Listen to the organs — they are playing for you.

How fearful that tune.

Significant imbalance lies at the heart of business law. In a legal order of liberal inspiration, each party is the guardian of its own interests. To borrow Fouillée’s aphorism: « what is contractual, is just ». Since homo juridicus is assumed to be reasonable, that party will have consented only to reasonable sacrifices. So with the one who agrees to a derisory profit margin in order to win a contract or to entrench its technology.

The limit of the exercise lies in the fact that some sacrifices were not consented to, but imposed. As has been brilliantly demonstrated (Th. Revet, « Le contrat d’adhésion », in Réforme du droit des obligations, on s’était dit rendez-vous dans dix ans, L. Thibierge (dir.), forthcoming in RDC 2026, no. 3; by the same author, « Les critères du contrat d’adhésion », D.2016, p. 1771; « L’incohérent cantonnement, par l’Assemblée nationale, du domaine du contrat d’adhésion aux contrats de masse », D. 2018, p. 124), alongside classical contracts—the fruit of a meeting of minds—there exist contracts whose content was not desired but imposed.

This is how positive law combats significant imbalances when they arise not from free negotiation but from a power dynamic.

Three texts thus serve as safety valves against imbalances too pronounced to be tolerated by the law, where they have not been freely accepted but imposed.

Let us briefly recall the forces at play:

On the left, the Consumer Code, Article L. 212-1 of which provides: « In contracts concluded between professionals and consumers, are abusive those clauses that have the object or the effect of creating, to the detriment of the consumer, a significant imbalance between the rights and obligations of the parties to the contract ». The text further specifies that « the assessment of the abusive character of clauses within the meaning of the first paragraph relates neither to the definition of the principal object of the contract nor to the adequacy of the price or remuneration with respect to the good sold or service offered, provided that the clauses are drafted in a clear and intelligible manner ».

At the centre, the Civil Code, whose Article 1171—introduced by the Ordinance of 10 February 2016 and subsequently amended by the Ratification Act of 20 April 2018—provides that, « in a contract of adhesion, any non-negotiable clause, determined in advance by one of the parties, which creates a significant imbalance between the rights and obligations of the parties to the contract shall be deemed unwritten ». A useful clarification: the review of imbalance cannot extend to the principal object of the contract or to the adequacy of the price with respect to the performance.

On the right, the Commercial Code, whose Article L. 442-1, I, 2° sanctions the fact, on the part of any person engaged in production, distribution or services activities, of « subjecting or attempting to subject the other party to obligations creating a significant imbalance in the rights and obligations of the parties ». Characteristic features: first, the text requires proof of a relationship of subordination, upon which many claims founder; second, the scope is restricted to contracts concluded in the course of an enumerated professional activity; finally, greater latitude is afforded to the judge, who may review imbalance bearing on the principal object of the contract or on the adequacy of the price with respect to the performance.

It is sometimes said that an abundance of goods does no harm. But a profusion of texts may.

Oh, certainly, it is not Article L. 212-1 of the Consumer Code that creates difficulty. That text is known to be reserved for consumers. The problem rather lies in the competition between Article L. 442-1 of the Commercial Code and Article 1171 of the Civil Code. As soon as the dispute arises in a professional setting (B2B), the contracting party suffering from a significant imbalance might legitimately hesitate between these two grounds—it being recalled that the conditions of the action and their respective regimes differ.

Does our professional have a choice between the Civil Code and the Commercial Code?

A recent decision (Cass. com., 13 May 2026) afforded the Commercial Chamber of the Cour de cassation the opportunity to answer that question.

In the case at hand, the dispute pitted the company Comuto Pro—a subsidiary of the BlaBlaCar group dedicated to intercity coach transport (BlaBlaBus), which markets transport services whose performance is subcontracted to professional carriers—against Les Voyages Star and Capri Cars, a Belgian-law carrier, concerning a contract for a passenger coach transport service.

On 23 April 2020—the health crisis having upended the contract’s economics—Comuto Pro notified its counterparty of a draft amendment. The negotiations having stalled, Comuto Pro terminated the contract on three months’ notice. Reproaching Comuto Pro for having imposed upon it a contract of adhesion creating a significant imbalance to its detriment—stemming notably from a limitation-of-liability clause for the sole benefit of the operator and a unilateral termination clause in the event of refusal of the proposed amendments—Capri Cars sued for damages.

