Absence of compensation for breach of fixed-term contract for serious misconduct
In case of a sudden break of a fixed terms contract for serious misconduct, no costs or damages will be allocated to the contracting party at fault.
This was the decision made twice by the French Chambre commerciale de la Cours de cassation during the 8 November 2017 rulings (Cass. com., 8 nov. 2017, n°s16-22.289 and 16-15.296). Although both decisions are identical, the legal grounds differ. In the first case, the highest court has indeed justified its position based on the ancient articles of the Code civil 1147 and 1184, while the second ruling was based on the article L. 442-6, 1-5° of the Code de commerce.
Regarding the first ruling, the French Cours de cassation held the fact that the fixed term contract could be breached if the contracting party’s misconduct justified it. The second ruling is based on precedents according to which the breach of a commercial relationship without notice does not render one liable if the other party fails to execute its obligations, given that this failure represents a sufficient degree of severity.