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Abrupt termination of established commercial relationships: key reminders and useful assessments by the Paris Court of Appeal
Paris Court of Appeal, 9 July 2025, nos. 23/16680; 23/18293; and 23/16348
The abrupt termination of an established commercial relationship constitutes a restrictive commercial practice prohibited under Article L.442-1, II of the French Commercial Code and may lead to the payment of significant damages.
The Paris Court of Appeal rendered three decisions in July 2025 in which it provided a useful reminder of the criteria applicable to the abrupt termination of an established commercial relationship.
The Court first recalled that the first criterion to verify is the existence of an established commercial relationship. This refers to a relationship that “must be of a continuous, stable, and habitual nature”. The Court also reiterated in each of the three decisions that the existence of an established commercial relationship does not depend on the presence of a written contract but may arise from a simple ongoing business relationship.
The Court further emphasised that a commercial relationship is established whenever the party claiming to be the victim of the termination could “reasonably expect, for the future, a certain continuity in the flow of business with its commercial partner”.
Lastly, in ruling no. 23/16680, the Court recalled that an established commercial relationship may be characterised even when the relationship has been formed successively with different persons. However, in such a case, the claimant must bring evidence that (i) the relationship continued under the same terms, and (ii) both parties shared the clear intention to pursue the prior relationship.
In the case at stake, the Court noted that the Business Purchase Agreement made no reference to the ongoing commercial relationship between the seller of the business and a supplier. It further held that the fact that “the commercial relationship had continued under the same conditions before and after the transfer of the business” was insufficient to demonstrate that the purchaser of the business intended to pursue the established commercial relationship with the supplier. The Court therefore concluded that the prior commercial relationship had not continued and could not be taken into account.
The Court of appeal then recalled that the second criterion required to establish the existence of the unfair commercial practice is the termination - whether total or partial - of the relationship. This materialises through “the diminution of the flow of business” or “the notification of the termination, corresponding to the announcement made by one contracting party to the other of its unequivocal intention to terminate the relationship on a certain date […]” (Paris Court of Appeal, 9 July 2025, nos. 23/18293 and 23/16348).
In ruling no. 23/16680, the Court pointed out that when a company ceases to entrust work to a supplier, this constitutes a termination of the established commercial relationship attributable to that company.
But in its ruling no. 23/18293, the Court took the opposite view: the fact that a company informed its distributor that it would be unable to supply additional product quantities over a given period did not amount to a substantial modification of the established commercial relationship. The Court specified that the parties had not demonstrated any agreement on minimum business volumes and that, throughout the relationship, fluctuations in the quantities supplied had already occurred (and were therefore inherent to the relationship) because they were linked to the supplier’s seasonal production capacity.
In ruling no. 23/16348, the Court held that, during an advanced commercial negotiation, a counter-proposal containing terms that differed significantly from previous years (in terms of prices, volumes, payment terms, and exclusivity conditions) amounted to an abrupt termination of an established commercial relationship, since the conditions of the existing relationship had undergone a “substantial modification”, and the partner “could no longer legitimately expect to renegotiate the key terms previously agreed”.
Finally, the judges recalled that the restrictive commercial practice is established if the termination is abrupt, meaning that it is carried out by one party without giving prior notice to the other, or with insufficient notice, taking into account the duration of the commercial relationship and other relevant factors.
Relying on settled case law, the Court stressed that the notice must correspond to the “time necessary for the company to reorganise, either to redeploy its activity, find another partner or a replacement solution, while benefiting, except in special circumstances, from the continuation of prior conditions” (Paris Court of Appeal, 9 July 2025, nos. 23/18293 and 23/16348).
Several criteria may be taken into account to assess whether the notice period was sufficient. The first and most important is the duration of the commercial relationship. But other factors may also be relevant: any situation of economic dependence of the victim, the volume of business generated, the investments made by the victim of the abrupt termination, the specificity of the market, and the proportion of the terminating party’s business within the victim's overall activity.
In case no. 23/16680, the Court held that a three-month notice period for a relationship of eighteen months was both necessary and sufficient. It relied on the fact that, on the one hand, the individual contractor generated almost all of his turnover with the company responsible for the termination, but, on the other hand, he did not provide concrete evidence regarding the market or other difficulties “to find an equivalent business partner” apart from his age.
In case no. 23/18293, the Court held that a fifteen-month notice period granted for a fourteen-year relationship was sufficient because it was “consistent with the duration of the established commercial relationship and its specific characteristics”. In this case, the Court found that the economic dependence alleged by the victim was not demonstrated, nor the “particular notoriety of the product”, which could otherwise have justified a longer notice period.
Lastly, regarding the calculation of damages, the Court, in judgment no. 23/16680, recalled the applicable principles: the compensable loss is the loss resulting “from the abruptness of the termination and not from the termination itself”, and must be assessed “by considering the loss of margin that the victim could reasonably have expected during the notice period that was circumvented”. The margin to be used is the contribution margin, minus, where applicable, “the share of fixed costs not incurred due to the reduction in activity resulting from the termination during the same period”.
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