France: Legal Revolution In France – Civil Law Reforms (Or Napoleon's Second Coming)

Executive Summary This alert draws attention to the approaching entry into force of the new French civil code. This will be of interest to all parties with French law-governed agreements or that do business in France – especially regarding contracts that are due for renewal after 1 October 2016. Terms and conditions should be reviewed and, where necessary, legal advice taken on some of the innovations under the new law.

Introduction For over 200 years, the core provisions of the French civil code concerning contract and tort have remained essentially unchanged. A French civil lawyer from the immediate post-Napoleonic age, wielding his civil code from that time, would not feel out of place today arguing a claim for breach of contract or advancing a general tort claim.

But from 1 October 2016, the putative Napoleonic lawyer will no longer be able to cite the long-trusted articles in the civil code fashioned by his peers. Even where the articles still exist, they will have a different number. Were he to return in October 2016, the Napoleonic lawyer would first need to return to school.

This is because on 10 February 2016, by executive order, a new civil code was passed into law which contains a complete reworking of the provisions of general contract law. In a second phase, those parts of the civil code addressed to torts will also be reworked.

In principle, the new civil code introduces but few innovations, while at the same time enshrining certain case law principles developed by the courts and otherwise maintaining the legal acquis from the old civil code. In theory, the new code should not overly disturb the legal status quo. But the devil will be in the detail. And account will need to be taken of the innovations introduced by the new code. Some of which are of potentially broad reach.

As a result, those contracting under French law or with French counterparties will be well advised to assess the potential impact of this legislative change in advance of 1 October 2016, when the new civil code comes into force. This will apply in particular for contracts due to be renewed after that date.

Discussion Those following developments in this area have broken down the provisions of the new civil code into three categories – (i) innovations, (ii) enshrining of case law into statute law and (iii) maintaining of the status quo. In this alert, we highlight some examples of the innovations introduced by the new civil code.

(a) Good faith: Under the old civil code, good faith was always an obligation imposed on contracting parties in the performance of their contract. Under article 1104, contracts must now be "negotiated, concluded and performed in good faith". The requirement of good faith in the formation of contracts is new. Article 1104 is also one of the relatively few provisions that is specifically stated to be mandatory ("d'ordre public"). It cannot be contracted out of.

(b) Hardship provisions: French law has long been held up as an example of an exceptional civil law country that adheres to strict application of contracts. No quarter is given for unforeseen events that might render performance of a contract significantly more onerous for one party. Thus, unless contractual provision is made through use of a hardship clause, or performance becomes impossible in circumstances where force majeure applies, the parties are bound to perform, irrespective of any hardship caused.

This feature of French law, some argue, is evidence that 'hardship' is not a general principle of international law, despite it featuring in the UNIDROIT Principles of International Contracts.

That argument will now be weakened. In a complete break with past tradition, the new code introduces the notion of "imprévision" into civil law (article 1195).

Under the new imprévision approach, if circumstances that were unforeseeable at the time of the contract make performance of the contract "excessively onerous" for a party, and that party had not assumed risk for the same, then the judge may revise or terminate the contract at the request of that party.

There was considerable, and at times heated, debate as to whether the notion of imprévision should be allowed into the new civil code and, if so, in what form. The wording which was finally adopted changed from the final draft. In the final draft, the contract could be terminated upon demand of a party, but not revised. Article 1195, as enacted, provides not only for termination but also for judge-ordered revision of the contract, upon demand of a single party, and only after an obligatory (and necessarily failed) negotiation stage.

It should be noted that the new imprévision provisions are not mandatory. Parties can therefore agree to exclude them.

(c) Standard form contract ("contrat d'adhésion"): The new civil code defines the notion of a "standard form" contract (article 1110). It is defined as a contract where the "general conditions, removed from negotiations, are determined in advance by one of the parties". Any clause in such a contract that creates a "significant imbalance" between the rights and obligations of the contractual parties shall be deemed to be of no effect (article 1171).

Thus where a contract is found to be a contrat d'adhésion, individual clauses in that contract are vulnerable to censure by the courts where they are found to create a "significant imbalance".

The power of the court to censure clauses already exists, and continues to exist, for consumer contracts. In the consumer context, the law is derived from EC Directive 93/13/EEC on unfair terms in consumer contracts.

The innovation here is that the court's right to censure individual clauses, where such clauses create a "significant imbalance", will now extend to business-to-business contrats d'adhesion.

Comments The new civil code is a welcome development. It should make French law more accessible and transparent. One of the drivers for reform was international competitiveness. There is little doubt that the significant work put into the new civil code will assist in that regard. The choice of legislative process, via executive order rather than the usual parliamentary legislative process, has given the drafters the very best chance of achieving overall coherence in this wholesale reformulation process.

On the other hand, the enshrining of case law principles perhaps goes too far by introducing inflexibility. It is fair to say that there is much enshrining in the new civil code, and clear choices have been made. When one carries out wholesale reformulation of the civil code every 200 years, is it wise to enshrine case law into statute law in this way? This is a real question, particularly within a legal tradition where stare decisis, in theory, does not apply and where judges are required to apply statute, in theory, without interpretative gloss.

In practical terms, and if only because of the three innovations described in this alert, commercial parties with French affairs should be reviewing their general terms and contracting practices, in anticipation of the 1 October 2016 entry into force of the new civil code.

Should a party be contracting out of the new hardship provisions? Will current contracting practices lead to a party's contracts being classified as contrats d'adhésion? If so, are any clauses in the general terms and conditions vulnerable because they create a "significant imbalance"? These and other questions need to be asked if unpleasant surprises are to be avoided or, at least, foreseen and minimized.

Over the coming years, the courts and users of French law will need to feel their way in this new environment. How French judges react to their new found powers to revise contracts will be an area of special interest, particularly given that the area of remedies under French law is not traditionally one where flexibility abounds. Overseas and arbitral precedent may be useful here to help guide the courts in formulating a hopefully principled approach.

For now, the starter gun is firmly loaded on what will undoubtedly be a new and interesting lease of life for Napoleon's long-lasting legal legacy – the civil code. For those who practice in former French colonies, the French civil code is about to become a less familiar friend and guide. For those who wish to survive and thrive in this new legal landscape, it is time to sharpen the pencils and prepare for the second coming of the Napoleonic Code.

How Reed Smith can assist Reed Smith can assist clients through this transition and, for example, adapt their general conditions of business to accommodate and address the new legal landscape in advance of its entry into force on 1 October 2016.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions