Or unpredictable unpredictability
A contract of enterprise is concluded between two companies for a period of five years for the maintenance of commercial vehicles for an annual fee. During the performance of the contract, an unforeseeable increase in the cost of raw materials occurs, which has an impact on the price of spare parts. The service company is no longer able to pay the royalty under its contract.
Is it possible to revise this contract of enterprise for changes in economic circumstances?
State of affairs before the reform
Civil jurisprudence has long been reluctant to accept the theory of unforeseen circumstances on the basis of the binding force of the contract.
By numerous decisions, the Court of Cassation has rejected the possibility for the parties to revise the contract for unforeseen circumstances since the famous Canal de Craponne judgment of March 6th 1876.
Against all odds, by a judgment of June 29th 2010, the Court ruling in summary proceedings seemed to draw the contours of a right to review for unforeseen circumstances. It will suggest that changes in economic circumstances have the effect of unbalancing the general scheme of the contract as intended by the parties when it was signed and depriving the service company of any real consideration for the commitment it has entered into.
This judgment has never been published.
The consecration of the theory of the unpredictability
It was not until the order of February 10th 2016 that the legislator enshrined the theory of unforeseen circumstances and introduced an article 1195 into the Civil Code.
Its application requires the fulfilment of three conditions:
First, it must be demonstrated that the change in circumstances was unforeseeable at the time the contract was concluded.
Secondly, the change in circumstances must make the performance of the contract excessively onerous.
Finally, the parties must not have agreed to bear the risks of unforeseen circumstances.
It is not surprising that the review for unforeseen circumstances that undermines the binding force of the contract is a strictly circumscribed process.
The party no longer able to perform its obligations must request a review of the contract. The parties then have two options: they can agree on the termination of the contract on the date and under the conditions they determine, or they can ask the judge by mutual agreement to adapt it.
If no agreement is reached within a reasonable period of time, the judge may revise the contract or terminate it at the request of a party on the date and under the conditions set by the judge.
What about the application of the theory of the unexpected today?
Recent case law does not yet mention a concrete application of the revision for unforeseen circumstances on the basis of Article 1195 of the Civil Code.
The strict conditions of application of the theory of unforeseen events make its application difficult or even impossible.
In this context, can we consider this to be an illusory recognition?
In the best of all worlds, the party no longer able to fulfil its obligations can try to reach a settlement with the other party for the revision of the contract and go through the amendment process.
So what about the theory of unpredictability?
Are you those of these supporters faithful to the respect of the binding force of the contract or do you think that the enshrinement of this theory is a real and positive step forward?