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Oussama Bourass EI

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Article 1

Exclusivity clauses in distribution contracts may constitute an abuse of dominant position

Exclusivity clauses in distribution contracts constitute an abuse of the dominant position of the undertaking holding the distribution network if they have the capacity to drive competitors away from it.

The CJEU first holds that conduct adopted by distributors forming part of the distribution network for the products or services of a producer in a dominant position may be imputed to the latter if it is established that that conduct was not adopted independently by the distributors, but forms part of a policy decided unilaterally by that producer and implemented through the distributors.

An undertaking in a dominant position has a special responsibility not to undermine, by its conduct, effective and undistorted competition in the internal market (CJEU 6-9-2017 aff. 413/14 P Intel v Commission, pt 135 and case law cited). Such an obligation is intended to prevent not only harm to competition caused directly by the conduct of the undertaking in a dominant position, but also harm caused by conduct the implementation of which has been delegated by that undertaking to independent legal entities, required to carry out its instructions. Where the conduct complained of against the undertaking in a dominant position is materially implemented by an intermediary forming part of a distribution network, that conduct may therefore be imputed to that undertaking if it appears that it was adopted in accordance with specific instructions given by that undertaking, as part of the implementation of a policy decided unilaterally by that undertaking and with which the distributors concerned were required to comply.

This is the case, in particular, when such conduct takes the form of standard contracts, entirely drafted by a producer in a dominant position and containing exclusivity clauses for the benefit of its products, which the distributors of this producer are obliged to have the operators of sales outlets sign without being able to amend them, except with the express agreement of the producer. Indeed, in such circumstances, the producer cannot reasonably be unaware that, given the legal and economic links between him and these distributors, the latter will implement his instructions and, by this means, the policy decided by him. Such a producer must therefore be regarded as being prepared to assume the risks of such conduct.

The Court states that the imputability to the undertaking in a dominant position of the conduct implemented by its distributors is not conditional either on a demonstration that the distributors concerned are also part of that "undertaking", within the meaning of Article 102 TFEU, or even on the existence of a "hierarchical" link resulting from a systematic and constant plurality of acts of direction addressed to those distributors which are capable of influencing the management decisions which the latter adopt in respect of their respective activities.

Article 2

Purchase subject to obtaining a loan: the buyer may refuse a loan below the maximum provided for.

The indication, in the promise to sell concluded under the suspensive condition of obtaining a loan, of a maximum amount of the loan does not oblige the buyer to accept an offer from the bank of a lower amount.

A synallagmatic promise to sell a flat is concluded under the suspensive condition of obtaining a loan of a maximum amount of €414,000 over 25 years and at a rate of 2% per year excluding insurance. Having only obtained an offer of a loan of €407,000, the buyer renounced the sale. The seller is seeking an order that the buyer pay him €38,600 in respect of the immobilisation indemnity, considering that he was obliged to accept the loan offer which did not exceed the maximum amount provided for in the promise.

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The seller's claim is dismissed. The indication in the promise of a maximum amount of the loan was not such as to compel the buyer to accept any offer of a lower amount. In this case, the failure of the condition was not attributable to the buyer, since he had applied for a loan in accordance with the characteristics defined in the promise to sell, which had been refused by the bank. The promise had therefore become null and void.

Article 3

The cross-actions of the guarantor and the creditor in the test of prescription

The formal notice to pay sent by the creditor to the guarantor by registered letter with acknowledgement of receipt sets in motion the period within which the guarantor may act in liability against the creditor, even if the guarantor has not received this letter.

The five-year statute of limitations (C. civ. art. 2224; C. com. art. L 110-4) applies to the liability action brought by the guarantor against the creditor bank, whether it is for the latter's failure to fulfil its duty to warn (Cass. com. 1-7-2020 no 18-24.339 F-D: RJDA 2/21 no 123), its obligation to inform (Cass. com. 13-2-2019 no 17-28.425 F-D : RJDA 5/19 no 367), for disproportionality of the guarantee (Cass. com. 12-5-2004 no 02-10.653 FS-PB : RJDA 11/04 no 1288 ; Cass. 1e civ. 5-1-2022 no 20-17.325 FS-B : BRDA 5/22 inf. 16) or even for abusive breach of credit (Cass. com. 9-7-2019 no 17-28.792 F-D : RJDA 12/19 no 775) The starting point of this limitation period is set at the day when the guarantor knew that his commitment was going to be enforced because of the debtor's default (Cass. com. 8-4-2021 no 19-12.741 F-P: RJDA 8-9/21 no 603), this knowledge resulting from the formal notice sent by the bank to the guarantor (Cass. com. 12-5-2004 no 02-17.735 FS-PB: RJDA 11/04 no 1287; Cass. com. 4-5-2017 no 15-22.830 F-D: RJDA 10/17 no 653) or, failing that, a summons it served on him (Cass. com. 1-7-2020 no 18-24.339 F-D: RJDA 2/21 no 123).

