In a September 30 2014 opinion, the French Commercial Practices Review Panel (CEPC) examined the general terms and conditions of purchase of a French car manufacturer. It considered that the general terms, which granted substantial discretionary powers to the manufacturer, breached Article L 442-6 of the Commercial Code, which prohibits a significant imbalance between the rights and obligations of parties, the sudden termination of established commercial relations or the threat of such termination to obtain clearly unfair conditions.
The examined general terms and conditions of purchase, the exclusive and therefore non-negotiable nature of which was expressly provided for, notably reserved for the manufacturer alone the authority to:
- amend the quantity and frequency of deliveries;
- assess the supplier's liability for enforcement of these amendments;
- consider the suitability of the guarantees offered by the latter; and
- fix the prices of products modified by the manufacturer.
Termination of the agreement before its expiry, at any time and for any reason whatsoever – including the supplier's rejection of the contractual amendments – was also at the manufacturer's discretion.
In the absence of reciprocal rights granted to the supplier, which could counterbalance the manufacturer's substantial powers, the CEPC considered that these provisions were likely to create a substantial imbalance which could lead to invalidation of the provisions, as well as civil fines.
The CEPC also considered that the application of new general terms and conditions of purchase without notice and without the supplier being able to negotiate the conditions could be considered a partial sudden termination of commercial relations if it implied a substantial modification of the conditions. The same would be true if the manufacturer chose to modify the quantity and frequency of deliveries, without giving the supplier sufficient notice.
Finally, certain provisions of the general terms and conditions of purchase could also constitute a threat of total or partial sudden termination of commercial relations, prohibited by Article L 442-6 of the Commercial Code, if the manufacturer decided not to partially or totally terminate the existing agreements, subject to the supplier accepting the general terms and conditions of purchase as they were or with any future modification of the contractual provisions.
Emmanuelle van den Broucke
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