The position may seem peculiar, since Article 1171 of the Civil Code sanctions significant imbalance by deeming the clause unwritten—and not by damages—whereas Article L. 442-1 of the Commercial Code opens with the words « engages the liability of its author… ».

The Paris Court of Appeal dismissed the claim, on the ground that the contract was not a contract of adhesion. Hence an appeal by Capri Cars, which the Commercial Chamber of the Cour de cassation, presided over by Vincent Vigneau, dismissed in turn.

For the High Court, the debate lies upstream. The problem is not the characterization of a contract of adhesion, but the very notion of a contract of adhesion, which is inapplicable here.

To this end, the Commercial Chamber cites the « parliamentary works that led to Act no. 2018-287 of 20 April 2018 ratifying Ordinance no. 2016-131 of 10 February 2016 », which would, it is said, show that the legislature’s intent was that « Article 1171 of the Civil Code, which governs the general law of contracts, sanctions abusive clauses in contracts not covered by the special provisions of Article L. 442-6, I, 2°, of the Commercial Code, in its wording prior to that resulting from Ordinance no. 2016-131 of 10 February 2016, whose provisions are now found in substance in Article L. 442-1, I, 2°, of the same Code and in Article L. 212-1 of the Consumer Code ».

From which the Court deduces that « Article 1171 of the Civil Code, interpreted in the light of those works, therefore does not apply to contracts concluded by a person engaged in production, distribution or services activities, except where the application of Article L. 442-1 of the Commercial Code to such contracts is excluded by another provision ».

Since, in the present case, « Comuto markets transport services, from which it follows that the commercial negotiations it conducts and the commercial contracts it enters into fall within the scope of Article L. 442-1 of the Commercial Code », it follows that « Article 1171 of the Civil Code is not applicable to the dispute ».

In other terms, Article 1171 of the Civil Code is excluded as soon as the contracting party accused of having imposed a clause creating a significant imbalance falls within the scope of Article L. 442-1 of the Commercial Code.

The rule calls for several observations.

First, as we have already written, the reference to the parliamentary works of the Ratification Act does not strike us as decisive. The text of Article 1171 dates from the 2016 Ordinance and was only partially modified in 2018 (it was simply clarified that only non-negotiable clauses could be subject to judicial review). The very principle of Article 1171 was therefore laid down as early as 2016. In that respect, the 2018 legislature’s intention—it being not its father—is not necessarily decisive. And it is far from certain that the mere words of the Commission’s rapporteur can be regarded as voicing a unanimous opinion, certain voices having proposed, on the contrary, a logic of superposition (on this point, X. Lagarde, « Questions autour de l’article 1171 du code civil », D. 2016, 2174; adde D. Fenouillet, « Le juge et les clauses abusives », RDC 2016. 358). True, one has hardly any better to hand than these parliamentary works—the Report to the President of the Republic having no greater legal authority. For want of thrushes, one ate blackbirds.

Secondly, one will note a notable development compared to the Green Day decision of 26 January 2022 (Cass. com., 26 January 2022, no. 20-16.782), which had held that « Article 1171 of the Civil Code, interpreted in the light of those works, therefore applies to contracts, even those concluded between producers, traders, industrialists or persons registered with the trade register, where they do not fall under Article L. 442-6, I, 2°, of the Commercial Code, in its wording prior to that resulting from the Ordinance of 24 April 2019, applicable in the case at hand, such as financial leasing contracts concluded by credit institutions and financing companies, which, for their banking operations and their related operations defined at Article L. 311-2 of the code monétaire au financier [sic], are not subject to the provisions of the Commercial Code on restrictive practices ».

In other words, in 2022 the Cour de cassation held that Article 1171 of the Civil Code applies to professionals who do not fall within the scope of Article L. 442-1 of the Commercial Code. The wording adopted in 2026 differs: « Article 1171 of the Civil Code, interpreted in the light of those works, therefore does not apply to contracts concluded by a person engaged in production, distribution or services activities, except where the application of Article L. 442-1 of the Commercial Code to such contracts is excluded by another provision ». The Court moves from a positive formulation (the text applies to professionals who escape L. 442-1) to a negative one (it does not apply to professionals, unless the application of L. 442-1 is excluded by another provision).

Moreover, the new formula is more precise. Whereas one might have hesitated over the meaning to be given to « falling under Article L. 442-1 » in Green Day, doubt is no longer permitted on reading Comuto: the general law reclaims its sway whenever a sector-specific text excludes, upstream, the application of the Commercial Code. This means that it is not enough for L. 442-1 to be inapplicable (for example because the requirement of subjection will not be established) for Article 1171 of the Civil Code to recover its dominion. A return to the « general » law is possible only if a text sets aside Article L. 442-1.

