Under the fifth paragraph of Article L.442-6 of the French Commercial Code, the following acts are considered breaches of contract and require the perpetrator to compensate for the resulting damages: " abruptly terminating, even partially, an established business relationship without written notice that takes into account the duration of the business relationship and respects the minimum notice period determined, with reference to trade practices, by interprofessional agreements ."
The length of the notice period to be observed in the event of the termination of an established business relationship must be determined based on the duration of that relationship. The duration of a business relationship between two legal entities or natural persons subject to the aforementioned provisions is not necessarily the duration of the contract concluded between them. While initially the Court of Cassation held that the duration of a business relationship could not be determined beyond the relationship existing between the initial parties who had actually maintained that relationship, this now appears to be the case.
Indeed, for some years now, the Commercial Chamber of the Court of Cassation has, in determining the duration of a business relationship, considered that, in certain cases, the entire duration of the relationship should be taken into account, even when several business partners have succeeded one another. This was notably the case when a French subsidiary of an international group took over the business relationship that a distributor had maintained with the Moroccan subsidiary of the same group. In such a case, the Court of Cassation held that this resumption of business relations demonstrated the parties' intention to maintain continuity with the previous relationship (Cass. Com. 25 September 2012, No. 11-24.301).
Any decision likely to clarify the assessment of the duration of established business relationships is therefore important.
In a judgment rendered on September 15, the Commercial Chamber of the Court of Cassation ( Cass. Com., September 15, 2015, No. 14-17.964) addressed this issue .
In this case, a company sold its business to another company after leasing it to the latter for five (5) months. The selling company maintained an established business relationship with a transport provider until the sale, a relationship that was continued by the acquiring company for the duration of the lease. Fifteen days after the sale of the business, the acquiring company notified the transport provider of its intention not to continue the business relationship initially established with the selling company.
The transport service provider sued the acquiring company for damages for the abrupt termination of an established business relationship, arguing that the duration of the business relationship since its inception between the original parties should be taken into account when determining the required notice period.
The Court of Cassation dismissed the transport service provider's appeal, ruling that, firstly, the sale of a business does not automatically substitute the acquiring company for the transferring company in the contractual and commercial relationships that the latter maintained with the transport company; and secondly, the fact that the acquiring company maintained a business relationship during the lease-management period was insufficient to demonstrate that it intended to continue the business relationship initially established between the transferring company and the transport company.
The Court of Cassation's decision appears judicious for two reasons. The first point is that the sale of a business does not automatically transfer the contracts entered into by the seller. The second point lies in the principle of privity of contract, according to which the acquiring company cannot be obligated to continue the relationship initiated by the selling company unless it has expressly stated its intention to do so. It would have been contrary to this principle for the acquiring company to bear the consequences of a business relationship maintained by the selling company.
