Cours 1 : Business law

Main provisions of commercial contracts

- Formation of a contract
- What happens when the contract has been formed.
- (special kind of contracts French law knows)

A contract (definition): a document of commitment, it remains. It is not just an agreement.

Buying oneself at law (only those are agreements).
If the contract is oral, then there is no claims in front of law/justice.

It is well summarized in law.

General part of article : règles qui s’appliquent à tt les types de contrats. General rules
because they do apply to any type of contract. It governs any contract.
Governing: régir. It actually means: legal rules apply to some facts (all over the world, the law
focus on facts) ex : I drive too fast, I will get a fine.

It is not sufficient if the parties to have something to make a contract. It will never be
protected by law. In order to get a contract, the will of the parties is not sufficient, the will of
law is necessary (it has to be according to the law).

Contract according to French law: agreement of wills (two or more persons or individuals)
aimed at creating modifying, transferring, or ending obligations.

Only if you have an agreement then you have a contract. I cannot have a contract only with
myself, it legally doesn’t exist.
Legally unilateral act exists but it is not a contract. Two parties of contract are not
always individuals, they can also be companies.

In order to achieve a contract, we need a full agreement on all the elements (the offer must
be followed by an identical acceptance)

1) Not interested
2) The seller will have to do what he agrees to do, and the buyer will have to do what he
agrees on.
3) interested but party B decided to add a criteria. Legally from B to A, this is a counteroffer.
It is not an acceptance because party B added something.

Never use the term “contract” until it really exists. It takes negotiations (between A and B) to
build a contract. It can take a day, a month or even a year.

In case of counteroffer (if B do counteroffer) then B becomes A and A becomes B.

Long contracts take long times. Business is huge. The law has to adopt to very small to the
very big.

Difference between negotiate and contract. (never confuse both).

Contract is the happy ending of negotiate (agreement has been found)

Negotiate: to seek an agreement.
If both parties don’t agree so the negotiate ends here.

Negotiate is use in two contexts:

- First in business law in order to make a contract.
- When there is dispute resolution (when the contract is not respected the parties will
negotiate, will get angry on parle de litige). Non executé une obligation. = britch.

How will the parties will deal with a britch :

They will try to find a solution (this a negotiation). They contract has already been performed
but one of the parties has not performed well.

So the first case of negotiation is before contract (in order to make contract)
Second case of negotiation in after the contract has been performed (because one of the
parties did not perform well, so they try to find a solution). Sometimes they don’t find
solution so there is a dispute.

Dispute is legal in nature = it concerns legal rights and obligations.

A company is powerful in the market = when there are very few competitors.

1050 code civil: article 1101

Contract is not a random agreement it is an agreement with legal obligations. In French law,
contract has 4 functions (in the definition). The most important among these functions:
CREATING. We conclude everyday contracts to conclude legal obligations between us.

Why do we need legal obligations, moral obligations are not enough ?

Because we cannot relay on moral obligations, because some people don’t respect moral
obligations.

Cours 2 :

Creating is the most important part of the contract. = create an obligation between 2 parties.

Supply contract = agreement to last during a period of time. (ex: carrefour receive milk from
producer, it doesn’t make its own milk). If both parties agree, they can change the
agreement.
Sale contract = one transfer tittle
One party cannot change agreement without the will of the other party. I must perform
according to the contract (= they have legal obligations toward each other).

Second function is : modify.

Third function is : transfer.

Last function is : bring to end.

It is not easy to be buyer or seller.

Agreement only if there is a common interest otherwise there is no contract.

Contract is not negotiate (negotiate = maybe we will find an agreement so there will may be
a contract or maybe a failure and no contract)

Everyone is free to contract or not contract, to choose its partner, co contractors and to
determine the content and the form (written or oral contract) and if we find an agreement
we contract.

The only solution for oral contract will be witnesses statement or testimony. In business we
don’t want that complicated situation, written contract is preferred.

This is called Freedom of contract.

The most important part of a contract is its content (type of contract : sale, loan, lease…).
Law is different depending on the type of contract.

The judge can change the legal identifications if they are not accurate.

Preamble history of the commercial relationship

Substantive clauses (most important) : price, quantity, place, time of delivery, warranties,
. The most warranties the seller give, the more exposure he will have to face financial issues.
Ex : produce a product with good quality coasts much because it has a warranty. (if goods
don’t fulfill their promise, it will coast more money to the producer). In the coast, the
company must cover the insurance coast. Final price must cover all including the legal coast.

commitments on the contract become legal obligations. If I don’t fulfill my obligations, the
other party has the right to go to the court.
Article -1102

Force majeures : very exceptionnelles conditions under which the debtor is excused: justified
in non-performing. One of the many clauses that deserve to be discussed between the
parties.
Dispute resolutions clauses very different from the substantive clauses (they are obligations).

