French government issues final draft of private contract law

The government has taken into account many of the criticisms that were levelled against previous drafts and modified the final version of the bill accordingly, said Paris-based Peter Rosher of Pinsent Masons, the law firm behind Out-Law.com.

Reform to the French civil code was announced by justice minister Christiane Taubira in February 2015, and aims to bring the law into line with international standards. The code was first written in 1804 and the principal articles concerning contract law have not changed since its creation.

Christine Taubira resigned last week after a row over the French government's plans to strip French nationality from dual-citizens who are convicted of terrorism. However, this "hasn’t halted the process and the version of the bill just released will now be the final text of the new French private contract law which will be ratified later this year," said Rosher.

"Several of the vociferous criticisms that were levelled against the draft Bill, in particular by the French Association of In-House Counsel, have been taken into account and the final version of the bill has been modified accordingly. There was, for example, some very vocal criticism that certain provisions of the previous draft law gave too much opportunity for judicial intervention in private contracts. For the great part, the new law simply codifies much of the case law and thus will provide a one-stop, clearer point of reference for contracting parties’ rights and obligations," he said.

The reform does not drastically alter French contract law although approximately 300 articles of the code have been rewritten. Most of the proposed changes aim to reflect French case law and the interpretations that have been given by French courts over the years, Rosher said.

The reform has also provided the opportunity to reshuffle the code to organise it into a more coherent body of law, Rosher said.

"In that context, criticism decrying a quiet revolution of French contract law is not justified. However, there are a few substantial changes to distinctive features of French contract law," he said.

These include changes to imprévision, or unforeseeable circumstances. This allows a contract to be revised or terminated due to unforeseen circumstances that make it too onerous for one party's to meet its obligations. Parties who cannot agree on this can now ask a judge to adapt or terminate a contract. Companies should ensure they have properly drafted 'hardship' clauses in contracts to avoid this being necessary, Rosher said.

A party injured by unfair pricing will be entitled to ask for damages and for termination of the contract under the new code. This differs from the draft, said Rosher, which said that the injured party would be able to ask for the price to be changed.

A judge can delete an unfair clause in a standard form contract if it creates a significant imbalance in rights and obligations. In contrast to previous drafts of the code, this will not affect contracts that have been negotiated by the companies involved, Rosher said.

The new code defines the date and place of acceptance of an offer as where and when an entity making an offer receives an acceptance. The previous code did not give any definition of this, and case law suggested that acceptance occurs when as offer is made.

"This solution is better adapted to the twenty-first century in which postal services are less frequent than they were in the past, and electronic communication has taken over," said Rosher.

One issue that has still to be resolved is the 'unilateral promise to sell', on whether a company can be forced to execute a sale contract. The French senate has objected to this change and so the French constitutional council will vote on whether it should be included in the code, Rosher said.  

This reform is only the first stage of a broader change to the French law of obligations, and the Government intends to improve law on civil responsibility next, Rosher said.