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E-library Commercial Contracts Miscellaneous provisions in a French law contract

Miscellaneous provisions in a French law contract

08 Jan 2012

Although standard, the so-called "miscellaneous" provisions must not be overlooked while reviewing or drafting a contract. Below is a description of such provisions and an explanation why they are important:

Independent contractors

If the relationship between a service provider and its client is, or transforms into, one of dependence, a risk exists that such relationship could be qualified as an employment contract, an agency agreement or a partnership, with potentially heavy legal and tax consequences for the client. For example, if a contract for the provision of services is subsequently qualified as an employment contract, the client may be liable for social security contributions and late penalties on such contributions, in addition to the price paid for the provision of services. Appropriate provisions should therefore be included in the agreement to ensure that the parties will remain independent contractors.

Notices

A notice clause provides for a system for notification by one party to the other. This clause is especially important when the parties' relationship deteriorates, as the actual receipt of a notification may determine a party's right to claim penalties or bring action. A notice clause should therefore determine to whom and how a notification should be sent, and when it will be considered received.

Choice of law and jurisdiction

The choice of law and jurisdiction is particularly important in international contracts, as it avoids controversies regarding the court competent to hear the parties' dispute and the law which applies to it. Thus, if the parties have chosen French law, none of them shall have the right to bring the dispute before English courts, even if both of them are located in England. The parties should however allow for derogations from the contractually stipulated choice of law and jurisdiction for interim measures and specific performance actions. Thus, if the parties have chosen French law and French courts, while a violation of a party's intellectual property rights has occurred in England, the party suffering from such violation should have the right to obtain interim measures protecting it from further damage in England before English courts.

No-assignment

A non-assignment clause prevents a contractor from assigning the agreement to somebody else without the consent of the other party. It does not however prevent the contractor from hiring subcontractors. A specific no-subcontracting clause should be included.

Force majeure

A force majeure clause relieves a defaulting party from liability for breach of contract (such as delays in delivery, failure to perform an obligation, etc.) when such breach is due to acts of god or other events outside the control of such party. Force majeure clauses should be read and commented carefully as most of them also include events which are within the control of a party, thus restraining significantly the right of action of the non-defaulting party in the event that it suffers a contractual breach.

Severability

The law changes frequently or is sometimes unclear (it is not rare for court decisions to conflict with each other). In addition, it is not infrequent for a party trying to avoid liability to claim that a contractual clause (or the entire contract) is null and void. To avoid that a provision which may be null entails the nullity of the entire agreement, a severability clause should be included. Such severability clause stipulates that if a provision is found to be null and void, it will not impact the validity of the remaining parts of the agreement, which will remain in full force and effect. It may also oblige the parties to negotiate in good faith a substitute valid provision which reflects their initial intention.

No waiver

If a party tolerates breach of contract, such as, for example, delays in delivery, a judge could consider that it has waived its right to claim delivery on time. The purpose of no-waiver clauses is to provide that a failure by a party to respond to one breach does not waive its right to respond to another.

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