On 22 October 2013, the Court of Cassation handed down a new judgment confirming its position in respect of compensation awarded for termination of established commercial relations without reasonable notice without evidence of any prejudice having been suffered.
The judgment is important in that it confirms the (highly contestable) position of the Court of Cassation to award compensation for lack of a reasonable period of notice as a lump-sum payment based on loss of margin which would have been achieved in the months for which the plaintiff was deprived of notice. This is assessed according to previous results, regardless of whether any actual harm has been suffered.
The Court of Cassation thus continues in its erroneous interpretation of Article L442-6,I,5° of the Commercial Code and businesses therefore need to be extra-vigilant when deciding to terminate or not to renew ongoing contracts.
Three other judgments rendered on the same day by the commercial chamber of the Court of Cassation on the termination of established commercial relationships confirm the traditional case law insofar as:
· the notice period to be taken into account is not the period originally granted in the contract, but the effective notice period (which may be longer e.g. because an extension of the notice period was granted or the relationship was pursued further): this is a reasonable solution although in total contradiction with the principle of not taking into account any event subsequent to the notification of termination when assessing the harm to be compensated;
· the contractual notice period must comply with the statutory notice period;
· the launch of a call for tender constitutes the point when the notice period starts to run.