Termination of commercial relationship: clarifications on the rules of notice
The Court of Cassation clarifies the criteria for assessing notice in the event of termination of a commercial relationship, stressing the importance of the duration of the relationship and economic dependence. An essential analysis for companies concerned with securing their contractual practices.
TheCourt of Cassation clarifies the criteria for assessing notice in the event of termination of a commercial relationship, stressing 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 of its commercial relationship with one of its distributors, with a seniority of about fifteen years. This commercial relationship, initially governed by general distribution conditions, 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 the sufficient notice period is assessed taking into account the duration of the commercial 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 commercial relationship to be taken into account: should we take into account the duration of the commercial relationship on the date of effective termination 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.
- Over the period of notice, 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 cases, 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 breach was foreseeable due to Free’s entry into the market, stressing that predictability does not preclude the brutality of the breach.
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 assessing economic dependency 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 length of notice for a subsequent total breach. This leaves some uncertainty for businesses.
(Court of Cassation, 1st Civil Chamber, January 29, 2025 – No. 23-21.150)
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