This is an historic time for French civil law. For the first time in its two centuries of existence, the French Civil Code is undergoing a major reform, focusing on contract law (the first draft of another reform focusing on civil liability was recently published by the Ministry of Justice for comments by academics and practitioners). The Government Order of February 10, 2016, which will enter into law on October 1st 2016, has introduced significant changes in a legal code once viewed as a model, but criticized since the 1960s for its obsolescence and growing inadequacy to the modern world. In a context of competition between legal systems, as parties to a contract very often decide which law applies to their agreement, the Civil Code has been rejuvenated and clarified. More importantly, an array of new provisions, many of them inspired by case law, aim at ensuring a better protection of the weaker party. This new set of protective provisions appears at every stage of a contract’s life, from the negotiating phase to its performance. We will briefly present three examples of this “Law of Contracts 2.0”.
1. Pre-contract negotiations: The Civil Code of 1804, which mainly envisioned simple contracts, had nothing to say about the negotiating stage. The new regime devotes many provisions to this important stage and creates a duty of disclosure imposed upon each party. This duty already existed in consumer law; it is now provided for in general contract law. The law also adds an important element to the traditional three cases of defect of consent in the conclusion of a contract (error, deceit, and violence), as the concept of violence now encompasses economic violence, allowing a party in a “state of dependency” who has signed a contract providing “obviously excessive” advantages to the other party to request the annulment of the contract.
2. Another important innovation is the now explicit prohibition of unfair or “abusive” provisions, which only applies, however, in adhesion contracts (a loosely defined term which usually corresponds to standardized contracts signed between a professional and a consumer, but the definition will certainly be challenged in front of civil courts). In any case, an abusive provision is one that “creates a significant imbalance between the rights and duties of the parties”. Such a provision is simply erased from the contract, without causing its annulment.
3. A third example of the better protection the new law attempts to provide to the weaker party is the entry into law of the “doctrine of frustration”. This concept borrowed from common law was absent from the Civil Code and had long been rejected by case law since a famous 1876 case (“Canal de Craponne”). This long-held precedent had led practitioners to introduce a hardship provision to counteract the law’s rigidity. The new law puts an end to this impractical – and unjust – situation. It now provides that if an unpredictable change of circumstances makes the performance excessively onerous for a party who had not accepted such a risk, this party can request the other party to renegotiate the contract. If the other party refuses to do so, the contract can ultimately be revised, or even annulled, by order of a court.
Sources:
https://www.trans-lex.org/601101/_/french-civil-code-2016/
https://digitalcommons.law.lsu.edu/cgi/viewcontent.cgi?article=1202&context=jcls
https://www.nortonrosefulbright.com/en/knowledge/publications/2a563f12/reform-of-the-french-civil-code-on-contract-law-and-the-general-regime-and-proof-of-obligations
