Abrupt termination of commercial relations: the notice owed and the loss recoverable

The applicable wording comes from Ordinance no. 2019-359 of 24 April 2019, as amended by Law no. 2023-221 of 30 March 2023 and in force since 1 April 2023. Its first paragraph makes liable, and requires to make good the loss caused, any person carrying on production, distribution or service activities who abruptly terminates, even partially, an established commercial relationship, in the absence of written notice taking account in particular of the duration of the commercial relationship, by reference to trade practices or inter-professional agreements.

Three words in that sentence generate the whole of the litigation.

• “Abruptly” — it is not the termination that is wrongful, it is its suddenness. Nobody is bound to contract for ever, and a termination announced in good time calls for no compensation, whatever the reasons for it.
• “Even partially” — an abrupt and significant drop in volumes falls under the same provision as a complete stop. It is the most frequent situation and the one identified latest, because no letter records it.
• “Written” — notice announced by telephone or at a meeting does not exist. The date of the written notification is the starting point for the whole calculation.

The provision does not need a contract: it protects a flow of business, not an undertaking. A supplier delivering on simple purchase orders for eight years is within its scope; a succession of fixed-term contracts may be too, if it has created a continuing relationship. That is the first point on which having the termination classified and the accounting records secured changes the outcome.

The provision does not define the word. In practice a relationship is established where it is continuing, stable and habitual, and where the partner could reasonably expect the flow of business to carry on. Neither exclusivity, nor a minimum volume, nor a written agreement is required.

Two situations weaken it, almost always the same two. The periodic tender first: where each contract is put back out to competition on a known timetable, it becomes hard to argue that the future could be anticipated. Then irregular flows — erratic volumes, long interruptions, one-off orders do not create the stability the provision presupposes.

Conversely, length alone is not enough: what counts is duration, regularity and a significant share of the business, together.

This is the question everyone wants answered in weeks, and to which the code gives no answer. It fixes a method — duration of the relationship, trade practices, inter-professional agreements — then two boundaries.

The upper boundary. The second subparagraph of II is explicit: where the parties are in dispute about the length of the notice, the party terminating cannot be held liable on the ground that the notice was too short once it has given eighteen months' notice. That is neither a standard duration nor a cap on compensation: it is a shelter, which neutralises the single complaint of insufficient length. It does not cover other wrongs committed while the notice runs.

The lower boundary. Notice written into the contract does not protect the party terminating if it turns out to be shorter than what the actual relationship required. A three-month termination clause, signed ten years earlier, does not excuse giving twelve.

Between the two, the assessment is made on a range of factors. The ones that recur:

This is the point that most often decides a case, and the one least anticipated by the party terminating. Giving twelve months' notice and then emptying the relationship of its content while they run is not notice: the purpose of the period is to let the other side reorganise, not to put a date in a letter.

The Cour de cassation so held on 19 March 2025 (Cass. com., no. 23-22.182, reported). After the end of the relationship, a company had gone on selling off its stock for six months, but under significant restrictions — no manufacturing, an obligation to sell within that period. The Court upheld the lower courts' refusal to deduct from the award the profits made on that run-off: the conditions of the relationship during that period did not allow the company to reorganise and therefore did not give it effective notice.

The practical consequence: during the notice period, the relationship continues on the previous terms. Cutting volumes, changing prices, withdrawing an exclusivity or imposing new constraints amounts to shortening the notice by as much — with the risk that the whole period is treated as never having run.

The third subparagraph of II lists them, and there are no others: its provisions do not prevent termination without notice where the other party has failed to perform its obligations, or in a case of force majeure.

What those two cases do not cover is what is most often relied on: a downturn in business, the loss of a downstream contract, an internal reorganisation, a change of shareholder, a new purchasing policy. None is an exemption. They justify the decision to terminate; they do not excuse the notice.

As for non-performance, it has to be proved. In cases of this kind the difficulty almost never lies in whether the breaches occurred but in whether they were recorded: delays tolerated for two years without a written complaint are hard to defend as grounds for immediate termination. Complaints are notified when they arise, not when you decide to leave.

The loss made good is not the loss of the business flow: the termination was lawful, only its abruptness was not. What is compensated is the margin the partner would have made during the notice period it was not given.

Gross margin or margin over variable costs?

The distinction is not cosmetic. Gross margin deducts only the cost of purchase; margin over variable costs deducts everything that would have ceased along with the lost activity. It is that second, economically accurate notion which the Cour de cassation describes as the profit lost in its judgment of 19 March 2025.

A few lines later, though, the same decision uses the phrase “loss of gross margin” — the parties had not argued the distinction, and the Court did not have to decide it. The practical stake remains entire: depending on the method the expert adopts and the documents produced, the amount claimed is not the same. That is where the quantification is won, and it is prepared by building the file, not at the hearing.

The calculation has three stages.

1. Determine the notice owed, on the factors above.
2. Deduct the notice actually given — and effective, in the sense of the previous section.
3. Multiply the missing months by the monthly margin over variable costs made with that partner, reconstructed from previous financial years.

To that are added, where applicable, investments made at the partner's request and now without use, and reorganisation costs whose link with the termination is demonstrated. Those heads are proved document by document.

Composite example, for illustration only. No real case. An industrial subcontractor has worked for nine years for the same customer, which accounts for 45 % of its turnover, and has financed a dedicated production line at its request. It receives a letter announcing a stop in three months, in line with the framework agreement. During those three months, orders fall to a fifth. Three questions arise, in this order: what notice did the relationship require, what is left of the three months given once the relationship has been emptied out, and what margin did the dedicated line generate. None can be answered without the accounts.

Article L. 442-1 I 2° penalises subjecting, or attempting to subject, the other party to obligations creating a significant imbalance in the parties' rights and obligations. Part I covers the content of the contract and its negotiation; part II covers its end. They are two distinct grounds, in a shared provision.

They meet in the same case where a derisory contractual notice period has been imposed on a partner in no position to refuse it. The sanction is common to both: compensation, an order to stop the practice, and a civil fine of up to — at the request of the minister for the economy or of the public prosecutor — five million euros, three times the amounts wrongly obtained, or 5 % of net turnover in France, whichever is highest (article L. 442-4 I).

This litigation is not brought before just any court. Disputes under article L. 442-1 fall to a closed list of courts: their seats and jurisdictions are fixed by the table in annex 4-2-2 of the French Commercial Code (article D. 442-3), and appeals go to the Paris Court of Appeal (article L. 442-4 III). Issuing before the court of the defendant's registered office because that seems natural costs several months.

The period for bringing a claim is five years from the day the claimant knew or ought to have known the facts enabling it to sue (article 2224 of the French Civil Code). Where termination is partial, that starting point is arguable — all the more reason to date the drop early.

Lastly, the evidence. This is the only competition dispute where it is already in your hands: three years of invoicing with the partner, the share it represented of turnover, the margin over variable costs certified by your accountant, and the written exchanges showing what the relationship was before the letter. Those documents decide the amount.

We act on both sides: for the party on the receiving end — classification, quantifying the missing notice, formal notice and then proceedings before the specialist court — and for the party wishing to terminate without exposure, by calibrating the period and holding the notice to its end.

The scope and the amount are accepted before the work begins: the cost is announced before the engagement. We give no undertaking as to the outcome of litigation — our professional rules forbid it.

If you do not know whether your relationship was “established” within the meaning of the provision, that is what a first conversation establishes.