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The clause of post-contractual non-competition stipulated in a commercial agent contract must be proportionate

The clause of post-contractual non-competition stipulated in a commercial agent contract must be proportionate

On the occasion of an order rendered on 23 September 2014, the Court of Cassation came to specify that besides the conditions of validity set out in article L 134-14 of the Commercial Code, a clause of non-competition stipulated in a commercial agent contract must be proportionate.

In effect, article L134-14 of the Commercial Code stipulates that a clause of non-competition inserted into a commercial agent contract:

–        must be established in writing,

–        cannot exceed two years after the termination of the commercial agent contract,

–        must concern the geographical sector of the commercial agent, even the group of people entrusted to the commercial agent and the goods or services for which the commercial agent has been mandated.

By this judgement delivered by its commercial chamber, the Court of Cassation adds, for the first time to our knowledge, a new criterion to those stipulated by the law.

In the present case, the principal, a company practising a consulting activity in communication, edition and operational marketing, had entered into with a commercial agent a permanent contract for marketing with a clientele of manufacturers, of advertising space in the magazines that it edited. In this contract, was contained a clause of non-competition prohibiting the agent “from practising the same professional activity for a duration of two years from the breach.”

After having recalled the conditions of validity posed by article L 134-14 of the Commercial Code, the Court of Cassation adds “any clause of non-competition which is not proportionate is invalid, moreover, i.e. that which is not justified by the legitimate interests to protect, considering the subject of the contract, or which, not being sufficiently limited in time and in the present case, excessively jeopardises the freedom of exercise of the profession of the debtor of the obligation.

The Court of Cassation then approves the decision of the Court of Appeal to have declared this clause null and void, the agent can no longer “exercise his/her profession of agent of sale of advertising space in any sector and over the entire national territory during this period,” which is a total prohibition of exercising his/her profession for the agent.

The Court of Cassation appears therefore to add a new condition to article L 134-13 of the Commercial Code by referring to a proportionality requirement

For the Supreme Court, this proportionality must be assessed with respect to the legitimate interests of the principal that the latter intends to protect by the insertion of such a clause that in respect of the infringement of the liberty of the agent, this infringement should not result in total prohibition of exercise of his/her profession by the agent.

As this order is not published in the bulletin, it would be advisable, however, to see if such a solution is confirmed by the Court of Cassation during future decisions.

If this is the case, this will inevitably give greater power to the judges in assessing the validity of the clauses of post-contractual non-competition contained in the contracts of commercial agents.

 

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Specialised in commercial agent law and managing over a long time the issues linked to the breach of commercial agent contract, FOUSSAT AVOCATS advices and assists its clients throughout the life of their commercial agent contracts, including in the event of international contracts, as well as concerning their conclusion, execution and cessation.

We are therefore at your disposal for any additional information that you may wish.

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