The reform of contract law has resulted in new provisions in the Civil Code governing the duration of contracts. While not profoundly innovative, these provisions, which enshrine various rules and concepts applicable to this subject, should lead to a more meticulous approach to it, particularly regarding the use of terms intended to formalize the fate of fixed-term contracts upon their expiry.
Three concepts are defined:
- The extension of the contract, which is based on an expression of will by the contracting parties before its expiry.
This would have the effect of extending the contract for a longer period than initially planned.
- The renewal of the contract, which would result either from the agreement of the parties or from the effect of the law, would give rise to a new contract whose content would be identical to the previous one but whose duration would be indefinite.
- Tacit renewal, which would result from the fact that upon expiry of the term of a fixed-term contract the contracting parties would continue to perform their obligations and which would produce the same effects as renewal.
These concepts, along with their respective legal regimes, pose particular difficulties in the context of a law in transition, for two reasons.
First, the parties must understand the potential consequences of adopting them in relation to the mechanisms governing the treatment of contract duration provided for in the contracts they are accustomed to entering into.
The consequences associated with each type of mechanism that can be used are indeed significant, as they relate in particular to whether the continuation of the contractual relationship would lead to the formation of a new contract, which can have important implications for the fate of the contract's ancillary elements, including security interests.
Second, it is even necessary to consider, from this point forward, the potential consequences of the immediate application of established concepts, insofar as they were used in contracts concluded before the entry into force of the new contract law, since they could subject new contracts resulting from tacit renewal or re-renewal to this new law.
This is why it is undoubtedly one of the first issues to be tackled quickly and which requires an audit of the duration clauses of contracts concluded or used.