Dispute resolutions clauses (causes relatives aux réglèments des litiges) are written at the
very end of the contract (just before signature), it is a disagreement between parties
concerning the existing or scoop of rights and obligations.

How is a dispute generally resolve : that party that is losing something will go to court and
will find a case against the other party, the judge will decide.

If there is no dispute resolution clause on the contract : only the laws applies.
Choice of court clauses

If the parties when they can choose arbitration (only for arbitrable disputes). It’s a private
justice. It is used a lot in international business.

Cours 3 :
Structure/content of a contract

- Content
- Type of contract (except pouvoir du juge)
- Identifications of parties
- Preamble history of the commercial relationship
- Seller will identify the goods, price, quantity, place of time of delivery, warranties,
force majeure.

When we set a contract, we commit legally (we have obligations)

Committing asset (patrimoine), not only today’s asset but also tomorrow’s essence.

The law says: The debtor has to pay with the current asset or with tomorrow’s asset
Ne devez jamais créancier de quelqu’un qui ne peut pas payer (never become creancier of
someone who doesn’t have asset to pay with)

In business debts are a lot, (outside of business, the normal person is very careful to not have
debts).
L’entreprise doit satisfaire pleins de créanciers.

In business, more companies are concluding contracts than individuals. Companies have
money because of shareholders, if things go well, the company will have success so the
company will start creating its own wealth.

Shareholder can contribute to the company, for example : François can work in the company
but he will not perceive a revenue because he is a shareholder. If he starts having a salary, he
will simply be a worker of company and not the shareholder.

Once a company is created, it will have its own legal identity.

Companies or individuals : we always pay our debts with assets

Sociétés des capitaux vs sociétés des personnes.

Identification of parties :

Individuals
Unlimited liability companies
Limited liability companies

Those who do business never never never never use sociétés des personnes with unlimited
liabilities.

Only the company will pay with her own assets, shareholders are protected by law, they are
not holed responsible.

Always use limited liability.

“What is force majeure”: can be asked on the exam

Force majeure: Circumstances which don’t depend on the parties.

Cours 4:

Résumé des cours précédents

Cours 5

Voie normale : règle le litige par voie juridique

Juridicial way is the normal way to deal with a litige (the law judges)

To litigate against someone (plaider contre qqln)

Arbitration is the other way. In this case we can choose any place (Madrid, New-york,
Paris…). It is non juridical

2 things can happen :

Either the parties find an agreement: the dispute disappear.

If the parties are not able to find an agreement:

In order to go to the arbitration, both parties must agree. In the juridical way, there is no
need of agreement of both parties.
Some rights will not be forever, if you don’t exercise your rights early enough, you will loose
them.

Only legally capable people can sign contracts. (contrat entre particulier)
Only the legally representif of the company can sign contract (pour savoir qui est le
representant de l’entreprise, ça depend du droit des sociétés et il change d’un pays à un
autre). Each country has its own rules.

Clauses express the will of the parties.

Business is a very fast world. Companies don’t have time to see every single point of clauses.
All companies use general trade. Only the most important clauses are discussed by
companies.

Consumers are protected by law.

In business to business (entre enterprises), 2 companies, hopefully they come together and
find time to see the disagreements they have on clauses. If they do that, they will find a
solution and there will be a new clause for every point on which there was a disagreement.

Good companies take time to see where there is a disagreements, find time to discuss and
find a solution.

Cours 6 :

Pas cours 30 octobre et 13 novembre, rattrapage en distanciel samedi 4 novembre de 14h à

17h.

Third situation (most common): does not say anything (does not say its mandatory), it just
provides rules.
Article 1583

A soon as the parties on propriety and on prices, they respect It of whether the price and
deliveries.

The buyers become owner immediately. It does not matter when delivery occurs.
Provision mandatory or not: nothing is said by the rule.

Consequence on being non mandatory: parties have the freedom the insert a different
clause.

La marchandise demeure la propriété du vendeur jusqu’au jour où le paiement est effectué.

In case of non-payment the seller will have a better position to restitute the propriety. That’s
why this clause is protecting the seller.

Sources of rules:

Clauses are will of the parties. (volonté commune des 2 parties).

They are generally express terms.
Standard forms (already existed before this contract, it is in the general conditions of the
contract).

Article 1119
Important, clear precision in this article on the general conditions.
(à traduire en anglais)
Les conditions générales invoquées par une partie n’ont effet à l’égard de l’autre que si elles
ont été portées à la connaissance de celle-ci et si elle les a acceptées.

En cas de discordance entre des conditions générales invoquées par l’une et l’autre des
parties, les clauses incompatabiles sont sans effet.

En cas de discordance entre des conditions générales et des conditions particulières, les
secondes l’emportent sur les premières.

Implied terms in law :

Its the legal obligations, it cannot be modified. It is mandatory.

Implied terms in facts:

awareness of preexisting facts by both parties. Factually obvious does not need to be spell in
contract.
Ex : in the beginning of covid it was new but after months of working together, covid became
an implied term in fact.

