High Court Limits Recovery for Wrongful Termination of Negotiations | La Cour de cassation limite l’indemnisation de la rupture abusive de négociations

by Morgan Lewis
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[authors: Alexandre Bailly, Aude du Parc, Xavier Haranger, and Coline Warin]

Court holds that parties cannot be compensated for loss of opportunity to perform a contract where there is no firm and binding agreement.

On 18 September, the French Supreme Court for Judicial Matters (Cour de cassation) issued its ruling in Paul Boyé technologies (Boyé) v. Sagem défense sécurité (Sagem),[1] finding that a wrongful termination of mere negotiations does not give rise to compensation for the loss of chance to perform a contract. This decision confirms the precedent set by the High Court in Manoukian v. Stuck,[2] in which the Court ruled that compensable damages in a case of wrongful termination of negotiations were limited to the loss suffered. As a result of this decision, the amount of damages that may be awarded to the aggrieved party in these cases is severely limited.

Background

Boyé, a French company manufacturing army combat uniforms, executed a contract with Sagem to design a uniform for the Directorate for Armament, the French defence procurement agency. After completing the design, Sagem and Boyé entered into negotiations to outsource the manufacturing of the uniforms, which occurred over the years 2003 and 2004. However, no contract regarding the manufacturing was executed.

Sagem later informed Boyé that it would not be working with Boyé to manufacture the uniforms. Sagem contended that Boyé was not able to provide the uniform prototypes by the requested date set by the Directorate for Armament. The manufacturing of the uniforms was then outsourced to cheaper competitors. Boyé filed suit claiming damages for the wrongful termination of the relationship.

High Court's Findings

In deciding the Boyé case, the Court confirmed its holding in Manoukian, which found that a wrongful termination of precontractual negotiations could not give rise to damages for the loss of chance to perform a contract, except where a firm and binding agreement existed between the parties.

In Boyé, the executed contract concerned the design of a military uniform only, while the subsequent terminated negotiations concerned the outsourcing of the manufacturing of the uniform. Because the design and the outsourcing of manufacture were two different projects and because there was no firm and binding agreement as to the outsourcing, the exception for firm and binding agreements raised in the Manoukian case was not applicable to the agreement in Boyé.

Implications

Prior to Manoukian and Boyé, when a sudden breach of negotiations occurred, certain court decisions allowed the aggrieved party to receive compensation for the loss of chance to enter into the contract with a portion of the anticipated profit from the performance of the contract. However, there had never been a clear solution as to the amount of damages that could be awarded if no firm and binding agreement had been reached by the parties.

Under the Court's recent decision, if there is no firm and binding agreement, the compensation for breach of the negotiations will be limited to the actual loss suffered, i.e. the costs incurred and, if any, the damage to the image of the affected party. Therefore, in order to protect their rights of recovery, parties involved in long negotiations should execute a preliminary contract setting forth the amount of damages that may be awarded in case of wrongful termination of the negotiations on the main contract.


[1]. Cour de cassation [Cass.] [supreme court for judicial matters] com., Sept. 18, 2012.

[2]. Cour de cassation [Cass.] [supreme court for judicial matters] com., Nov. 26, 2003, Bull. civ. IV, No. 186.

 

La Cour juge que les parties ne peuvent pas être indemnisées pour la perte de chance d'exécuter le contrat lorsqu'il n'y a pas eu d'accord ferme et définitif.

Le 18 septembre, la Cour de cassation a rendu un arrêt Paul Boyé technologies (Boyé) c/ Sagem défense sécurité (Sagem),[1] jugeant qu'une rupture abusive de simples négociations précontractuelles ne donne pas lieu à indemnisation pour la perte de chance d'exécuter le contrat. Cette décision confirme la jurisprudence antérieure de la Haute Cour Manoukian c/ Stuck,[2] dans laquelle le préjudice indemnisable en cas de rupture abusive de négociations était limité à la perte éprouvée. En conséquence de cette décision, le montant de l'indemnisation qui peut être allouée à la partie brutalement éconduite lors de négociations est fortement limité.

Rappel des faits

Boyé, une société fabricant des tenues militaires, a signé un contrat avec Sagem portant sur la définition d'une tenue de combat pour la Direction Générale de l'Armement. Une fois la définition achevée, Sagem et Paul Boyé ont entamé des négociations pour sous-traiter la fabrication des tenues. Ces négociations se sont déroulées au cours des années 2003 et 2004; cependant, aucun contrat concernant la fabrication n'a été signé.

Sagem a par la suite informé Boyé qu'elle ne travaillerait pas avec cette dernière pour fabriquer les tenues. Sagem a soutenu que Boyé n'était pas en mesure de fournir les tenues à la date exigée par la Direction Générale de l'Armement. La fabrication des tenues a alors été confiée à un concurrent meilleur marché. Boyé a intenté une action afin d'obtenir des dommages et intérêts en réparation des préjudices résultant de cette rupture.

Décision de la Cour de Cassation

Dans l'arrêt Boyé, la Cour de cassation a réaffirmé la jurisprudence Manoukian, selon laquelle la rupture abusive de négociations précontractuelles ne peut pas donner lieu à indemnisation de la perte de chance de conclure le contrat ; sauf s'il existe un accord ferme et définitif entre les parties.

Dans l'arrêt Boyé, l'accord signé portait seulement sur la définition d'une tenue de combat, alors que les négociations subséquemment rompues concernaient la sous-traitance de la fabrication de la tenue. Puisque la définition et la sous-traitance de la fabrication étaient deux projets différents, et parce qu'il n'y avait pas d'accord ferme et définitif sur la fabrication, l'exception prévue dans l'arrêt Manoukian ne semble pas transposable à l'arrêt Boyé.

Conséquences juridiques

Avant les arrêts Manoukian et Boyé, lorsque survenait une rupture brutale des négociations, certains arrêts accordaient à la partie lésée une indemnisation pour la perte de chance de conclure le contrat, incluant une fraction du profit espéré de l'exécution du contrat. Cependant, il n'y avait jamais eu de solution claire quant-au montant des dommages et intérêts qui pouvaient être alloués lorsque la rupture intervenait avant la conclusion d'un accord ferme et définitif.

Après cette décision récente de la Cour, s'il n'y a pas d'accord ferme et définitif, l'indemnisation de la rupture des négociations sera limitée à la perte subie, i.e. les coûts engagés et, le cas échéant, l'atteinte à l'image du négociateur brutalement éjecté. Par conséquent, afin de protéger leurs droits à indemnisation, il est fortement recommandé aux parties de conclure un avant-contrat prévoyant le montant de dommages et intérêts qui seront alloués en cas de rupture abusive des négociations sur le contrat principal.


[1]. Cour de cassation [Cass. com.], Boyé c/ Sagem, 18 septembre 2012.

[2]. Cour de cassation [Cass. com.], Manoukian c/ Stuck, 26 novembre 2003.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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