Court of Cassation, Commercial Chamber, Judgment No. 96 FS-B of 26 February 2025, Appeal No. M 23-50.012
The commercial chamber of the Court of Cassation provides clarification on the starting point of the notice period in the event of the termination of a commercial relationship through competitive tendering and confirms its definition of economic dependence.
A fairly common context of competitive tendering
Since 2005, the company Transports [M] had been responsible for transporting certain waste from wastewater treatment plants in the south-eastern quarter of France on behalf of Suez Eau France. In an email dated 30 March 2016, Suez Eau France had informed it of its intention to put out the contract to tender. In a letter dated 5 December 2016, of which it became aware in January 2017, the company Transports [M] learned that its bid had not been accepted and that it would cease all collaboration with Suez Eau France as of 1 December 2017.
A brutal and clear-cut termination
Considering that the five-month notice period observed was insufficient, the Paris Court of Appeal ordered Suez Eau France to pay 115,707 euros in damages to Transports [M].
Both Transports [M] and Suez Eau France criticised the Court of Appeal’s decision on different points. The Court of Cassation validates the legal analysis of the Court of Appeal on two issues raised.
Which date should be used as the starting point for the notice period?
The Court of Cassation states that the announcement of a call for tenders does not in itself constitute notification of termination, unless a specific end date for the relationship is indicated.
‘The written document by which a company notifies its intention not to continue an established commercial relationship does not trigger the notice period owed to the company that is being terminated unless it specifies the date on which the relationship will end.’
The simple information about a call for tenders is therefore not enough to constitute the starting point of the notice period. It is essential to specify when the commercial relationship will end in order for the notice period to start running.
The notice period must allow the ousted company to reorganise, so it is quite normal for judges to impose clear and precise visibility on the terms of the end of the commercial relationship.
In concrete terms, therefore, in the context of this decision, the first information on the call for tenders did not give any perspective on the end of the commercial relationship. This information did not constitute due notice of the termination.
The letter of December 2016 specified a clear date for the end of the commercial relationship. This letter therefore triggered the notice period for the termination of the commercial relationship.
When is there economic dependence?
Economic dependence is one of the factors that allows the judge to require a longer period of notice for the termination of established commercial relationships.
Transports [M] contested the ten-month period set by the Court of Appeal, arguing that it was economically dependent on Suez Eau France. Suez accounted for 86% of Transports [M]’s total business in 2014/2015 and 72% in 2016/2017.
The Court of Cassation reiterates that the mere preponderant share of a client in the turnover of a company is not sufficient to characterise economic dependence.
The Court of Cassation gives a definition of the concept of economic dependence in the matter of sudden termination of commercial relations:
‘The state of dependence results from the impossibility for the party that suffers the termination of the established commercial relationship to have, at the time of this termination, with one or more companies, a solution technically and economically equivalent to the contractual relationships it has established with the company that took the initiative of the termination. »
This definition is not new and had already been given by the Court of Cassation in a previous ruling (Cass. com., 31 Jan. 2024, no. 22-24.045).
However, the Court of Cassation complements this definition with a negative definition.
‘This state of dependence cannot be inferred exclusively from the size of the share of turnover generated with the company responsible for the breach »
It is therefore up to the company that is the victim of the breach to prove economic dependence as defined by the Court of Cassation, but without limiting itself to proving only the predominant share of the lost business. It will have to prove that it is impossible to replace the lost business during the notice period.
In practical terms:
– Make sure you mention a date on which the business relationship will end. Otherwise the information given will not trigger the notice period.
– Be careful to demonstrate economic dependence if you invoke it. It is not enough to rely solely on figures; you must also prove that it is impossible to replace the activity during the notice period.
By Olivier VIBERT, Lawyer, Paris,
Kbestan, business law firm in Evreux and Paris
French Law . BLOG 