Harass. Pressure put on a party to give substance.

Violence can be physical or psychological.
A harassed party can go to court. The seller will give back the money and the buyer have to
send back the products.
The law protects these 3 scenarios, but it does not protect beyond. It’s up to the parties to
be very careful about what they do.
Ex : if a person buys a bicyle for 1000$ and its actual market price was 50$, the judge will not
do anything, he will say it is just a stupidity you have to be more careful. The buyer will not
get his money back.

Article 1168
Lack of balance between obligations and performances is not a ground for the ? of the
contract.(Ex of bicyle) The contract remains perfectly valid.

Few exception where law interfere:

Article 1170

When at the time of conclusion, if the counter performance is ridiculously low, the contract is
over.

Case law, judge meet law (juriprudence) : any clause

Cours 7

Contrat d’entreprise article 1792 code civile.

Contrat d’entreprise : qqln fait quelque chose sur mesure suivant l’instruction du client.

Service contract: where a party has some precise requirement to the other party.

The law intervenes to corrects some clauses. Make sure to excluding some clauses that
deprive the contract of its balance.

Example of where the laws interves (interview) in because the clauses are extremely
favoriting one party, there are legally not valid.

Article 1628: in a sale contract, whatever a clause may say in a contract and says that the
seller owns no warranties, in reality a seller can never exclude its liability. Ex : the seller can
say I’m selling something I buy from someone else, if there is a defect in the product, its
because of the person I buy it from.
The law comes and says that thus clause is not balance enough, there is one party extremely
favored.

Liberté contractuelle : chacun est libre de contracter ou non et de choisir son contractant.

Article 1102 : freedom of contract, freedom to decide with whom to contract, freedom to
choose the form of the contract. Freedom does not the parties to derogate from legal rules
which concerns public policy.
Negotiate and contracting are 2 different things.

A contract may not derogate from public policy (règles publiques neither by its clauses nor by
its purpose whether the purpose has been known or not by all parties.
Ex : there is a sale contract of a given kind of poison for rats. If someone buys it to kill a
person. The seller assumes that it will be used for rats. Only one person knows that it will be
used for illegal purpose.

How do we know if a provision rule is mandatory?

Créé par Loi 1804-03-06 promulguée 16 mars 1804 :
it is perfect between the parties, and ownership is acquired by right to the buyer with regard
to the seller, as soon as the thing and the price have been agreed, although the thing has not
yet been delivered nor the price paid.

= this provision is not mandatory (said by cour de cassation)

There is uncertainty because we don’t know if it is mandatory or not, the law must be clear
as much as possible. It is not good for all those who conclude sale contracts. French courts
(tribunaux) interpret French law and tell us which provision is mandatory or not.

Retention of tittle clause (clause de réserve de propriété).

Difference between mandatory and non-mandatory.

The biding nature of the contract (nature juridique obligatoire) :

Article 1103 :

There are conditions for a contract to be binding : il n’a que les signataires (ceux qui signent
le contrat) qui sont concernés.
When you sign contract, you must be at least 18, legally capable. Not anyone in a company
can sign a contract on behalf of the company unless the person is the legal representant of
the company.

Contracts are only biding on those who signed it.

Structure de toute règle de droit :

Always 2 elements:
- A situation of facts (les contrats légalement formés)
- The legal consequence / effect of this situation of fact. (tiennent lieu de la loi à ceux
qui les ont faits).

Article 1583

Contract must have a lawful content (clauses)

Ex : in a contract there are 2 clauses which are not legally valid. There are 48 clauses
remaining.
Those 2 clauses must not be essentials.
The 48 others must be biding. (only if these 2 clauses are not essentials).

If these 2 clauses are essentials, the whole contract will not be legally valid.

Article 1103

L’annulité : doit être prononcer par le juge à moins que les 2 parties s’e
Any contract which fails to meet the validity requirement is void. A contract must be declared
void by a court (judge) unless both parties agree that the contract is voied.
Why the judge should tell if the contract if voied or not ? Because you cannot rely on a party
to tell if the contract is valid or not. One party can keep the voied contract because it
advantages them. That’s why the judge of a court is important.

If everybody agrees that the contract is voied, no need to go to the judge.

The contract that has been voied by the judge is supposed to never existed.

Whatever that has been performed under a voied contract until the judge pronounce it must
be returned.

A voied contract is a retrospectively voied.

Now and then there are exceptions. We do have cases where the French law give up on
retrospective perspective. It will apply only for the future.

Ex : I am a cleaning lady and I’ve cleaned for 3 years under a voied contract and I have been
paid, there will be no retrospective aspect.

Legal entities = companies. They are holders of rights and legal obligations, ownership tittle,
assets.

Article 1832

If the text is clear: no interpretation.

Two categories of legal text: - legal texts, - legal axes.