If the formal notice is made by registered letter AR, the formal notice remains valid if the letter was returned to the sender with the mention "unclaimed" (Cass. 1e civ. 20-1-2021 no 19-20.680 P : BRDA 4/21 no 17). In this last decision, the Court of Cassation had specified that, being non-contentious in nature, the formal notice is not subject to the provisions of the Code of Civil Procedure which make the validity of the notification of procedural documents by registered letter subject to the signature of the receipt by the addressee. The solution, of general scope, which had then been applied to the formal notice of a borrower, also applies to the formal notice of the guarantor, as this new judgment indicates. It is therefore the date on which the registered letter is sent that starts the limitation period. Beware, when the guarantor invokes the bank's fault only to obtain the rejection of the payment claim made by the latter, this defence on the merits is not subject to prescription (Cass. 3e civ. 4-10-2018 no 17-15.601 F-D; Cass. 1e civ. 5-6-2019 no 18-13.226 F-D; in the same sense, Cass. 1e civ. 5-1-2022 no 20-17.325 FS-B applying prescription to the claim made by the guarantor against the bank even before being pursued by the latter).

Article 4

The termination of a contract may be pronounced for non-faulty non-performance thereof

Non-faulty non-performance of a contract may result in its termination and the return of the deposit paid on the non-performed service. Application to a contract not performed because of the health crisis

The party to whom the undertaking has not been performed may bring about the termination of the contract (C. civ. art. 1217). Termination may, in any event, be requested in court (art. 1227) and it puts an end to the contract (art. 1229, para. 1). If the services exchanged could only be of use by the complete performance of the rescinded contract, the parties must return to each other in full what they have obtained (art. 1229, para. 3). A service provider contracts to provide catering services to a company during an international trade fair to be held from 9 to 13 March 2020. The trade fair is postponed and then cancelled on 26 March 2020 following health measures taken by the public authorities to combat the spread of Covid-19. The company gave notice to the service provider to return the €150,000 deposit it had paid. The contractor refused, arguing that the contract had not been terminated. The company requests the cancellation of the contract and the return of the deposit.

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The Court of Appeal in Provence dismissed the claims for the following reasons: the contract provided for a deduction of 100% of the price of the services ordered in the event of late cancellation; although the cancellation of the trade show had prevented the service provider from performing its catering service, it had not prevented the company from fulfilling its obligation to pay the sums contractually provided for; although the non-performance of the contract had been total and of sufficient gravity, it could not be considered to be at fault since it had been caused by the cancellation of the trade show. The Court of Appeal could not rule in this way since it had noted that the services covered by the contract had not been performed. The Court of Cassation therefore censured this decision.

Article 5

The buyer of a property infested with parasites can only act on the basis of hidden defects

The buyer cannot act on the basis of the obligation to deliver and inform when the defect in the property constitutes a hidden defect. This is the case of a parasitic infestation that has destroyed the framework and joisting, leading to a risk of collapse.

A building to be rehabilitated as a dwelling house is sold. The buyer notes that the roof structure is infested with parasites and sues the seller for compensation for his loss on the basis of the obligation to deliver and the obligation to advise and inform. The judges dismissed his claim on the grounds that the parasitic infestation by woodworms had destroyed the main parts of the framework and joisting, leading to a risk of collapse, and that this defect could only constitute a latent defect.

Article 6

Starting point of the limitation period for the action of a builder against another builder

An action by a builder against another builder or his subcontractor shall be time-barred after 5 years from the date on which the client summoned the claimant builder for compensation for his losses.

A public housing office (OPH) entrusts the project management and rehabilitation of a building to a grouping that subcontracts part of the work to a company (Arcade). Following disorders, the grouping was condemned in 2016 by a judgment of the administrative court, confirmed on appeal on 15 March 2018. On 6 March 2018, the OPH sued another builder (Archibald), the subcontractor and its insurer before the court for reimbursement of the amounts paid. The Court of Appeal declared the claims to be time-barred after 5 years. It considers that this period began to run from the request for an interim expert opinion filed by the OPH on 13 September 2011. 

