Case:
D. 1998, 563 Case Malvezin v. Mme Grostabussiat Subsequent Developments
Date:
07 October 1998
Translated by:
Tony Weir
Copyright:
Professor B. S. Markesinis

The Court:

Given that on 17 June 1981 M. Malvezin acknowledged in writing that he owed his wife a sum of money repayable on three months notice and that on 14 June 1989, after their divorce, Mme Grostabussiat, as she now was, agreed in writing that the loan be repaid to her in the form of an increase in the alimony which her ex-husband was paying her;

Given that the decision below (Versailles, 23 February 1996), which avoided the agreement of 14 June 1989 and granted the ex-wife’s claim for repayment of the loan, is attacked by M. Malvezin on the ground, first, that in view of article 1131 Code civil the decision had no statutory basis in that it did not find that the main purpose of the agreement was to effect illicit tax deductions rather than to prorate repayments of the loan which was demandable in full at any time, and secondly that a contract cannot be avoided for illegality unless both parties were agreed on its principal purpose, whereas it was clear from the admitted fact that Mme Grostabussiat included in her tax return the full amount received from M. Malvezin that it could not have been her main aim that M. Malvezin should be able to deduct these sums, so that in holding that the agreement was based on an unlawful cause, the Court violated the article cited;

But given that a contract may be avoided for illegality or immorality even if one of the parties was unaware of the illegality or immorality of the principal purpose of the contract; Mme Grostabussiat was entitled to demand that the agreement of 14 June 1989, unlawful in that it was designed to permit M. Malvezin to make illicit tax deductions, be held void, so that the Court of Appeal justified its decision in law without having to engage in the futile investigation mentioned in the application for review;

For these reasons DISMISSES the application.

Subsequent Developments

This note on subsequent developments reflects the legal situation as of October 2004.

Civ 1, 7 October 1998 [Bull I no 285, Dalloz 1998, Jurisprudence pp 563/564, JCP G, Jurisprudence II no 10202 and Gazette du Palais, 5 and 6 April 1998, pp 643 to 646]: "A contract can be annulled because of illegal or immoral cause even when one of the parties did not know of the illegal or immoral character of the determining motive for the conclusion of the contract". Case law maintained.

Cf "Les grands arrets de la jurisprudence civile" (Leading judgments in civil case law) (op cit no 157): "anxious to procure legality for contracts and juridicial security, the higher courts have chosen a middle way for a long time", requiring until this point that "the illegal motive which had guided one of the parties" should be "determining and known to the other contracting party". However, the criticisms of this concept by legal writers have led the Cour de cassation to abandon this latter requirement by this reversal of the 7 October 1998, which has not since been the subject of a confirmatory or contradictory judgment. It is however possible to cite a judgment given in a related sphere by the commercial chamber on the 24 October 2000 (Bull no 163) under the terms of which it does not matter whether one of the parties to the agreement (entente) had known or not of the anti-competitive character of the prohibited practices; the nullity provided for by article L 420 3 of the Commercial Code arose from the ordre public and was capable of being invoked by anyone.

Translation by Mr Raymond Youngs

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