The reform of contract law enshrines the consideration of the fact that a contract may have been concluded in an overall operation and be closely linked to other contracts concluded within the framework of that operation, by providing that said contract may be called into question by the disappearance of one of them.
In line with a body of case law that had begun to develop, the new article 1186 of the Civil Code states: " when the execution of several contracts is necessary for the completion of the same operation and one of them disappears, the contracts whose execution is rendered impossible by this disappearance and those for which the execution of the disappeared contract was a determining condition of the consent of a party are void ."
This provision makes the lapse thus established conditional upon the characterization of a situation whose various components are as follows:
- An operation requiring the execution of several contracts for its completion
The general nature of the term "operation" gives Article 1186 of the Civil Code the potential to apply to an extremely wide variety of situations, virtually unlimited insofar as it involves multiple contracts and therefore not necessarily multiple contracting parties.
The question then arises as to how the necessity of performing these contracts for the completion of the operation will be assessed by the courts.
- The disappearance of one of the contracts necessary for the completion of the operation
First, the wording of the article does not appear to make the identity of the parties to the contracts in question, even partial, a condition for invoking the lapse. This would mean that the lapse could be invoked by a party to a contract on the grounds of the disappearance of another contract within the transaction to which neither it nor even its co-contracting party is a party.
Furthermore, once again, the use of the term "disappearance" gives lapse a fairly broad scope to operate, insofar as it is a generic term that could apply to all the mechanisms that can lead to the annihilation of the contract, such as cancellation, termination or rescission, lapse itself and even the simple occurrence of the term…
It is observed, with regard to the vocation of lapse to characterize a disappearance in itself, that the lapse of a contract in a contractual operation could itself be the origin of another lapse and therefore of a chain reaction that could lead to the lapse of the entire operation, provided that the other required conditions are met with regard to each contract concerned.
- A particular link between the contract that may be considered void and the disappeared contract, namely either an objective indivisibility between the two contracts (the impossibility of executing the second contract due to the disappearance of the first) or a subjective indivisibility (the questioning of the reason that led one of the co-contractors to the second contract to conclude it due to the disappearance of the first)
The widespread adoption of this solution by case law in certain types of contractual relationships now necessitates a thorough understanding of the established mechanism, given its potentially significant consequences.
It essentially allows for the invocation of lapse, which terminates the contract outright, in situations previously unforeseen.
The only obstacle to invoking lapse is that the contracting party against whom it would be invoked was unaware of the overall transaction when they gave their consent.
At this stage, it is far from clear that the application of Article 1186 of the French Civil Code can be contractually prevented, leaving only the possibility of stipulating the consequences of lapse.
This is therefore a new issue that legal professionals must recognize and address by drafting or revising appropriate clauses in the contracts they prepare.
Morgan Jamet
