The reform of the reform of the law of contracts ?

on October 13, 2017 – Bruno DONDERO – Right

© DR – Bruno Dondero, professor of the Faculties of law (private law) and professor at the University Paris 1 (Panthéon – Sorbonne).

Ordinance no. 2016-131 of February 10, 2016, that has reformed the law of contracts is applicable to contracts entered into since 1 October 2016. But now arises the question of its ratification…

Even when the Parliament has empowered the Government to act by way of order in a given material, the Parliament retains the ability to edit the work of ministries during the phase of ratification of the order.

This ratification may take the form of a confirmation, pure and simple, of the ministerial work, and logically enough, when the Government submits a draft law of ratification, that is, a single article stating that “the order XXXXXX is ratified” that he proposed to the vote of the parliamentarians.

The ephemeral keeper of the Seals Bayrou had proposed a draft law going in this direction with respect to the ratification of ordinance n° 2016-131 of February 10, 2016, even if this text had not been prepared under his authority.

It is in front of the Senate that the parliamentary debate will start from 17 October, and the least we can say, is that the senators do not intend to be merely a ratification of an article.

During the last Campus lawyers, Bruno Dondero, the famous professor of law 2.0, reviewed the timeliness of the company law. © A. P.

We remember the opposition which had taken place between the Senate and the national Assembly regarding the issue of the use of a prescription. The senators did not want the reform of the law of contracts is done by way of an order, and they wanted the law to be used. But the national Assembly had asserted its point of view, and it was finally the use of the order which had been retained by the law n° 2015-177 on 16 February 2015 relating to the modernisation and simplification of law and procedures in the areas of justice and home affairs.

The senators intend to give the vote at the ratification phase, and they have to this end conducted a large number of practitioners, professional associations, academics (including Daniel Mainguy, Philippe Stoffel-Munck and the writer of these lines).

The result is quite impressive, since it is fourteen amendments which have been tabled by the senator Pillet, rapporteur of the text. Most of the proposed changes improve the quality of the texts of the civil Code, some of them, more rare, affecting in contrast to questions of substance.
He is happy that it has been limited in recent changes, as if the act of ratification was passed with significant changes, we’ll see a new ” new contract law “, with the application of the texts of the order to contracts entered into between 1 October 2016 and, for example, prior to June 1, 2018, if the law of ratification enter into force on this date, and the law of contracts resulting from the act of ratification apply to contracts entered into on or after June 1, 2018…

Let’s see the contents of the various amendments, in anticipation of their discussion in the Senate, and then to the Assembly (which should still retain at least some…).

I – Definitions, negotiations, and consent (amendment n° 1 to 4)

Amendment no. 1 clarifies the effective definition of the negotiated contract (art. 1110 (1) of the civil code), in which the terms are freely negotiable, “according to the amendment, and not” negotiated “, according to the current text.

Also clarified the definition of a contract of adhesion, removing the reference to the general conditions, and by substituting the reference to “clauses in non-negotiable, unilaterally determined in advance by one of the parties” (missing a comma for the definition to be clear).

Probably less useful, however, is the addition of a reference to “public morals” in article 1102 : the contract may not waive the public order, it is shown currently, and it will not deviate from the good morals. The text will, it is true, the merit of coherence with the article 6 of the civil code.

Amendment no. 2 clarifies the reparable damage in the event of a fault in pre-contractual negotiations, excluding the loss of opportunity to obtain the expected benefits of the contract not concluded.

The amendment no. 3 extends the lapsing of the offer in the event of death of the recipient.This amendment clarifies the reasonable time period contemplated by section 1123 to the action of interrogation on the existence of a right of preference, and which is set at two months.

Amendment no. 4 clarifies that the malicious concealment is not to have communicated any information that it was required to provide pursuant to the act, which replaces the reference to the knowledge of the characteristic determinant for the other part (already covered by the general duty of information of the article 1112-1).

The same amendment specifies that the addiction may be the seat of the vice of violence must be a dependency (item 1143).