This decision was overturned by the Court of Cassation, which set out a reversal of case law. The judgment states that, by a judgment handed down in 2020 (Cass. 3e civ. 16-1-2020 no 18-25.915 FS-PBRI), it was held that the time limit for recourse by a builder against another builder or its subcontractor falls under Article 2224 of the Civil Code and is prescribed by 5 years from the day on which the builder knew or should have known the facts enabling it to exercise it. It was previously thought that this was the case for the summons for summary judgment issued by the client to the contractor. However, the Court of Cassation added that this rule obliged builders to lodge a warranty claim against other parties even before being summoned for payment by the client, with the sole aim of interrupting the limitation period. This practice posed a problem because the summons for an expert opinion suspends the limitation period, which starts running again from the day the expert opinion is carried out, and the 5-year period may expire before the 10-year period available to the client for compensation for damage. Considering that the multiplication of preventive appeals is detrimental to the proper administration of justice, the Court of Cassation considers that the case law should be modified.

It decides that, as the builder cannot act in warranty before having himself been summoned for payment or performance of the obligation in kind, he cannot be considered as inactive before the main claims are brought. It is therefore the writ of summons accompanied by a request for recognition of the right, even by provision, which serves as the starting point for the limitation period for the recourse action. In the present case, as the summons of the grouping against the subcontractor was delivered less than 5 years after the OPH's request to the administrative court for compensation of its losses, it was admissible.

Article 7

The ten-year warranty action is not open to the usufructuary

Although the usufructuary has the right to enjoy the thing, he is not the owner. The ten-year warranty action is therefore not open to him. He may, on the other hand, act on the basis of contractual liability under common law.

Stating on the action of a usufructuary against a company he had commissioned to carry out the metal framework and cladding of a building for commercial use, the Cour de cassation sets out two rules:

- the usufructuary, although holder of the right to enjoy the thing, is not its owner. He cannot therefore exercise, in his sole capacity, the ten-year warranty action which the law attaches to the ownership of the work and not to its enjoyment;

- the usufructuary may nevertheless act, on the basis of contractual liability under ordinary law, for compensation for damage caused to him by the improper performance of the contracts which he entered into for the construction of the work, including damage affecting the work.

The beneficiary of the ten-year guarantee is the master of the work, who has the right to build. The judgment under review limits the benefit of the ten-year guarantee to the person who has ownership of the thing. The solution is not new. In an earlier judgment, the Court of Cassation had already stated that the ten-year guarantee "constitutes a legal protection, attached to the ownership of the building" (Cass. 1st civ. 28-11-1967 no 65-12.642: Bull. civ. I no 348).

Article 8

Conditions for the application of the ten-year guarantee to photovoltaic panels

Photovoltaic panels that participate in the completion of the roofing work as a whole are covered by the ten-year guarantee when a fire risk affects the roofing of the building and makes it unfit for its purpose.

A company entrusts a specialised company with the installation of a solar energy production unit on the roof of a building, the roofing of which has been removed beforehand. The installation consists of photovoltaic panels equipped with connection boxes. The panels and boxes are supplied by specialised companies and the cabling of the installation is carried out by a subcontractor of the company. One year after acceptance and various incidents, the installation was shut down due to a serial defect in the connection boxes. The client sued the main contractor in the person of its liquidator and its insurer. The latter calls the other service providers and their insurers as guarantors.

Dismissed from his ten-year warranty action by the Pau Court of Appeal, the project owner appealed to the Supreme Court and raised two grievances. He criticised the Court of Appeal for applying Article 1792-7 of the Civil Code, considering that the photovoltaic modules constitute an item of equipment whose defect only affects the production of energy without affecting the solidity and purpose of the building. However, according to the client, a photovoltaic installation constitutes a structure whose function is to enclose and cover the building as well as to produce electricity.

He also criticises the Court of Appeal in that it held that the boxes had started to burn internally, but that this was not followed by any fire affecting the roof of the building, whereas the risk of fire is sufficient to bring the ten-year guarantee into play.

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These complaints are upheld and the Court of Cassation censures the appeal judgment. It first decides that by holding that the photovoltaic panels constituted an item of equipment, after having noted that they participated in the completion of the roofing work as a whole by ensuring a closed, covered and watertight function of the building, the court of appeal violated articles 1792 and 1792-7 of the Civil Code. It then held that the proven risk of fire in the roofing of a building made it unfit for its purpose. It censured the Court of Appeal on this point in the light of Article 1792 of the Civil Code.

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