Cour de cassation Commercial chamber, 7 April 2009 - Decision N°08-12.832 (Castel Blomme v. SA Martelle)

This decision concerns the interpretation of a gross misconduct in a commercial agency contract.

A company terminated the contract of one of its commercial agent. The commercial undertook legal action against the company to claim indemnities.

The Court of appeal of Amiens (November 15,2007) ruled that the agent had committed serious negligence and therefore had no right to indemnities. The Court of appeal ruled that certain negligence notified in the termination letter could be qualified as gross misconducts. The alleged misconducts were the followings:

- Late transmissions of orders,

- indication in the order of a price inferior to the real price,

- absence of delivery of goods which had been billed,

- inappropriate storage conditions for the goods,

The former commercial agent appealed before the Cour de Cassation (French civil and commercial Supreme Court).

The Supreme Court, overruled the Court of Appeal's decision. The French Civil Supreme Court held that the Court of Appeal should have studied if the acceptance of certain behaviors during the execution of the contract by the principal could impact on the gravity of the alleged negligence.

For the French Civil Supreme Court, the tolerance of the Company during the execution of the contract might temper the appreciation of the Agent's misconducts. This protecting position of the Supreme Court for the agent could in fact encourage the Principal to be less tolerant with the Agent and to notify each misconducts or minor errors.

The principals need to be cautious. They need to notify all misconducts to their agent to facilitate the proof of serious negligence if the agency contract needs to be terminated on this basis in the future.

Article written by Olivier VIbert, Attorney, Paris, France

This article has been published in the European Journal of commercial contract law EJCCL