Thirdly, the practical reach of Comuto deserves discussion. To us it seems to fit within the same pattern as other rulings of the same Commercial Chamber, which is boldly and pragmatically rewriting certain swathes of contract law. One thinks of the precontractual duty to inform (the well-known « friterie » decision and its progeny, on which see L. Thibierge, « Devoir précontractuel d’information : mais où est donc Ornicar ? », Revue des contrats 2025, no. 3) or of contracting parties’ liability towards third parties (the Clamageran and France Comptabilité decisions, on which the reader is referred to our paper L. Thibierge, « De Boot Shop à Artemis », forthcoming in the RJDA of June 2026): in all those scenarios, the Commercial Chamber neutralizes what it perceives as certain excesses of the general law of contracts. Not by going directly contra legem, but by narrowing the scope of the relevant texts.

One question remains upon reading Comuto: what is left of the general law of contracts? If it applies only subsidiarily—where neither consumer law nor the law of restrictive practices is applicable—what relationships will it govern? One will not be satisfied with the idea that Article 1171 is confined to contracts between private individuals. Who will fail to see the artifice? In what circumstances is a private individual ever in a position to impose a contract of adhesion upon another private individual? What remains—as Comuto seems to suggest in negative—is the residual scope of Article 1171 of the Civil Code: contracts concluded by professionals engaged in production, distribution or services activities… but which a highly specific text removes from the special text that is Article L. 442-1 of the Commercial Code.

Finally, a word on the hiatus that may exist between the Cour de cassation and the lower courts. A recent decision of the Paris Court of Appeal illustrates the point (Paris, 14 January 2026, no. RG 23/17036; L. Thibierge, « Caducité, rentabilité, imprévision : et un, et deux, et trois zéro », forthcoming in Revue Lexbase Contrats, Responsabilité, Immobilier, 20 May 2026). In that case, beIN Sports challenged the validity of a clause waiving imprévision, stipulated in a contract of adhesion binding it to the Professional Football League (Ligue de Football Professionnel). The Paris Court expressly applied Article 1171 of the Civil Code and concluded that there was no significant imbalance. Yet, following the Cour de cassation, ought it not simply have declared Article 1171 inapplicable to the case at hand?

To be continued!

L’article Requiem for an Adhesion Contract est apparu en premier sur Louis Thibierge.

Note on Cass. com., 1 April 2026, no. 24-13.364, F-B

The independent guarantee is a singular figure among personal security interests. Belatedly codified at article 2321 of the Civil Code by Ordinance no. 2006-346 of 23 March 2006, it is the subject of a single provision. This may suggest that the legislator, having significantly framed the law of suretyship, intended in counterpoint to leave contractual freedom free to flourish in the field of independent guarantees.

The independent guarantee maintains an ambiguous relationship with the obligation it secures. Although it is autonomous — independent in principle — it cannot, however, fully emancipate itself from the underlying obligation, lest it cease to be a security at all. There is, indeed, no security without a debt to secure.

Hence a ridge to be walked: while the effectiveness of the independent guarantee must be preserved by enabling the creditor to be paid by the guarantor, autonomy must not be allowed to slide into arbitrariness.

This, in a few words, is what the Commercial Chamber of the Cour de cassation reminds us in a decision destined for the honours of the Bulletin, handed down on 1 April 2026 in the wake of the dispute arising from the aborted redevelopment of the Paris Gare du Nord (Cass. com., 1 April 2026, no. 24-13.364, F-B).

Before turning to the facts, let us set the stage by recalling the cardinal rules governing independent guarantees.

1. The applicable rules

Article 2321 of the Civil Code defines the independent guarantee as « the undertaking by which the guarantor obliges itself, in consideration of an obligation entered into by a third party, to pay a sum of money either on first demand or in accordance with agreed terms ».

The text, as can be seen, is both isolated and laconic.

It says little about the regime of the guarantee: « The guarantor is not bound in case of manifest abuse or fraud by the beneficiary or in case of collusion between the latter and the principal.

The guarantor cannot raise any defence based on the secured obligation.

Save where otherwise agreed, this security does not follow the secured obligation ».

It therefore fell to scholarship and case law to outline the regime, which we may attempt to sketch in broad strokes.

