Setting the price of a service: who decides in the absence of an agreement?

The price of services may be determined after the conclusion of the contract when the parties have not agreed on its amount before the commencement of performance.

This right, however, does not constitute discretionary power. The service provider must be able to justify the amount claimed and, in the event of abuse, is liable to pay damages and terminate the contract.

It is therefore preferable to determine the price, or at least its method of calculation, before any intervention.

Does the price have to be fixed when the contract is concluded?

Contrary to popular belief, determining the price at the time of contract formation is not a general condition for the validity of all contracts for valuable consideration.

Article1163 of the Civil Code requires that the performance be possible and determined or determinable. It specifies, however, that the performance is determinable when it can be deduced from the contract, from custom, or from prior relations between the parties, without the need for a new agreement.

Some contracts remain subject to special provisions requiring the determination of the price. This is notably the case for sales, for which Article 1591 of the Civil Code stipulates that the price must be determined and specified by the parties.

The rules are different for service contracts.

How does the pricing of a service work?

Article1165 of the Civil Code states:

"In service contracts, if the parties fail to agree before performance, the price may be set by the creditor, who is then required to justify the amount in the event of a dispute.
In the event of abuse in setting the price, the court may be seized of a claim seeking damages and, where appropriate, the termination of the contract."

This provision means that the absence of prior agreement on price does not necessarily render the contract void.

When the principle of a paid service is established, the service provider, as the creditor of the price, can set the amount of his remuneration if no agreement has been reached before execution.

This rule addresses a common practical difficulty. When concluding certain service contracts, it can be difficult to predict exactly:

• the time required to complete the mission;
• the nature and number of the stages;
• the technical difficulties that may be encountered;
• the human or material resources to be mobilized;
• additional requests from the client;
• the actual duration of the intervention.

The contract can therefore be validly concluded even though the exact price is not yet known, subject to the special rules applicable to the activity concerned.

Can the service provider unilaterally set the price?

The service provider has the power to unilaterally set prices, but this power is neither arbitrary nor unlimited.

In the event of a dispute, the seller must be able to justify the amount claimed. They must therefore provide evidence to explain how the price was calculated, for example:

• the number of hours spent on the mission;
• the hourly rate usually charged;
• the nature and difficulty of the tasks;
• the human and technical resources mobilized;
• the rates communicated to the client;
• professional uses;
• the prices previously applied between the parties;
• the quality and scope of the service actually provided;
• the costs incurred for the performance of the service.

The mere issuance of an invoice is not necessarily sufficient to establish that its amount is justified.

The pricing must also comply with the general obligation of good faith stipulated inArticle 1104 of the Civil Code. The service provider cannot intentionally leave their client unaware of the cost of the service and then impose an amount unrelated to the service actually provided.

How to dispute the price of a service?

The high price alone is not necessarily sufficient to establish abuse. The judge must assess the circumstances of the contractual relationship and the evidence presented by the parties.

The following may be taken into consideration:

• the difference between the price charged and the prices usually charged;
• the absence of any information given to the customer;
• a sudden and unjustified increase in the price;
• the disproportion between the price and the service provided;
• the use of a situation of dependence or constraint;
• the lack of justification for the services billed;
• the difference between the amount announced and the amount ultimately claimed;
• the behavior of the parties during the performance of the contract.

Abuse does not automatically lead the judge to substitute their own price for that demanded by the service provider.

Since Law No. 2018-287 of April 20, 2018, the customer can request:

• damages to compensate for the harm suffered;
• and, when circumstances warrant it, the termination of the contract.

This second sanction was not included in the initial wording of Article 1165 resulting from the 2016 ordinance. The article in its original version must therefore be corrected on this point.

Does Article 1165 apply to all service providers?

No. Article 1165 constitutes a general rule, which may be set aside by special provisions specific to certain professions or contracts.

Article 1105 of the Civil Code states that general rules apply subject to the specific rules governing certain contracts.

This connection was illustrated by a ruling of the Court of Cassation on September 20, 2023.

In this case, a chartered accountant claimed payment for services whose price had not been sufficiently justified. The Court of Cassation held that Article 1165 was not applicable, because the chartered accountant profession is subject to special provisions requiring a written contract defining the engagement and specifying the rights and obligations of the parties.

The Court nevertheless ruled that, since the services had been performed and the fees were justified in principle, the judge could not refuse to assess their amount.

Therefore, for each activity, it is necessary to check for the possible existence of:

• of an obligation to provide a quote;
• of a fee agreement;
• of a written contract;
• prior pricing information;
• of a regulated scale;
• or a special remuneration determination system.

What rules apply to relationships with consumers?

In relations between a professional and a consumer, Article 1165 must be articulated with the pre-contractual information obligations provided for by the Consumer Code.

Before the conclusion of the contract, the professional must inform the consumer of the price or, where this cannot reasonably be calculated in advance, of how it is calculated.

The absence of a definitively fixed price does not therefore exempt the professional from communicating the elements enabling the consumer to assess the cost of the intervention.

Depending on the sector concerned, a written quote may also be mandatory.

The professional should therefore not consider article 1165 as a general authorization to begin a service without providing any pricing information.

What happens when no written agreement sets the price?

The absence of a written agreement does not necessarily mean that no contract has been concluded. Unless a specific form is required by law, a contract can be formed:

• by oral agreement;
• from an exchange of emails;
• ordering a service;
• from the start of execution;
• of the unconditional acceptance of the work provided;
• usual relations between the parties.

The difficulty will then lie in proving the onerous nature of the service, its content and the amount of remuneration.

The service provider will notably have to establish:

• that the service has been ordered or accepted;
• that it was not free;
• that it has actually been carried out;
• that the price claimed corresponds to the work carried out.

Article 1165 does not allow for invoicing a service that was never ordered. It deals with determining the price of an existing contract, not with proving the existence of that contract.

How to prevent a dispute over the price?

Even when subsequent price fixing is legally possible, it remains a significant source of litigation.

The contract should ideally specify:

• the fixed price of the service;
• the applicable hourly or daily rate;
• the services included in the package;
• additional benefits;
• costs and expenses;
• the terms of price revision;
• the assumptions requiring a new quote;
• the procedures for validating additional work;
• the frequency of billing;
• the payment terms;
• the consequences of a dispute.

When the exact price cannot be known in advance, the contract may provide for a calculation method, an estimate, a price range or a ceiling requiring the prior agreement of the client before any overrun.

Pricing for services: what clauses should be included?

For the service provider

The service provider should:

1. submit a quote or a business proposal;
2. define precisely the scope of the mission;
3. communicate its price or method of calculation;
4. to accept the additional services;
5. retain proof of the steps taken;
6. notify the client in case of a significant overrun;
7. prepare a sufficiently detailed invoice;
8. to be able to objectively explain the price being asked.

For the customer

The customer should:

1. request a quote before the start of the mission;
2. check the services included in the price;
3. request a ceiling or an estimate;
4. require prior authorization for supplementary services;
5. promptly dispute any insufficiently detailed invoice;
6. request the documents justifying the amount claimed;
7. avoid allowing a service to continue when the financial conditions remain undetermined.

The price of services can therefore be set after the contract has begun. However, this option should remain exceptional in practice: a clear contract, an understandable calculation method, and regular communication with the client are the best ways to prevent disputes.

The Contracts and Business Litigation department of ARST Avocats assists companies in drafting their service contracts, securing their pricing mechanisms and handling disputes relating to invoices and fees.

Article written by Morgan Jamet