Has to be information that determines consent.
  In Case from 1974 the contracting party did not reveil that a pigsty was about to be built by the house and this was considered fraudulent concealment. Duty to inform any information that could alter the consent (like there establishment of pigsty) except the price.
• The information is not about the price
  In case from 2007 a peasant was disabled and sold the house below market price, this is not fraudulent concealment because the information was the about the price.

To make this estimation: Standard of a reasonable man: Does a reasonable man agree to set up his home next to a pigsty? No.

Question 30

What is duress?

Answer 30

Art 11.40 CC Party undertakes a commitment and the pressure of a constraint which inspires him the fear of exposing his person, his good or his related, to considerable harm
Art 11.41 CC Not threat of legal action
Art 11.42 CC Does not matter if exercised by party of contract or third party

Question 31

What is economic duress?

Answer 31

Art 11.43 CC Party abusing the state of dependence on which his cocontractor finds himself in relation to him, obtains from him, a commitment which he would not have entered into, in the absence of such cohersion, and takes it from a manifestily great advantage

What is state of dependence and taking advantage? For instance a boat offers to rescue you for money
Case Bordas (2002): Woman employed at publishing house and they offered to buy her work but is was unfavourable to the employe, it was not possible for her to negotiate. This was however not a state of dependence according to Cour de Cassation.

Question 32

How is fraud/law of misrepresentation in english law?

Answer 32

Three statued types of misrepresentation:
1. Fraudulent misrepresentation
2. Neglent misrepresentation (like French mistake)
3. Innocent misrepresentation (like French mistake)
Silence never constitute fraud under English law.
For duress, it requires threats.
No equivulance to economic duress (Art 11.43 CC)

Question 33

What are the requirements for the content of the contract?

Answer 33

Art 11:28 CC
1. The consent of the parties
2. Their capacity to contract
3. Lawful and certain contract
Also:
Art 11.62 CC: Cannot violate public order
Art 6 CC: Cannot violate morality

Question 34

What is morality?

Answer 34

• Dignity
• Human dignity
• Sexual morality

Case Mademoiselle Gadepoun: Sexual morality. Mistress inherited money from a married man, and the widow was left without. Cour de Cassation rendered that this contract was not in contrary to morality.
Case Adults of short nature: A game where purpose was to throw them as far as possible. Conseil d’Etat said this was contrary to human dignity and therefore morality. Has spread to contract law.

Question 35

What is public order?

Answer 35

• Public order of direction: Mandatory rules that aim at the general interest
  For instance. a defaulting debteur is not allowed to organize his insolvency, like hiding assets abroad, hide wealth, etc.
• Public order of protection: Mandatory rules to protect vounorable contractual parties
  For instance rents must be limited in Paris

But also the broader respect of human rights. They must be respected by the individuals themselves.
Case Housemaids. There was a clause which allowed parties to introduce another tenant, and one invited daughter to stay as a tenant, and this clause did not respect the other housemaids right to Privacy (Art 8 European Convention on Human Rights) and was therefore against public policy.

Question 36

What is a certain contract and what are the exceptions?

Answer 36

A certain contract is about knowing what you are committing yourself to when entering.
Art 11.28 CC contains issues concerning the setting of the price and if it can be foreseen, and also the problem of counter performance.

Problem of setting the price:
Art 11.63 CC: Civil Code says the price must be determined or determinable (like calculation, indexecation, hardship, market price).
Two exceptions:
- Art 11.64 The frame-work contract
- Art 11.65 The service contract
Trust is fundamental for these contracts.

Problem of counter-performance:
Art 11.68 CC: Unbalanced contracts are valid
Case Balders: Buying way below market price and still valid.
Art 11.36 CC: A mistake on the price is not a ground for annulity
Exceptions from Art 11.68:
- The realestate sale if price is lower than market price, 7-12
- Sharing of inheritance
Art 11.69 CC Contractual imbalance, void if counter performance is illusory of derisory.
Art 11.70 CC Any clause which deprives the debtor’s essential obligation on its substance shall be deemed unwritten
Case Chronopost: A service which ensured delivery within 24 hours, and an architect sends a fine by this service. Was the only service on the market. Had a limited liability clause, will only compensate up to the purchase price. Cour de Cassation declared this clause not valid, because it deprived Cronopost essential obligation of its substance.
Art 11.71 CC 1 § Standard form contract: Non negotiable clause with creates significant imbalance is deemed unwritten
2 § Exception if the assessment of significant imbalance does not relate to the main subject of the contract or to the edequisy of the price of the service.

The Scrivinaire Act: The origin of the Art is in Consumer law. Created from European directive from 93.
Today L-212-1 Con. C An unfair term is a clause which in a consumer contract creates a significant imbalance
Presents two lists of unfair terms:
- Black list: Terms which are irrifutiable presumed to be unfair
- Grey list. Terms mirely presumed to be unfair, possible to prove the contrary.
Art L-442-1 Com. C makes it possible to impat imbalances in commercial relationship.
So the scope of Art 11.71 CC: Cons. and Com. C contract may exhause all forms of standard form contracts

Question 37

What is the meaning of former Art 11.31 CC and why was it repealed?

Answer 37

Former Art 11.31 CC An obligation without cause or on a false cause or unlawful cause can have no effect

It was repealed because change of purpose of contract and new concepts of counter-performance
The vocabulary is not appropriate. A contract without cause is a contract without counter-performance, the article is about sactioning a contract without counter-performance, it corresponds to devisory or illusory contracts.
Then both objective cause and subjective cause, but there is no need to go into subjective matters.
The unlawful cause corresponds to the purpose of the contract: Morality and public order.
Unlawful purpose with cleaning lady in a brothel because it makes it work for the procuring.
Has caused confusion.
Case Video (1996) Annulment of contract with supplier was accepted by Cour de Cassation because lack of cause, because no people rented the tapes.
But today, we ask the question, why should one be able to cancel a contract because of mistake on economic profitability.

