CIVIL BULLETIN

FACTS AND POINTS CONSIDERED

Prior to this case, the Court of Cassation had held on several occasions that various types of commercial contracts, and particularly those relating to the long-time supply of substances such as beer to retailers or petrol to petrol stations, were null and void because annual price variations were fixed on the basis of, inter alia, the supplier’s general tariff. The motive was one of protecting the purchaser, perceived as being in a weak bargaining position as against the supplier; and the decisions were based on Article 1129 of the Civil Code, which provides, inter alia, that the extent of the subject matter of an obligation must be at least determinable. Before this line of cases, it had not been thought that this article applied to the determination of a price, since, in respect of sales contracts at least, the matter is governed by Article 1591. This case, decided by the full court, and dealing with the fixing of rental for telephone equipment, states quite bluntly that Article 1129 does not apply to the question of the determinability of price.

THE COURT, meeting in plenary session at the public hearing of 24 November 1995,

As regards the only argument pleaded, taken in its two limbs;

Whereas, according to the affirmative judgement brought before this Court (Rennes, 11 February 1993), (1) on 27 August 1987, with a view to running a hotel, , Le Montparnasse (an incorporated partnership) leased from the Compagnie Armoricaine de Télécommunications, whose rights have been taken over by GST-Alcatel Bretagne (Alcatel), a telephone system for a period of 10 years; (2) in January 1990, Le Montparnasse sold its business and the purchaser did not wish to take on the telephone system; (3) Alcatel brought an action against Le Montparnasse for payment of compensation for termination, as set out in the contract;
Whereas Le Montparnasse challenges the judgement for rejecting the plea of nullity of the contract and its supplements, based on the uncertainty of the price of part of the “ services” stipulated in the contract, whilst, according to the argument, on the one hand, (1) “in the meaning of article 1129 of the Civil Code, a price whose determination refers to parameters which are insufficiently precise is neither certain nor determinable” (2) in this instance, article 2 of the agreement of 27 August 1987 provides that any extension to an installed system will be subject to an increase in rent, determined with reference to the supplier’s price increase since the last fixing of base prices, as well as in relation to the index of contractual prices, or, if the application of the index is temporarily suspended, according to the substitution formula or the statutory or regulatory coefficient of increase set by the public authorities; provided that these same index variations can be applied both to the material added to the system being leased or supplied, and to labour costs, if, following “certain circumstances”, the material supplier’s increase cannot be duly established; (3) therefore, by going no further than stating that the parameters thus defined could not be controlled by the parties, and by consequently coming to the conclusion that it was perfectly possible to determine the increase in the initial rent resulting from the extension of the system, without investigating whether, through its obscurity and complexity, the calculation method provided by the contract made it impossible for the lessee, bound by an exclusivity clause, to know the rate of increase, the Court of Appeal has deprived its decision of all legal basis with regards the aforementioned text; and since, on the other hand, (1) for a contract to be valid, it is necessary that the extent of the subject of the obligation resulting from that contract be determinable; (2) in this instance, it is indisputable that the lessee was bound to deal with the lessor for any extension, the setting up of which was dependent, pursuant to the last part of article 3 of the contract of 27 August 1987, on the payment of the rent requested by the supplier; (3) consequently, by refraining from investigating if, when the supplementary agreements prepared in case of modification or extension of the initial system were signed, the prices could be freely negotiated and accepted by the parties, the Court of Appeal has deprived its decision of all legal basis with regards to article 1129 of the Civil Code;

But whereas (1) article 1129 of the Civil Code is not applicable to the determination of the price and (2) the Court of Appeal is not seized of a claim for rescission or compensation for abuse in the fixing of the price, that Court’s decision has a legal basis;

ON THESE GROUNDS
DISMISSES the Appeal;

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