II – Ability and representation (amendment no. 5)

It was an area in which corrections were really necessary, but the work still contains some imperfections.
Amendment no. 5 removes the reference contained in section 1145 of the civil code “acts useful to the achievement of the object of legal persons, but the end result is not great, since the article states that” The capacity of legal persons is limited in accordance with the rules applicable to each of them “…

The time of the action examination to see if a person has the power to represent another is set to two months, which is too long-acting to a situation where one is on the point of concluding a contract, and we do not see why it would take two months to reply on the existence or non-existence of a power of representation.

Especially, article 1161, relating to situations of conflict of interest (contract concluded by the representative with the represented, or the contract where the same representative is involved for both parties) is limited to situations where the principal is a natural person, which does away with the issues of articulation of this text with the representation rules of the company law and the law of other groups.

III – Contents of the contract (amendments no. 6 and 7)

Amendment no. 6 adds to section 1162 a reference to morality, and, above all, it allows, when the price of a contract for the provision of services has been determined unilaterally by the creditor, that the other party to obtain from the judge, in cases of abuse in the fixing of the price, rescission of the contract, and not only damages.
Is clarified that the reference to the legitimate expectations of the creditor to the article 1166.
Especially, the abusive clause in a contract of adhesion and which is deemed non-written (item 1171) is only that which is not negotiable and is determined in advance by a party. (In committee, senators have adopted all of the amendments, except the references to morality, ed.)

Amendment no. 7 is one of the most expected, since it is editing the article 1195 relating to the lack of foresight, and removes it to the judge the power to revise the contract, leaving her as the one to end it. It is stated by the editor of the amendment, that the power granted to the court by the order exceeded the scope of the authorisation granted by the law n° 2015-177 on 16 February 2015 relating to the modernisation and simplification of law and procedures in the areas of justice and home affairs.

It is true that article 8 of this law allowed the Government to ” 6° Clarify the rules relating to the effects of the contract between the parties and towards third parties, giving the possibility for women to adapt their contract in case of unpredictable change of circumstances “, which is not quite what retains the article 1195, by introducing the judge in the contractual relationship…

In addition, operations on financial instruments (shares and bonds) are excluded from the scope of the text (by adding an article within the monetary and financial code), which will prevent, in particular, in the risk capital operations, that the fulfilment of the promises of redemption of shares to be embarrassed by the game of article 1195.

IV – Performance of the contract (amendment no. 8)

The amendment n° 8 to limit the debtor in good faith the possibility to oppose the enforcement in nature of the contract when there is a disproportion between the interest to the creditor, and the cost to the debtor.
Moreover, the reduction of the price by the creditor is not satisfied is clarified to specify that it is him who decides, unilaterally, to the reduction of the price (item 1217 and 1223).

V – Other amendments (amendments nos 9 to 13)

Amendment no. 9 provides clarification as to the possibility that the party engaged under the condition to renounce to it (art. 1304-4) and as to the inapplicability of the forfeiture of the term, extended to the sureties (art. 1305-5).

The amendment no. 10 shall submit the assignment of debt to the formalism of writing (art. 1327), as the transfer of a debt and the assignment of a contract. Amendment no. 11 corrects an error of the pen relative to the enforceability of the assignment of the debt to the creditor when the latter has in advance given its consent to the assignment, and is not intervened (the “and” replaces “or” infelicitous).

It is then the restitution involving a minor or a protected adult who is confirmed as that due by it, and not to the minor or protected adult (art. 1352-4).
A correction is made to the article 1343-3 of the civil Code by the amendment n° 12, which replaces the reference to an international contract, allowing payment to take place in a currency other than euro, by reference to the more broad a ” international character “.

The amendment n° 13 finally brings clarification as regards the possibility for the guarantor and jointly and severally liable to avail of compensation, even though it would not have been invoked by the principal debtor, a jointly responsible or the creditor.

VI – Application of the reform of the law of contracts in time

The amendment n° 14 editing finally, article 9 of the ordinance, stating that the contracts entered into prior to October 1, 2016 shall remain subject to the old law, adding that this also applies to their legal effects and to the provisions of public order.

By doing this, we want to avoid that the reform is applied to contracts entered into before the date of entry into force, because such a new rule would be seen as being of public order or governing the legal effects of the contract and not the only contractual effects.

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