BAKER & Mc-KENZIE
[Text Box: Katia Boneva-Desmicht Local Partner Baker & McKenzie SCP] The Dark Side Of French Contract Law In Light Of Reform
By Katia Boneva-Desmicht, local partner at Baker & McKenzie Paris.
Published on July 11th 2016 in Law 360.
The aim of this article is to point out, in a summary and to the particular attention of foreign companies, problematic issues relating to French contract law, notably in light of the current legal reform. The article underlines some specificities of French law as compared to common law legal systems.
Contrary to the assumption of many businessmen, an agreement is not limited to its written provisions. The obligations of the parties of a commercial contract could go well beyond what was contractually negotiated. This is particularly true in France. These invisible obligations, of which foreign and sometimes French companies become aware only when it is too late, can be a source of liability, both in contract and in tort. They can also sometimes even give rise to criminal and administrative sanctions. Choosing another applicable law than French law would not always allow the parties to reduce their exposure to liability or to circumvent French statutory obligations meant to be implemented in the contract. The best way to limit the risk is to anticipate and understand these French specificities.
A contract is not always the result of a negotiation. Many international companies use templates approved and applicable worldwide with limited margins of maneuver left for local teams. Harmonized contracts are easier to manage but it must be noted that they can give rise to realistic risks.
Under French law, general terms and conditions of sale are considered to be the basis of commercial negotiations. It is therefore not acceptable to start or skip the negotiation process, by imposing the buyers' terms and conditions from the beginning. In some cases, the law requires the negotiation to be conducted on an annual basis.
Any buyer should request the other contracting party's general terms and conditions, whether it is a seller or provider of services. Once such terms and conditions are communicated, freedom of negotiation allows the parties to go beyond the provisions contained in the general terms and conditions of sale and to take into account the terms and conditions of the buyer.
The negotiation is important since the absence of negotiation makes the contract fall within the category of standard form contracts, which have a specific legal regime.
For instance, in case of ambiguity, a standard form contract is interpreted against the person who put it forward.
1 The Dark Side Of French Contract Law In Light Of Reform i July 2016