Contract law reform
Newsletter - September 2016
On 16 February 2015 the parliament approved the authorisation law pertaining to modernising and simplifying the law and the procedures in the fields of justice and domestic affairs, which enabled the government, in February 2016, to pass an order reforming the law of contracts, which will come into effect on 1 October 2016.
The reform’s objectives
The purpose of the reform is to update the Civil Code, since some articles have not been updated, or have hardly been updated, since 1804, when the Napoleonic Code was first drafted. One of the major objectives was to make contract law more legible, but also more attractive with regard to the other legal systems of the European Union.
Moreover, the reform aimed to codify certain provisions arising out of case law. Since some of the texts were out-of-date, the judge himself, using leading case law, backgrounded the law by defining concepts that had not been transcribed into the Civil Code.
The definition of contract
The classical concepts of the obligation “to give, to do or not to do” are no longer used. Now, the contract is defined in Article 1101 of the French Civil Code: “the contract is an agreement of intentions between or among two or more entities, which is intended to create, amend, transfer or extinguish obligations.”
Until now, case law defined the contract as the intersection of “an offer and an acceptance.” Now, the Civil Code devotes a sub-section that is entitled “offer and acceptance.”
Origin and purpose
Traditionally, these two terms were part of the actual definition of contract. Previously, the Civil Code made reference to the “legal origin” and the “certain purpose.” Article 1128 of the Civil Code, in its new wording, explains that “the factors required for a contract to be valid are: (1) the parties’ consent; (2) their capacity to enter into contract; (3) legal and certain content.”
These concepts had their source in French law, and in an attempt to harmonise, particularly with the other legal systems of Europe, they were eliminated.
Case law had acknowledged several legal mechanisms pertaining to pre-contracts, although there were no written provisions by legislators. Hence, the order introduces into the Civil Code the “pacte de préférence” and the “promesse unilatérale” jointly defined as “pre-contracts.”
Article 1123 states that the “pacte de préférence” is “the contract by which a party undertakes to propose preferentially to its beneficiary to deal with it in the event that it should decide to enter into contract.”
Article 1124 explains that the “promesse unilatérale” is “the contract by which a party, the potential contracting party, grants to the other, the beneficiary, the right to opt to enter into a contract, the essential factors of which have been determined, and for the formation of which, only the beneficiary’s consent is lacking.”
Article 1217, in its new wording, now states that “the party to which the commitment has not been performed, or has not been performed in full, shall be entitled:
– to refuse to perform or to suspend performance of its own obligation;
– to continue forced performance of the obligation;
– to seek a price reduction;
– to cause termination of the contract;
– to apply for compensation for the consequences of the breach.”
In all circumstances, action by the judge seems to be required to settle the disputes that arise out of the breach of contract.
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