Fall in orders: a sudden breakdown in the relationship may occur without the contract being terminated

Logistics warehouse in Isère, France

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.

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