Overview of the reform of the French law of obligations

29 September 2016

We would like to draw your attention to an extensive French civil law reform: that of the law of obligations coming into effect on November 1 2016. This reform derives from the Ordinance n°2016-131 « on reform of contract law, general rules on obligations and of the proof of obligations » issued on February 10 2016.

In addition to an in-depth reorganisation of the numbering of the Civil Code articles, the reform confirms a long-established case law and also offers new legal solutions and new legal actions.

Below is a non-comprehensive summary of some key points of the reform of contract law. In a future article, we will highlight other significant aspects of the reform, especially with regard to general rules on obligations and on proof of obligations as well.

During a negotiation: a general duty to provide information and to respect discretion:

The new article 1112-1 CC imposes on future contracting parties a duty of public order to provide each other information: « Celle des parties qui connaît une information dont l’importance est déterminante pour le consentement de l’autre doit l’en informer dès lors que, légitimement, cette dernière ignore cette information ou fait confiance à son cocontractant. ». (Can be translated as follows: « The party who is aware of information that is critical to the consent of the other party must inform his counterparty provided that the latter legitimately ignores the relevant information or trusts the counterparty »). In case the failure to inform leads to a defect in consent then this can cause the contract to be cancelled.

The new article 1112-2 CC also introduces a general duty to respect confidentiality. However it is strongly recommended for contracting parties to include special provisions in their contract in order to determine precisely which information is to be considered as « confidential ».

Date and place of conclusion of the contract:

The new article 1121 CC gives precedence to the theory of the receipt of acceptance and sets a unique criteria in order to determine the place and date of the conclusion of a contract by providing that: « Le contrat est conclu dès que l’acceptation parvient à l’offrant. Il est réputé l’être au lieu où l’acceptation est parvenue. ». (In English : « The contract is concluded as soon as the acceptance has reached the party making the offer. The place of conclusion of the contract is considered to be that where the acceptance is received by the party making the offer. »).

For example, if a seller residing in The Hague sends an email on October 1 to a person residing in Paris, and the offer is accepted through an email received by the seller on October 3, then the contract will be deemed to have been concluded on October 3 in The Hague.

However this article is not a ‘public policy’ provision (« d’ordre public »), which means the parties can derogate from said provision by way of a contract, in order to avoid any ambiguity.

The new article 1122 CC also introduces the possibility to provide for a “cooling off” period. The recipient of the offer cannot express his acceptance of the offer before said period has expired. A withdrawal period can also be included in the contract. During this period, the beneficiary of the offer can withdraw his acceptance.

The « actions interrogatoires »:

One of the main innovations of the reform is the introduction of three new « actions interrogatoires ». These « actions interrogatoires » aim at avoiding the occurrence of a dispute before it emerges.

  1. When in doubt about the will of the beneficiary of a pre-emption agreement to invoke its provisions, the new article 1123, paragraphs 3 and 4 CC allows any third party who is aware of the existence of the agreement to « request the beneficiary in writing to confirmwithin a reasonable time limit set by him, that the pre-emption exists and that he intends to make use of it. »

  2. When in doubt about the actual powers of a contractual representative to act on behalf of one of the parties, the new article 1158 CC makes it possible for the other party to « ask in writing the represented party, within a reasonable time limit set by him, whether the representative is entitled to act on his behalf. »

  3. When in doubt about a possible nullity of a contract, the new article 1183 CC introduces an « action interrogatoire » which prevents the contract from being affected by possible “relative” nullities.
    Three cumulative conditions have to be met:
    1. The cause of nullity must have ceased to exist;
    2. The nullity which is avoided must not be of ‘public policy’ (« d’ordre public ») ;
    3. The written document must specifically mention that the contract shall be deemed valid unless an action for cancellation is brought before the expiry of a six-month period of time.

« Significant imbalance » in pre-formulated standard contract (« contrat d’adhésion »)

The new article 1171 CC provides that in a « contrat d’adhésion » (a standard contract), « any provision which generates a significant imbalance between the rights and obligations of the contracting parties is deemed to be unwritten ».
The same article also stipulates that « The assessment of the “significant imbalance” relates neither to the main purpose of the contract nor to the adequacy between the price and the service provided. »
Consequently a disadvantaged party will have a reasonable interest in trying to obtain the requalification of the contract in a « contrat d’adhésion ».

Overturn of the ‘doctrine of hardship’ (« imprévision contractuelle »):

The new article 1195 CC overturns the long-lasting precedence of the Canal de Craponne (Civ. 6 mars 1876) case law. Provided certain conditions are met, this article makes it possible for the parties to adapt their contract if a change of circumstances unforeseen at the time of conclusion of the contract occurs.

If you have any specific questions, please do not hesitate to contact us.

Attorney at law (Paris bar)