Termination of commercial relationship: clarifications on the rules of notice

TheCourt of Cassation clarifies the criteria for evaluating the notice period in case of termination of commercial relationship, highlighting the importance of the duration of the relationship and economic dependence. An essential analysis for companies concerned with securing their contractual practices.

The decision of the Court of Cassation of 29 January 2025 commented on concerns the termination by Bouygues Telecom COMMERCIAL RELATIONSHIP with one of its distributors, with a seniority of about fifteen years. This relationship initially governed by general conditions of distribution was reinforced by special conditions signed 9 years later.

The termination was notified in two stages: a termination of the contract with the special conditions in 2012 with 9 months’ notice (partial termination), followed by a total termination in 2013 with 13 months’ notice.

The length of notice was therefore at the heart of the debates.

After recalling that the duration of sufficient notice is assessed taking into account the duration of the business relationship and other circumstances at the time of notification of the termination, the Court is invited to rule on several questions:

• Regarding the duration of the business relationship to be taken into account: should we take into account the duration of the business relationship on the effective termination date or on the date of notification of the termination? the Court of Cassation reaffirms a constant rule according to which the period of notice must be assessed at the time of notification of the termination. This provides legal certainty to the parties by specifying the key moment for the assessment of the notice.

• On the duration of the notice period, the Court of Cassation recalls the importance of a concrete analysis of the commercial relationship, taking into account various factors such as the duration of the relationship, the volume of business, and the state of economic dependence. She stressed that the state of dependency must be assessed based on criteria such as the partner’s notoriety, its market share, and the importance of the relationship in the distributor’s turnover.

The Court rejected the argument that the termination was foreseeable due to Free’s entry into the market, stressing that foreseeability does not preclude the brutality of the break-up.

Unsurprisingly, as the Court of Cassation did not control the assessment of the notice period carried out by the trial judges, it relied on the sovereign discretion of the trial judges, who held that reasonable notice should be set at 24 months.

This decision is a reminder of the importance of properly evaluating economic dependence in business relationships. Companies must be vigilant about the length of notice in the event of a break, especially if they are in a situation of dependence.

Nevertheless, while the Court mentions the importance of considering a prior partial breach, it does not provide clear guidelines on how this should influence the period of notice for subsequent total rupture. This leaves some uncertainty for businesses.

(Court of Cassation, 1st Civil Chamber, January 29, 2025 – No. 23-21.150)