The termination of established commercial relations is mainly intended, as its name suggests, for commercial relations. However, some previous decisions had agreed to apply the notion of a sudden termination of established commercial relations to civil activities (e. g. architect).
By a decision of 20 February 2019, the Court of Cassation returned to a classic definition of the scope of this text by requiring a relationship of a commercial nature in order to apply Article L442-6 of the French Commercial Code. This articles has introduced into French law the now famous notion of a sudden termination of established commercial relationships.
Court of Cassation, 1st Civil Chamber, 20 February 2019 Appeal No. 17-27967
A lawyer had entered into a Liberal associate agreement with a law firm in August 2010.
In 2014, the Law firm terminated the contract of its associate after three months’ notice.
The associate referred the matter to the President of the Bar Association to claim indemnities against its former law firm. In particular, the associate claimed 190,000 euros in damages for « manifest disproportion in relation to the service rendered or significant imbalance in the rights and obligations of the parties. »
The Paris Court of Appeal rejected the employee’s request.
The Court of Appeal ruled that Articles L410-1, L442-6 1° and 2° of the French Commercial Code did not apply to relations between an associate lawyer and a law firm because these texts were applicable to commercial exchanges and therefore to commercial relations.
The Associate referred the matter to the Court of Cassation.
The associate developed the argument that the agreement was a simple service contract. The service contract may be subject to the competion rules of the French Commercial Code.
The application of a text in the Commercial Code to a lawyer who is not a merchant may come as a surprise, but some judgments of the Court of Cassation had applied the sudden termination of established commercial relations to liberal professionals.
Indeed, this rule had been ruled applicable to an architect (judgment of 16 December 2008 No. 07-18050). The architect also has a civil activity.
Why not applying article L442-6 of the French Commercial Code to a lawyer?
This argument was however rejected. The Court of Cassation ruled that Article L442-6 1° and 2° did not apply to relations between lawyers.
The service of a lawyer is by definition liberal or civil. A liberal activity cannot be commercial. The concepts of commercial and liberal professional relations are distinct. The activity of a lawyer is a professional activity, but it isn’t commercial. It does not consist in the exercise of commercial acts on a regular basis.
The Court of Cassation therefore refused to apply the competition rules to the professional relations established between two lawyers. These relationships are not of a commercial nature. Article L442-6 of the French Commercial Code does not therefore apply to liberal professionals.
By recalling that Article L442-6 of the Commercial Code applies only to commercial relations, the Court of Cassation adopts a classic position that must be approved.
To conclude, it should be noted that this legal battle between the associate and his former law firm is not completely over. The Court of Cassation overuled the appeal decision on another point. A part of the dispute will therefore be referred to a new Court of Appeal.