Autonomy. An essential element, the independent guarantee is… autonomous. Far from being a tautology, the assertion means that the guarantor enters into an undertaking distinct from that of the debtor. Fully distinct, since it commits to paying its own debt. To revisit a Roman-law distinction, what we find here is a duality of both obligatio (the power of constraint) and debitum (the debt). By contrast, in suretyship, although there are two ties of obligatio (the creditor has an action against both the surety and the debtor), there is only one debitum, since the surety pays the debtor’s debt. The independent guarantee is therefore autonomous in two respects.

« In consideration of an obligation entered into by a third party ». The independent guarantee is a security. As such, it strengthens the rights of a creditor. It follows that, if there is no claim, no obligation entered into by a third party, there can be no guarantee. The underlying debt is not the object of the guarantor’s obligation (he has his own debt); it is, however, its raison d’être. To allow the creditor to be paid by the guarantor when he has no claim against the debtor would betray the very notion of security and confer an unjustified enrichment upon the creditor.

« On first demand ». The guarantor must pay upon call, without being able to rely on defences drawn from the secured obligation. This is precisely what gives the independent guarantee its bite: pay first, discuss later — pay now, argue later. As in the dispute board mechanism, efficiency comes first.

The risk for the guarantor is therefore high: it may be wrongly called upon to pay, and the prospect of seeing the creditor sanctioned in court two or three years later offers little consolation. Case law therefore recognised, very early on, two safety valves: manifest abuse and manifest fraud (see in particular Cass. com., 11 December 1985, no. 83-14.457; Cass. com., 10 June 1986, no. 84-17.769, in the wake of the recognition of independent qualification by Cass. com., 20 December 1982, no. 81-12.579). To these two valves should be added collusion between the beneficiary and the principal, a hypothesis covered by article 2321 of the Civil Code but which, in practice, may also be regarded as a form of fraud.

Thus, in principle, it is very difficult for the guarantor to resist payment.

It nevertheless appears that another avenue of resistance exists, as evidenced by a recent decision of the Cour de cassation (Cass. com., 1 April 2026, no. 24-13.364, published in the Bulletin).

2. The facts

At the risk of simplifying them, the salient facts may be summarised as follows.

In February 2019, SNCF Gares & Connexions and Ceetrus Paganor (a subsidiary of New Immo Holding, hereinafter NIH) set up a single-purpose semi-public joint venture, the SEMOP « Gare du Nord 2024 », tasked with carrying out the redevelopment project of the Gare du Nord in Paris.

On 22 February 2019, SNCF G&C granted the SEMOP a concession to carry out the operation. Article 17.3 of the concession agreement provided that NIH would furnish a completion-bond independent guarantee in favour of SNCF G&C, in the amount of EUR 47 million, renewable annually (last renewal: 29 March 2021).

The « Gare du Nord 2024 » project encountered multiple difficulties — legal, financial and scheduling — and SNCF G&C ultimately notified, on 21 September 2021, the forfeiture of the concessionaire for serious misconduct, in application of article 52.1 of the concession agreement. The concessionaire SEMOP challenged the forfeiture before the administrative judge.

Without waiting for the outcome of that dispute, the creditor (SNCF G&C) called the guarantee provided by NIH, by registered letter dated 18 January 2022, for the full amount of EUR 47 million. The stakes were significant.

The guarantor, NIH, resisted the demand for payment and put forward three main arguments:

– the call did not relate to the object of the guarantee (the proper completion of the works of the abandoned « Gare du Nord 2024 » project);

– the call was manifestly abusive, since the beneficiary had renounced the very project for which the guarantee had been granted;

– the call was manifestly fraudulent, the alleged delays having been contractually extended by amendments.

The arguments were rejected by the Paris Court of Appeal, which ordered NIH to pay; NIH therefore appealed to the Cour de cassation.

3. The Cour de cassation’s solution

Let us say it from the outset: the solution does not change anything for NIH, whose appeal is dismissed and which will therefore have to pay the EUR 47 million. The practical interest for NIH is therefore limited.

On a theoretical level, however, the solution — published in the Bulletin — appears to be of some interest.

Indeed, the Cour de cassation lays down, with a clarity that we believe to be without precedent, a rule according to which « the independent guarantee cannot be called in respect of matters falling outside the object for which it was granted ».

The point is not to say that the guarantor may rely on a defence drawn from the principal relationship, but rather on a defence drawn from the very object of the independent guarantee contract. By way of comparison, an analogy may be drawn with insurance contracts: in order to determine whether the insurer must pay, one must verify the scope of cover as set out in the policy.

