Break-up of a relationship

Your supplier:

is no longer competitive enough;
does not have an offer that remains in line with your needs;
poorly performs its obligations: delays, incomplete deliveries, defective products, etc.

You wish to terminate your contractual relationship. Attention, danger.

You can always break off a business relationship, but breaking it off abruptly entails the responsibility of the person who is at the origin of the break.

Freedom of trade means being able to choose your suppliers and therefore whether or not to remain a customer of a supplier.

To lawfully terminate a business relationship, it is necessary to:

on the one hand, comply with the terms of the contract (date of termination if it is for a fixed period, compliance with the notice required for it to cease its effects),

on the other hand, send a written notice, the duration of which is independent of what is provided for in the contract, taking into account the duration of the commercial relationship and respecting the minimum period of notice determined, with reference to commercial practices, by interprofessional agreements, and more generally the state of dependence of the supplier.

Failing to comply with this notice, Article L. 442-1 of the Commercial Code incriminates the sudden termination of an established commercial relationship. However, this notice does not have to be respected if the supplier or the customer has committed serious misconduct (e.g.: failure to deliver goods sold, non-payment of the price). This serious misconduct cannot be defined by a contract and is assessed restrictively by the judge.

The risk is financially very heavy: if your supplier has not obtained sufficient notice, he is entitled to obtain that you pay him, as damages, the equivalent of the gross margin (on variable costs) that he should have made with you during the period of notice from which he did not benefit (mainly, but other compensation is possible).

This litigation is frequent. It can arise from a total break in the commercial relationship, but also from a simple partial break (decrease in the volume of orders). It exists even in the absence of a written contract between the supplier or the customer.

Conversely, you are a supplier and a customer leaves you without notice, what are your rights? How can I be compensated?

It is therefore necessary to carefully prepare a break in a commercial relationship to know how to break it, and if you are a victim, to know if you can be compensated in order to act quickly.

Our method to accompany you on a sudden termination of an established commercial relationship 

We ask you for the history of the commercial relationship in order to be able to understand and qualify it: is it an established commercial relationship within the meaning of the law (Article L. 442-1 of the Commercial Code)?

The answer to this question is not obvious and comes from a thorough legal analysis: for example, a succession of fixed-term contracts with no prospects of renewal could exclude this qualification.

If the answer is positive, we then investigate whether serious misconduct was committed by the victim of the termination of the business relationship. The definition of serious misconduct is restrictive, at the discretion of the judge and this qualification, in restrictive competition law, does not exactly cover the assessment of serious misconduct in contract law.

If serious misconduct has been committed, it is without notice. If, on the other hand, no serious misconduct has been committed, then the duration of the written notice and its starting point must be determined.

The duration of the notice period is analyzed on the one hand according to the duration of the commercial relationship, and on the other hand, according in particular to the state of dependence of the contractor victim of the termination.

This state of dependence may result from contractual exclusivity clauses, on the part of its turnover from the commercial relationship that is ending, from the specific investments that it had made to enable this commercial relationship, or from private label production or the organisation of the business sector.

Once this period has been set, with reference to court practice and practice, it must be determined whether or not there was a written notice: was clear written information on the termination of the relationship sent or received? If not, can certain acts, such as the organisation of a call for tenders, be analysed as allowing this notice period to run?

Finally, the risk or damage is quantified if it is realized.

A tailor-made intervention by Gouache Avocats for the sudden termination of your commercial relationship

If Gouache Avocats intervenes before the termination of the commercial relationship, we allow you to manage the termination as quickly as possible, in compliance with the rules of restrictive practices of competition, and in consideration of your economic interests and your risks.

If Gouache Avocats intervenes downstream of the termination decision, our intervention will allow you, depending on whether you are the author or the victim of the sudden termination of the established commercial relationship, to reduce or maximize the compensation. Our intervention may consist in negotiating a settlement or a judicial settlement of the difficulty if no amicable solution could be found.