Question 38

What are the effects of the contract?

Answer 38

The effect between parties and the effect between third parties.
The main principle is the binding force of the contract: Pacta sunt servanda.
Art 11.93 CC: Mutual dissensus. You both agree to stop or modify the contract and it must be on grounds which legislation authorises
- Marriage
- Employment
Art 11.94 Binding force of consequences induced by Equity, usage or legislation - means there are unexpressed obligations (barely used in practise)
Case Canal de Craponne (1876) (respected before reform 2016): Parties had been in a watersupply-contract for over 400 years and not modifying the price could lead to one of the parties ruin. No consideration of time, equity can allow the jugde to modify the terms of the agreement reached between the parties. Because it is the parties who are supposed to modify the contract, not the judge.

Only one exception:
Art 11.95 CC: Review for unforeseen circumstances
The party may ask the other party to renegotiate
The parties can agree to terminate the contract (Mutual dessensus)
If refusal or failure, possible to ask the court to set about its adaptation. Judge can terminate the contract or proceed to judicial review.
Restrictive interpretation. Conditions:
- Only take place in absence of hardship clause (clause that commit the parties to review the contract)
- Absence of alitary contract (debtor must have accepted the risk of change of circumstances)
- Performance leads to the ruin of the debtor

Question 39

What is the excuse for non-performance?

Answer 39

There is only one excuse.
Art 12.18 CC: The Force-Majeure, where an event beyond the control of the debtor, which could not reasonably been foreseen at the time of the conclusion of the contract, and who’s effects could not have been avoided by appropriate measure, and which prevents the performance of his obligations of the debtor.
Three conditions:
1. Irresistible
2. Unforseeable
3. Outside debtor’s control
So different from 11.95. Here you are released of obligation (not having to do the procedure of 95), and here performance is not possible (not that it leads to your ruin)

Question 40

What are the penalties for non-performance?

Answer 40

Art 12.17 CC provides 5 penalties:
1. The right of the creditor to refuse to performe his own obligation
2. The right to seek the enforcement of the performance in kind
3. Reduction of the price
4. Termination of the contract (to end, even with retroactive effects, different from resilitation which is only for future)
5. Claim for damages

Question 41

When is it not possible to seek enforcement of the performance in kind? (in case of non-performance)

Answer 41

Not possible if the enforcement is impossible, for instnace if the dress is ruined or painter no longer wants to paint
Not possible if there is a manifest disproportion between the cost to the debtor and the interest for the creditor.
Case Swimming Pools, has been overruled, there a debtor was forced to destroy his own work to remove the swimming pool and put a new one because he made 3 steps instead of 4.

Question 42

What are the rules on termination of the contract?

Answer 42

Art 12.24-12.30 CC
Must in principle be provided for in termination clause.
If not stipulated in contrat, the creditor must go to court, and ask the judge to terminate the contract, he cannot do it on his own.
Art 12.26 CC: A creditor may terminate the contract, but on his own risk. It means that it is sleeping until the debtor performs.

Question 43

What are the effects of the contract on third parties?

Answer 43

Art 11.99 CC: The principle of Privity of Contract. The contract creates obligations only between the parties. Third parties may neither request performance of the contract nor be compelled to perform it
Art 12.00 Third parties must respect the legal situation created by the contract. They may rely on it to prove a fact

Question 44

What happens when a contract causes harm to a third party?

Answer 44

Case Bootshop vs. Myr’ho (2006) Extracontractual liability
Non-performance of the contract on a third party
Two contracts. A management contract between lessor and lesse. Myr’ho has trusted Bootshop to manage the business. But there is a damage on the premis, because of lack of maintenance. The debtor at fault is the owner of the premis who does not perform in premis lease contract to Myr’ho.
Can Bootshop as a third party complain as they suffer harm like not earning money in this condition?
Distinguish between contractual and extra contractual liability.
Not for contractual liability because there is no contract between premis owner and Bootshop.
Cour de Cassation allowed Bootshop to take action on extracontractual liability which gives him opportunity for full compensation.

This is critized, because Bootshop does not have to respect a clause limiting the liability and does not have to prove fault, but can still get full compensation.
This has given rise to a reform: Future Art 12.44 CC: A third party will have to choose between one of two sets of rules: Either on extracontractual basis and respect the conditions, or contractual liability and respect the conditions, like a clause limiting liability.

Question 45

What are the conditions for contractual liability and what is the compensation?

Answer 45

1. There must be a contract and its binding force (between plaintiff and the defendant)
2. There must be damage
3. Non-performance of the contract that directly causes the damage. A link of direct causality between the damage and contractual non-performance

The compensation has a limited scope. Limited to the damage what could be foreseen at hte moment of the conclusion of the contract

Question 46

What are the conditions for extra-contractual liability/Tort law?

Answer 46

Art 12.40 CC
1. A damage
2. A fault (general obligation due to life in society not to harm other, deliberatly or non deliberatly)
3. A link of direct causality between damage and fault (the person who committed the fault must himself have directly caused the harm)

The scope of compensation is very, very generous. It accepts the principle of full reparation of damage.
All consequences in victims life: not walk, not swim, not your hobbies, friends left, partner left, sexual damage