Second point: in order to verify whether the call of the guarantee is consistent with the object of the stipulated guarantee, the judge may, without disregarding the autonomy of the first-demand guarantee, refer « in addition to the guarantee itself, to the contract in consideration of which it was entered into ». Consultation of the underlying contract is therefore not prohibited; on the contrary, it is necessary in order to assess whether the call remains within the perimeter intended by the parties. The guarantee is autonomous, but it is not disconnected from the underlying contract.

The contribution of the decision appears significant in this regard. Alongside the means listed in article 2321 of the Civil Code (manifest abuse, fraud and collusion), another, judge-made one is added, drawn from the object of the guarantee. One could thus structure the means of resistance around two main axes: the call falling outside the object on the one hand, and abuse, fraud or collusion on the other — collusion being capable of being analysed as a particular instance of fraud.

Final point: the Cour de cassation maintains strict control over manifest abuse. The mere fact that the existence of the debtor’s debt has been challenged (here, before the administrative judge) does not suffice to render the call of the guarantee manifestly abusive or fraudulent. The rule is stringent for the guarantor: as long as the principal dispute has not been resolved, and as long as the beneficiary’s position remains defensible, the guarantor must pay.

It should be noted, in this regard, that the allocation of jurisdiction weighs upon the solution. The forfeiture of the SEMOP fell within the jurisdiction of the administrative judge, alone competent to assess the regularity of a decision taken under a concession agreement. As long as that judge has not ruled, the manifestly culpable nature of the creditor’s call cannot be regarded as established. NIH’s order to pay is, on this account, granted « subject to » any future order that the administrative judge may make against the SEMOP — a way of neutralising, as far as possible, the rigour of the autonomy principle.

L’article Independent guarantee – To be precise: independent, yes — but a guarantee nonetheless est apparu en premier sur Louis Thibierge.

The concept of the clause pénale — set out in Article 1231-5 of the French Civil Code (formerly Article 1152) — is a familiar one. It denotes a stipulation by which the parties agree in advance on a lump sum of damages payable in the event of non-performance of an obligation.

The traditional view is that a clause pénale (which English-speaking lawyers will tend to call a penalty clause, with all the comparative-law caveats this entails) can be identified by three converging features:

• It sanctions a contractual non-performance. That is why the indemnité d’immobilisation — the consideration paid for an option to purchase — cannot qualify: the option holder is under no obligation to buy.
• It fixes a lump-sum amount of damages. Neither a floor nor a ceiling, but a flat figure, divorced from any assessment of the loss actually suffered.
• It is in terrorem in nature: hanging over the debtor like a sword of Damocles, it puts pressure on him by spelling out, in advance, the price of non-performance.

So much for the theory.

In practice, separating the wheat from the chaff — distinguishing a clause pénale from neighbouring devices — is no easy task. And the stakes are high: once the stipulation is characterised as a clause pénale, the judge or arbitrator gains an exceptional power to revise the contractually agreed amount where it is manifestly excessive or derisory.

Hence the recurring hesitations and attempts at recharacterisation, as illustrated by the recent case-law of the Cour de cassation.

The cowl does not make the monk. What matters is not the garb, but what lies within. This, in essence, is the line taken by the Cour de cassation in four recent decisions, all of which embrace a functional reading of the clause pénale, looking past the words chosen by the parties.

First example — Cass. civ. 2e, 18 December 2025, no. 23-23.751, FS-B

A six-year retainer agreement between a lawyer and his client provided that, in the event of early termination by the client, the unbilled fees would be claimed “by way of penalty and compensation for the loss suffered“.

The Versailles Court of Appeal saw in this a clause de dédit — a contractual termination fee. The characterisation was not absurd: where the contract itself permits a party to walk away, can one really speak of non-performance?

The Cour de cassation nevertheless reversed, anchoring its analysis in the amount of the indemnity. In the high court’s eyes, because the indemnity equalled the full price of performance through to the term — even though, by definition, no further services would be rendered if termination occurred — the stipulation was coercive in nature: its function was to deter termination.

Once the clause pénale characterisation was secured, Article 1231-5 reasserted itself, and with it the judge’s power to moderate a manifestly excessive amount.

Second example — Cass. civ. 3e, 18 December 2025, no. 24-19.042, FS-B

The by-laws of an agricultural cooperative — approved by ministerial order — provided that, in the event of total or partial non-performance by a member, the board could impose various sanctions, including “a percentage of the value of the quantities that should have been delivered, or of the turnover that the cooperative should have generated, for the remaining accounting periods until the term of the commitment“.

