How to Terminate a Sales Contract for Breach in France

How to terminate a sales contract in France for breach

When your counterparty does not perform, the question is not only whether you can claim damages but whether you can bring the sale to an end altogether. French law calls this résolution — the retroactive undoing of the contract for non-performance. Since the 2016 reform of the general law of contract, Article 1224 of the Civil Code sets out the framework in a single provision: a contract may be terminated for breach where a resolutory clause so provides, or, in the case of a sufficiently serious non-performance, either by a written notice from the creditor to the debtor or by a decision of the court.

This matters to any foreign business selling to or buying from France, because it defines exactly how you can walk away from a deal that has gone wrong — and how the other side can walk away from you. To terminate a sales contract lawfully, you must pick the correct route, respect the conditions attached to it, and document the breach. Choosing the wrong route, or acting too quickly, can turn you from the innocent party into the party in the wrong.

The three routes are not equivalent. A resolutory clause gives near-automatic termination once its defined trigger is met. Unilateral termination by notice is fast but is exercised at the creditor's own risk. Judicial termination is the safest but the slowest, because a judge decides whether the breach justified ending the sale. The table below summarises the choice; the sections that follow explain each route in turn.

Terminating under a resolutory clause (Article 1225)

The most efficient way to terminate a sales contract for breach is to have planned for it in advance. A resolutory clause (clause résolutoire) is a term of the contract that identifies the obligations whose breach will bring the sale to an end and sets out how termination operates. Article 1225 of the Civil Code confirms that such a clause must specify the undertakings whose non-performance triggers it. A clause drafted in vague terms — in the event of any breach — will be read narrowly and may fail to catch the very default you are worried about.

The advantage of a resolutory clause is that it removes the requirement to prove that the breach was serious. The parties have agreed in advance that this particular default justifies termination, so the court's role is confined to checking that the clause was properly invoked. That is why a supplier will want a clause aimed at late or short payment, and a buyer will want one aimed at late or non-conforming delivery.

The efficiency comes with conditions. Article 1225 provides that termination under the clause takes effect only after a formal notice to perform (mise en demeure) that has gone unheeded, unless the contract states that the mere non-performance suffices. The notice must expressly refer to the resolutory clause. The clause must also be operated in good faith: a creditor who springs the clause opportunistically, or who refuses a cure that the contract allowed, risks having the termination set aside.

Unilateral termination by notice at the creditor's risk (Article 1226)

Where there is no resolutory clause, Article 1226 of the Civil Code allows the creditor to terminate the sale by simple written notice, without first going to court. This is the route most foreign businesses reach for when a deal collapses and time is short. It is powerful, but the Code is deliberate in describing it as termination at the creditor's own risk and peril.

Article 1226 imposes a sequence. Except in cases of urgency, the creditor must first put the debtor on notice to perform within a reasonable time. If the debtor still fails to perform, the creditor notifies the debtor of the termination and of the reasons for it. The breach must be sufficiently serious to justify ending the contract — this is not a device for escaping a bargain that has merely become inconvenient.

The risk is real. Because no judge has ruled in advance, the debtor can later challenge the termination in court. If the judge finds that the breach was not serious enough, the party who terminated is treated as having itself breached the contract and can be ordered to pay damages, or to perform. In practice this means unilateral termination should be reserved for breaches that are clearly grave and well evidenced, and the notice should set out the reasons carefully.

Judicial termination by the court (Article 1227)

The traditional route survives. Article 1227 of the Civil Code confirms that termination may always be requested from the court, even where a resolutory clause exists or where unilateral notice was available. Instead of ending the sale yourself, you ask a judge to pronounce the résolution and to draw its consequences. This is the cautious option: you do not carry the risk of misjudging the seriousness of the breach, because the court decides that question for you.

When seised of a claim for judicial termination, the court has real discretion. It may pronounce termination, but it may equally refuse it and instead order performance, grant the debtor extra time, or award damages alone. In commercial sales the judge also has a power of réfaction — reducing the price to reflect a partial or imperfect performance — where the breach is not serious enough to justify ending the sale. Termination is therefore never automatic before a court; it is one outcome among several.

