The determination of the object of the contract is an essential clause in the rights of “civil law” and whose importance is often paradoxically underestimated. This is so in the English or American style of drafting, where the subject
The price can be determined in the contract, or through a framework contract. It may result from tariffs or general conditions, which poses various problems both with regard to the general theory of contracts, and the essential conditions of consent, as well as the potestativity or unilaterality of the power to determine the price, and the right to the consumption.
Many contracts are spread over time, whether it is a service that cannot be performed instantly (construction of equipment, factories, infrastructure, etc.) or whether it is successive services (supply contract for example). It is therefore a matter of stipulating clauses which allow the price to be adapted to changes in the monetary, economic or legal and fiscal context.
The purpose of the monetary indexation clause is to adapt the price to currency fluctuations.
The economic indexation clause uses a formula which will cause the price to evolve according to an index reflecting the general evolution of prices in the sector, or upstream of the contractual relationship, or in general.
The price revision clause intervenes to take into account a substantial modification of the balance of the contract, which exceeds foreseeable fluctuations. In the absence of such a clause, often qualified as a “hardship clause”, the question of unforeseeability will arise.
The price increase clause intervenes to take into account the evolution of the legal and fiscal context, variations in the bases or the tax rate.
In the practice of banking contracts, these are so-called change of circumstances clauses. (changes in circumstances)
Payment of the Price
Payment of the price is often not made when signing the contract. It is therefore necessary to provide for the terms, in a way that is all the more secure as this payment will be subsequent to the performance of the service by the other party.
The payment can be accompanied either by personal sureties (sureties) given either by the debtor of the obligation, or by a third party, or real, movable or real estate sureties.
The guarantees can be either conditional or unconditional (guarantees on first demand).
Retention of title
Retention of title clauses are often the subject of a consent formalism. Their effectiveness in the event of financial difficulties depends on the applicable receivership law.
The purpose of confidentiality clauses is to allow the provision of information within the framework of respect for business secrecy, the protection of know-how and the economic value of information.
The determination of the information covered by the clauses must be the subject of particularly careful drafting.
The issue of sanctions for violations, especially in cases of violations through third parties (subcontractors, employees or agents) requires cascading commitments to strive to ensure the effectiveness of the clauses. Personal use of information, especially after a breakdown in talks, is particularly difficult to avoid, opening the door to negotiations whose sole purpose is in fact economic espionage.
The intuitus personae reflects the personal character of the contractual relationship that is established. To maintain the privileged nature of the relationship, so-called intuitus personae clauses may restrict the possibility of ceding the benefit of the contract or of maintaining the relationship when there is a change of control.
The parties can stipulate that the execution of the contract will be done in good faith, thus reinforcing the obligations of good faith and loyalty of the common law. This stipulation may be accompanied by an amicable composition clause.
The stipulation of penalties intended to sanction the violation of obligations comes up against the possibilities of reduction of these clauses by the judge when they clearly exceed the damage, either real or foreseeable according to national laws.
The duration during which the parties are committed must be clearly indicated, both for the main obligations and for the ancillary obligations which may begin after the end of the main obligations (non-compete for example).
The duration can be indefinite, with stipulation of a notice, or fixed. In this case, it may be renewable, except prior notice.
A fundamental principle of contract law is the non-performance exception. However, the terms differ or require clarification.
English and American law are aware of anticipatory breach . They also distinguish between the event of default and the declaration of default.
French law requires formal notice under certain conditions.
The purpose of force majeure clauses is to extend, or sometimes to restrict, the conditions under which non-performance can be justified. French case law requires that the event be unforeseeable, insurmountable and external. The common law refers to the ” Act of God ” and otherwise excuses non-performance when consideration cannot be obtained under the ” frustration of contract “.
Various notions of fairness can also lead to similar results, such as the doctrine of apologies in Koranic law.
The stipulation of force majeure clauses makes it possible to include events, such as a strike in the company or in the sector, which would not otherwise be an exempting event. In general, the drafting of clauses will deal with aspects of unpredictability, insurmountability and exteriority.
Non-competition clauses are particularly dangerous insofar as they are the only obligations to do which case law ensures effectiveness through forced execution.
If case law limits their validity with regard to competition law, when their validity is recognized, they have a particularly draconian effect.
Arbitration can be either ad hoc or by reference to the rules of an institutional arbitration body.
In the event of ad hoc arbitration, the terms of appointment of the arbitrator or the arbitral tribunal, the procedure and the costs of the arbitration must be specified;
Arbitration and Dispute Resolution
A conciliation phase prior to referral either to the arbitral tribunal, in the event of an arbitration clause, or to the courts may be provided for. Rules of arbitration institutions often have optional conciliation procedures.
The amicable composition clause allows arbitrators to rule on an equitable basis.