The debtor disputed the clause pénale characterisation, arguing in particular that a clause pénale can only flow from the parties’ agreement, not from a statutory or regulatory mechanism. The argument made no impression on the Cour de cassation.

He further submitted that a clause pénale must fix a lump sum independent of the loss actually suffered — which would not be the case here, since the by-laws referred to “the turnover that the cooperative should have generated“.

The high court nevertheless upheld the clause pénale characterisation. It held that “a clause in the by-laws of a cooperative which, in the event of total or partial non-performance by the member, places upon him the payment of a sum corresponding to a contractual and lump-sum assessment of the future loss suffered by the cooperative, constitutes a clause pénale, irrespective of the fact that the model by-laws contemplate the possibility of pecuniary sanctions and methods of calculation“.

The Third Civil Chamber added that “the sanctions, set out in Articles 8.6 and 8.7 of the by-laws, calculated either on the basis of an estimate of the quantity of harvests that should theoretically have been delivered but were not, or on the basis of a flat percentage, were intended — by reason of their dissuasive amount — to incentivise the member to honour his contractual commitments“.

Thus: because the sanctions were calculated on the basis of an estimate of the quantity of harvests that should have been delivered, the assessment of damages was a lump sum; and because the amount was dissuasive, the in terrorem dimension was made out.

The clause pénale characterisation followed, and with it the judge’s power of moderation.

Third example — Cass. civ. 3e, 8 January 2026, no. 24-12.082, FS-B

A contract for the construction of an individual house stipulated that, if the building owner cancelled before works began, he would owe a flat indemnity of 10% of the agreed price.

The facts look close to those of the first example concerning the lawyer’s retainer.

Yet the Cour de cassation here refused the clause pénale characterisation, on the ground that the indemnity did not sanction a non-performance, but compensated the exercise of a contractual prerogative of termination — one that Article 1794 of the Civil Code expressly grants to the building owner.

In the words of the Court: “The clause pénale, the purpose of which is to ensure performance of the obligation by one of the parties, is to be distinguished from the faculté de dédit, which allows that party to escape performance against payment of a lump-sum indemnity.”

The Court inferred that the clause “did not sanction a non-performance attributable to the building owner, with the result that it could not be analysed as a clause pénale but constituted a clause de dédit, not amenable to moderation“.

That much is true — yet hesitation seems permissible where the contract itself organises such a faculty of withdrawal or early termination.

Does the answer not lie rather in the amount of the stipulated indemnity? In the first decision, the amount was coercive precisely because the client had to pay all sums due under the contract without receiving anything in return. Here, by contrast, the exit ticket is far less onerous: 10% of the contract price (in addition to amounts corresponding to the work already performed).

And is the reference to Article 1794 truly decisive? Does it really matter that it is the Code that allows the building owner to terminate while compensating the contractor, given that (i) such a faculty could equally arise out of the contract alone, and (ii) in any event, it is the parties’ will that determined the amount of the termination indemnity?

Fourth example — Cass. civ. 2e, 12 March 2026, no. 24-13.954, F-B

A contract between an insurer and a general insurance agent provided that, in the event of breach by the agent of his post-contractual non-compete obligation, he would forfeit his right to the end-of-mandate compensatory indemnity.

Could this contractual forfeiture be characterised as a clause pénale?

No, said the Nancy Court of Appeal, which saw in it nothing more than the loss of a right.

That ruling did not stand. For the Cour de cassation, once the parties had “agreed in advance that non-performance [of the obligation] would be sanctioned by the loss of the right to the indemnity“, the legal form of the sanction was beside the point.

What counts is its function: to assess, in advance and on a lump-sum basis, the damages payable in case of non-performance.

It follows that the forfeiture clause may be treated as a clause pénale, and is therefore amenable to judicial moderation.

Key takeaway

The Cour de cassation has now firmly committed to a functional reading of the clause pénale.

In the high court’s eyes, a clause pénale is any stipulation that sanctions a non-performance attributable to the debtor.

It matters little whether the stipulation is dressed up as a “penalty”, a “compensation”, a “contribution to fixed costs” or a “forfeiture”: what counts is the dual dimension — coercive and indemnitary — of the clause pénale.

L’article A Penalty Clause by Any Other Name est apparu en premier sur Louis Thibierge.

L’article 33rd Willem C Vis Moot in Vienna est apparu en premier sur Louis Thibierge.