Judicial termination is the natural choice where the breach is arguable, where the sums at stake are large, or where you want a binding ruling that the other party defaulted. It is slower and costs more, but it produces certainty. A seller suing for the price and, in the alternative, for termination does not waive one remedy by pursuing the other; the two can be advanced together. For related situations, see our guidance on the seller's remedies for non-payment.

The requirement of a sufficiently serious non-performance

Two of the three routes — unilateral notice and judicial termination — turn on the same threshold: the non-performance must be sufficiently serious. This is the pivot of any decision to terminate a sales contract for breach in France. A minor or purely technical default will not do; the breach must go to the heart of what the innocent party bargained for.

The courts assess seriousness by reference to the whole contract and the parties' expectations. A short delay in delivering non-perishable goods will rarely be serious enough on its own, and the innocent buyer may be confined to damages. By contrast, delivery of goods that do not correspond to the contract, a persistent refusal to deliver at all, or a failure to pay a material part of the price will usually cross the threshold. The Cour de cassation has repeatedly held that it is for the trial judge to weigh the gravity of the breach on the facts.

Seriousness is also judged as at the date of the ruling. A debtor who cures the default before judgment may defeat the claim, because the non-performance no longer persists. This is why a well-drafted resolutory clause is valuable: by agreeing in advance which breaches justify termination, the parties displace the open-ended seriousness test and gain predictability. Where you are on the receiving end of a defective delivery, our note on the buyer's remedies for non-conforming goods explains the alternatives to outright termination.

The role of the mise en demeure (formal notice)

Across all three routes, one step recurs: the mise en demeure, a formal notice calling on the defaulting party to perform. It is the hinge between a breach that has simply occurred and a breach that entitles you to act. Under Article 1226, notice to perform within a reasonable time is a precondition of unilateral termination except in cases of urgency. Under a resolutory clause, Article 1225 requires an unheeded notice before the clause bites, unless the contract dispenses with it.

The notice does more than warn. It fixes the moment of default, starts the clock on any period you have allowed for performance, and creates the written record a court will look for. A notice should identify the obligation breached, demand performance, set a clear and reasonable deadline, and — where a clause or unilateral termination is contemplated — say so expressly. Sending it by a traceable means (recorded delivery or bailiff) is standard practice.

There is a narrow urgency exception to the notice requirement under Article 1226, and some resolutory clauses contract it out. But these are exceptions to be relied on with care. As a rule, a foreign business that wants to end a French sale for breach should serve a proper mise en demeure first and keep proof of it. Skipping this step is one of the most common reasons a termination is later held to be wrongful. Where the failure to perform is caused by an outside event, consider our guidance on force majeure and hardship before serving notice.

Effects of termination: restitution and retroactivity (Article 1229)

Once a sale is terminated, Article 1229 of the Civil Code governs what happens next. Termination ends the contract. Where the obligations exchanged were useful only if the contract had been performed in full — the typical case for a one-off sale of goods — termination operates retroactively: the parties are put back in the position they would have occupied had they never contracted, and each must return what it received. The buyer restores the goods; the seller restores the price.

This restitution regime is the practical heart of termination. For an instantaneous sale of goods, retroactivity is usually clean: the goods go back one way, the money the other. Complications arise where the goods have been used, damaged, resold, or partly consumed, in which case the value of what cannot be returned is accounted for in money. Article 1229 also confirms that a party who has already received a counter-performance it should not keep must give it back.

Termination does not extinguish clauses intended to survive it — dispute-resolution, confidentiality and, importantly, penalty clauses — which continue to apply. Nor does it bar a claim for damages: ending the contract and being compensated for the loss the breach caused are cumulative, not alternative, remedies. The measure of those damages follows the ordinary rules on contractual liability.

