Newsletter No. 9 – Business Law
Summary
LEGISLATION
GENERAL TERMS AND CONDITIONS OF SALE
Decree of December 18
JURISPRUDENCE
… of November 18, 2014
Leasing: Judicial liquidation does not preclude the finding of the prior acquisition of a termination clause
… of November 18, 2014
Clarification regarding the powers of the supervising judge
… of November 18, 2014
A guarantor may rely on the rejection of a guaranteed claim pronounced in the insolvency proceedings of their co-guarantor.
… of November 4, 2014
The omission of a word in a guarantor's commitment
… of November 19, 2014
The heating method can be a contractual element
… of November 5, 2014
The absence of adjustment of charges renders calls for provisional charges unjustified
LEGISLATION
General terms and conditions of sale
The decree of December 18, 2014, concerning the information contained in the general terms and conditions of sale regarding the legal guarantee, was issued pursuant to Article L.133-3 of the French Consumer Code. This article stipulates that the general terms and conditions of sale (GTC) of consumer contracts must state, according to the procedures established by decree: "the existence, conditions of implementation, and content of the legal guarantee of conformity and the guarantee against hidden defects in the goods sold, owed by the seller." Article 1 of the decree specifies that the GTC of consumer contracts must include: "the name and address of the seller guaranteeing the conformity of the goods to the contract, enabling the consumer to make a claim under the legal guarantee of conformity provided for in Articles L. 211-4 et seq. of the French Consumer Code or the guarantee against hidden defects in the goods sold as defined in Articles 1641 et seq. of the French Civil Code." The general terms and conditions of consumer contracts must state that the seller is liable for defects in conformity of the goods to the contract under the conditions of Article L. 211-4 et seq. of the French Consumer Code and for hidden defects in the goods sold under the conditions stipulated in Articles 1641 et seq. of the French Civil Code (Art. 2). The general terms and conditions of consumer contracts must include a box informing the consumer that, when acting under the legal guarantee of conformity, they:
- benefits from a period of two years from the delivery of the goods to take action;
- may choose between repair or replacement of the goods, subject to the cost conditions provided for in Article L. 211-9 of the Consumer Code;
- is exempt from providing proof of the existence of the non-conformity of the goods during the six months following delivery of the goods.
This period is extended to twenty-four months from March 18, 2016, except for second-hand goods. This same section must reiterate that the legal guarantee of conformity applies independently of any commercial guarantee that may be granted. Finally, it specifies that the consumer may choose to invoke the guarantee against hidden defects in the item sold, as defined in Article 1641 of the Civil Code, and that in this case, they may choose between rescinding the sale or obtaining a reduction in the sale price, in accordance with Article 1644 of the Civil Code (Art. 3).
JURISPRUDENCE
Leasing: Judicial liquidation does not preclude the recognition of the prior acquisition of a termination clause
Com. November 18, 2014 (n°13-23.997) F-PB
By an order dated October 31, 2012, a judge in summary proceedings declared the termination clause in a real estate lease agreement to be in effect and ordered the lessee to pay an advance on unpaid rent and set an occupancy indemnity. The lessee appealed and was placed in judicial liquidation on January 15, 2013. The Court of Appeal dismissed the claim seeking a declaration that the termination clause had been triggered, on the grounds that, as of the date the liquidation proceedings were initiated, the termination clause had not been definitively established by a final and unappealable judgment.
The commercial chamber overturned the ruling. According to the Court of Cassation:
"Article L. 622-21 of the Commercial Code does not preclude an action to establish the termination of a real estate lease agreement by application of a termination clause by operation of law which took effect before the judgment opening the judicial liquidation of the lessee.".
This is a reminder of the rules applicable to contracts in general, from which the rules applicable to commercial leases deviate.
The powers of the supervising judge
Com. November 18, 2014 (n°13-24.007) F-PB
Two veterinarians were ordered by a summary judgment judge to pay the debtor an advance. A judgment dated May 27, 1999, overturned this decision and ordered the debtor to repay the sum received. The debtor having been placed under judicial reorganization on July 1, 1999, one of the creditors filed a claim for restitution.
By order dated January 18, 2000, the supervising judge noted that proceedings were pending, the debtor having in the meantime sued the creditors for liability and damages before the trial court. On July 18, 2000, the court approved the debtor's reorganization plan, and a final judgment dated March 27, 2008, ordered the creditors to pay the debtor a certain sum as damages.
The creditor requested that its claim be recorded in the statement of claims. The debtor having objected, the parties were summoned before the supervising judge.
The Court of Appeal held that the debtor was barred from contesting the validity of the proof of claim and rejected his request to limit the entry of the claim on the statement of claims.
According to the Court of Cassation, the Court of Appeal's decision was justified insofar as: "the order by which the supervising judge notes, even if wrongly, that proceedings are pending, divests him of jurisdiction and renders inadmissible any new claim brought before him for the same claim."
The joint guarantor can take advantage of the rejection of the claim pronounced in favor of his co-guarantor
Com. November 18, 2014 (n°13-23.976) F-PB
The Court of Cassation held that "a joint and several guarantor may, once it is final, rely on the rejection of the guaranteed claim pronounced in the insolvency proceedings of their co-guarantor, unless it is due to a cause personal to the latter." In this case, a company and a married couple, joint and several guarantors of a loan granted to the company, had been placed in judicial liquidation. During the proceedings, the supervising judge irrevocably rejected the bank's claim against one of the spouses. Relying on the res judicata effect of this decision, the supervising judge rejected the claim against the other spouse.
Omission in the handwritten statement of the guarantee commitment
Com. November 4, 2014 (n° 13-24.706) F-PB
A guarantor, sued to enforce a guarantee she had given, argued that the guarantee was void.
The Court of Appeal declared the guarantee void on the grounds that the handwritten statement did not contain the word "interest" and did not exactly reproduce the wording required by Article L. 341-2 of the French Consumer Code.
According to the Court of Cassation, the omission only limited the scope of the guarantee to the principal amount of the debt without affecting its validity. Consequently, the Court of Cassation overturned the Court of Appeal's decision.
The heating method as a contractual element
3rd Civil Chamber, November 19, 2014 (No. 12-27.061) FS-PB
The landlords of a butcher shop replaced the gas heating and hot water system with an electric one after a fire in the boiler flue. The butcher sued the landlords for the cost of installing a new gas boiler and for compensation for increased electricity consumption and business losses resulting from the necessary work. The Court of Appeal ordered the landlords to pay a certain sum for the cost of installing the boiler and for the increased electricity consumption. The Court of Cassation
dismissed the appeal, emphasizing that the Court of Appeal had demonstrated that the change in heating system constituted the loss of a benefit the tenant derived from the lease.
Consequences of failing to regularize expenses
3rd Civil Chamber, November 5, 2014 (No. 13-24.451) FS-PB
In this ruling, the Court of Cassation held that "the failure to adjust charges under the conditions stipulated in the commercial lease renders the quarterly calls for provisional payments against charges unjustified." In this case, the lease signed between the parties stipulated that "the lessee, by calling for a quarterly provisional payment with each installment, will reimburse, in proportion to the leased premises, a set of charges listed, and that at the close of each fiscal year, the amount of the provisional payments will be adjusted based on the annual statement of charges.".
