Abstract
In 1994 and thereafter, the French judiciary set a trend by utilizing the causation theory to revoke the exemption clauses of liability that constitute a violation of the contract’s essential obligations. This utilization was intended to restore economic equilibrium to the contract, in order to achieve the benefit each party seeks from concluding a contract. However, in 2016, the new amendments of the French civil code -which were issued by decree no: 131-2016- abolished the causation theory in general. Nevertheless, they retained the previous French judicial trend based on causation theory, where Article 1170 of the new amendments states clearly “any contract term which deprives a debtor’s essential obligation of its substance is deemed not written”. However, Article 1170 of the new amendments did not specify what is meant by an essential obligation? When does the contract’s term result in depriving the debtor’s essential obligation of its substance? Moreover, Article 1170 consolidates an individual penalty which may cause many legal problems. These problems are: the matter concerns an essential clause in the contract and not a secondary one, the other clauses of the contract remain valid as they have been, without any modifications or replacements and, in some cases, abolishing the clause itself might lead to further imbalance in the contract. Therefore, the legal provisions of Article 1170 should be analyzed in an analytical approach along with the previous French judicial trend with respect to these provisions. As a result, the research illustrates the urgent need to amend Article 1170 of the new amendments, in order to contribute to the stability of the economic contractual equilibrium.
Highlights
This article is a codification of the case law of the French Court of Cassation which was based on the causation theory to restore contractual equilibrium by annulling any contract term which deprives a debtor’s essential obligation of its substance
While investigating the contract for the existence of a clause that deprives the essential obligation of the debtor of its substance, the penalty implied by Article 1170 of the NFCC for that is the consideration of the clause as “unwritten”; meaning, considering the clause as non-existent, or as if it has never been included in the contract
- Depending on the overall evaluation of the clause with a view to the other clauses of the contract and, as well, depending on the objective evaluation of the clause based on the general financial balance of the contract to evaluate the extent of the clause’s depriving of the essential obligation of the debtor of its substance leads to achieving the purpose sought by the legislature in consolidating the previous text, which is represented by restoring balance to the contract in specific cases when imbalance is grave
Summary
Article 1170 of the French Civil Code which was amended by Decree No 131-2016 on the 10th of February 2016 (NFCC) stipulates that: “any contract term which deprives a debtor’s essential obligation of its substance is deemed not written”.2 this article is a codification of the case law of the French Court of Cassation which was based on the causation theory (as contained in Article 1131 of the French Civil Code of 1804) to restore contractual equilibrium by annulling any contract term which deprives a debtor’s essential obligation of its substance. the utilization of causation theory was aimed to prevent the arbitrary terms in contracts generally depending on the general rules of contract theory. This is true, in case of some. Other jurists criticise it severely, on the basis that the French court of cassation’s case law was aimed at extending the legal protection against arbitrary terms to include professionals who were excluded from the scope of consumer protection law; as long as the NFCC provides the intended protection to professionals from arbitrary terms in contracts of adhesion under Article 1171,10 there is no need for enacting Article 1170 of the NFCC In response to these criticisms, the scope of application of Article 1170 appears to be completely different, as Article 1170 did not even use the phrase “arbitrary terms”, which was in order to ensure that this provision applies only to contract terms that deprive the debtor’s essential obligation of its substance, and not as a means of preventing arbitrary terms in contracts generally, including contracts of adhesion. This requires us to study the scope of the application of this article and the legal terms for this article’s application and the resulting penalty
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