Résolution versus résiliation, exception d'inexécution and damages

French practice distinguishes résolution from résiliation. Résolution unwinds the contract retroactively and is the usual outcome for a one-off sale of goods. Résiliation ends the contract only for the future and is reserved for contracts performed over time, such as a supply or framework agreement, where undoing past performance would make no sense. Knowing which applies tells you whether restitution runs back to the start or only stops the contract going forward.

Termination is not the only self-help remedy. Before ending the sale, the innocent party can often rely on the exception d'inexécution — withholding its own performance until the other side performs. A seller who has not been paid may decline to deliver; a buyer faced with non-conforming goods may suspend payment. This is a defensive measure that keeps the contract alive, and it is frequently the sensible first move before escalating to termination.

Whatever route you take, damages remain available where the breach caused loss. A creditor may combine termination with a claim for the loss flowing from the breach, and a resolutory or penalty clause may fix that loss in advance, subject to the court's power to adjust a manifestly excessive or derisory penalty.

How to terminate a sales contract for breach, step by step

The safest way to terminate a sales contract is to work through the same sequence every time. The steps below apply whichever route you ultimately choose; they force you to identify the breach, build the record, and select the route before you act rather than after.

Frequently asked questions about terminating a sales contract for breach in France

How do I terminate a sales contract for breach in France?

French law offers three routes under Article 1224 of the Civil Code: invoke a resolutory clause in the contract, terminate unilaterally by reasoned written notice, or ask a court to pronounce termination. In almost every case you must first serve a formal notice (mise en demeure) demanding performance.

Do I need to go to court to end the contract?

Not necessarily. A resolutory clause or unilateral termination under Article 1226 lets you end the sale without a judge. But unilateral termination is done at your own risk: if a court later finds the breach was not serious enough, you become the party in breach. Judicial termination is slower but removes that risk.

What is a resolutory clause?

A clause résolutoire is a term of the contract that lists the obligations whose breach will bring the sale to an end and how termination operates. Under Article 1225 it must specify the relevant undertakings and, as a rule, takes effect only after an unheeded formal notice. Its benefit is that you need not prove the breach was serious.

How serious must the breach be?

For unilateral and judicial termination, the non-performance must be sufficiently serious — going to the heart of the bargain, not a minor or technical default. A short delay in delivering non-perishable goods is often not enough, while non-conforming delivery or a failure to pay a material part of the price usually is. The trial judge assesses gravity on the facts.

What happens to the goods and the price after termination?

Under Article 1229, termination of a one-off sale generally operates retroactively, so each party returns what it received: the buyer restores the goods and the seller restores the price. Where goods cannot be returned in kind, their value is accounted for in money. Clauses meant to survive termination, such as penalty and dispute-resolution clauses, continue to apply.

Can I claim damages as well as terminating?

Yes. Termination and damages are cumulative, not alternative. You can end the sale and still recover the loss the breach caused, measured under the ordinary rules of contractual liability. A penalty clause may fix that loss in advance, subject to the court's power to reduce a manifestly excessive amount.

What is the difference between résolution and résiliation?

Résolution unwinds the contract retroactively and is the usual outcome for a one-off sale of goods, triggering restitution back to the start. Résiliation ends the contract only for the future and applies to contracts performed over time, such as supply agreements, where past performance is left undisturbed.

How our French lawyers help with terminating a sales contract for breach

Petroff Avocats advises both sellers and buyers on ending French sales contracts cleanly and defensibly. On the offensive side, we assess whether a breach is serious enough, select the safest route, draft and serve the mise en demeure and the termination notice, and pursue judicial termination and damages where needed. On the defensive side, we challenge wrongful terminations, argue that a breach was not serious enough or was cured in time, and negotiate restitution. We also draft resolutory, penalty and dispute-resolution clauses so that termination is predictable before any dispute arises, and we advise on how the Vienna Convention changes the analysis in cross-border sales.

This article is for general information only. It does not constitute legal advice and does not create a lawyer-client relationship. The law and its application to a particular sale depend on the facts and on the applicable regime, which may be the French Civil Code or the Vienna Convention. Contact our French lawyers for advice on your situation.