We help new exporters over the first hurdles in what may otherwise seem to be a strange and difficult new area.

Persons doing business in France should be very cautious.  

To give an example, we introduce herebelow how French judges interprate contracts (A).  The literal scope of a contract might be expanded or reduced: "the French implied terms" (B).  Finally, we deal with the interpretation of contracts governed by a foreign law (C).

For any question or assistance, please contact us at our Paris office (24 rue de Prony 75017 Paris), Bordeaux office (163 rue Manon Cormier 33000 Bordeaux) or through our contact email address contact@legal-export.com.


A/ Interpretation of contracts

In most contracts, interpretation is unavoidable to give a meaning to the relevant text in order to enable its performance in accordance with the intention of the parties.

Interpretation of a contract by a French judge is not limited to its explanation.  Certain contracts also prove to be incomplete because the drafters did not or could not anticipate all possible events or difficulties which could have arisen in the course of their performance.  The role of the judge will be, in such cases, not only explanatory but creative.  

There are basically two methods of interpretation which are used today in a complementary manner by the Courts in France.  Such methods are referred to as the subjective and objective methods.  

In the first method (subjective), the judge will discover the common intention of the parties and will look  beyond the terms of the contract to find this intention.

The objective methods recommend that the judge interprets the contract not by referring to the common intention of the parties but by applying principles such as good faith, equity and business usages, concepts which are independant in the modern theory and which are not only a conseuqnece or a continuation o the parties' will.

These two theores are combined by the courts.

The basis for the subjective method can be found in article 1156 of the civil code which suggests that the judge discover the common intention of the parties :

"One must in agreements seek what the common intention of the contracting parties was, rather than pay attention to the literal meaning of the terms."

As the judge does not have any particular means of investigation and cannot refer for example to to preparatory works, the legislator laid down a few guidelines which can be foudn in articles 1157 through 1164 of the civil code.

Articles 1157 and 1158 suggest that the judge apply good sense to the interpration exercise in order to get as close as possible to the intention of the parties.

B/ French implied terms

Article 1135 of the civil code indicates that:

"Agreements are binding not only as to what is therein expressed, but also as to all the consequences which equity, usage or statute give to the obligation according to its nature."

This article has often been used by a judge to fill a contractual gap.  In such cases, the judge may apply either a provision of the civil code relating to the legal regime of a given contract or the commercial usages or a principle which appears to be just and equitable.

Article 1135 of the civil code has alos been used to expand the scope of a contract.  The courts for example considered that under a transport contract, the carrier had a duty to bring people safely to destination.  Though it was uargued that such an obligation was to be found in the common intention of the parties, the courts were in fact guided by a principle of equity and justice.  They wanted to reverse the burden of proof which a victim could hardly establish.

The obligation for certain contracting parties to provide information to the other party, mainly on the effects and consequences of the contracts also has its foundation in the principle of equity or in the principle of good faith which is countained in article 1134:

" Agreements lawfully entered into take the place of the law for those who have made them.  They may be revoked only by mutual consent, or for causes authorized by law.  They must be performed in good faith."

Many examples of this duty can be found in contracts with consumers or between professionals and non professionals.  Bankers, for example, must inform their customers of the risks associated with certain derivatives contracts contracts or with the taking of position on certain regulated markets.  The seller of dangerous products has also a duty to inform the user on how the products should be utilised.

Finally, one should bear in mind that teh scope of contracts may be reduced by application of the principle of public policy or by application of the laws enacted for the protection of the consumers.


C/ Interpretation of contracts governed by a foreign law

As a general principle, French courts will recognise the choice made by the parties and apply the law which governs their agreement.  Exceptions to this principle can be found in the French rules or public order or more generally, mandatory rules which cannot be avoided by the parties in a private agreement.

When it is established that the law governing a dispute contract is a foreign law, evidence of its contents must be brought before the court.  In that respect, it has always been considered that the budern of proof lies with the parties to the case.  However, the judge is entitled to gather information on the contents of the foreign law and the Code of Civil procedure contains a number of provision which enable the judge to take measures (art. 10, 143 and 200).

For example, the judge may request expert evidence or look for consultation.  He is also authorised to apply his own knowledge of the foreign law to the relevant case.  There is no rule regarding evidence.  The contents of a foreign law may be established by any means.  One common method is to produce an affidavit of foreign law which does not have to be issued by an official body.