The abrupt termination of an established commercial relationship does not necessarily require formal termination of the contract or a complete halt to orders.
Termination can be partial
Article L. 442-1(II) of the French Commercial Code penalises termination, “even partial”, of an established commercial relationship without sufficient written notice.
A substantial reduction in order volumes may therefore amount to partial termination, even where commercial dealings continue.
The French Court of Cassation reiterated this in a judgment of 24 September 2013. In that case, the customer had never formally ended the relationship and some orders remained. The Court nevertheless overturned a decision dismissing abrupt termination without adequately examining whether the sharp fall in business amounted to partial termination.
Not every fall in orders automatically constitutes abrupt termination.
Distinguishing a fluctuation from termination
The assessment includes the scale and lasting nature of the reduction, the circumstances in which it occurs and its cause.
A decline in business may, for instance, not be wrongful where it results from a reduction in the customer’s own activity or an objective change in the market.
Conversely, a substantial reduction in orders resulting from a partner’s decision may amount to partial termination even where some business continues.
The Paris Court of Appeal, in a judgment of 12 December 2024, reiterated that not every reduction in turnover amounts to termination: the decrease must in particular be sufficiently substantial.
No percentage threshold therefore determines, by itself, whether a fall in orders constitutes partial termination.
The real difficulty is to distinguish normal fluctuations in the commercial relationship from a sufficiently significant change in business to amount legally to termination.
If your matter concerns a reduction in orders or termination of a business relationship, contact the firm, which will get back to you to discuss your situation.