Compensation for sudden termination of an established commercial relationship
Termination of a service contract
In this ruling handed down by the Commercial Chamber of the French Supreme Court on September 4, 2024 (appeal no. 23-10.446), the Court dismisses the appeal lodged by GRG against a ruling by the Paris Court of Appeal dated October 5, 2022. Mecarungis had sued GRG for damages for the brutal breach of an established commercial relationship following the termination of a service contract.
Key points of the ruling
Termination of an accounting services contract
GRG, a partner and client of Mecarungis, had terminated a contractual relationship for the provision of services, which led Mecarungis to claim damages for the brutal termination of an established commercial relationship.
The monopoly of chartered accountants
GRG argued that Mecarungis’s business constituted a service falling within the monopoly of chartered accountants and that, consequently, the rules governing the sudden termination of commercial relations could not be applied.
GRG also argued that the contractual relations between Mecarungis and its members, the company’s shareholders, should not be subject to the rules on the sudden termination of established commercial relations.
The activity does not fall within the remit of a chartered accountant
On the first point, the Cour de cassation confirmed that Mecarungis’ activity did not fall within the scope of a chartered accountant within the meaning of Ordinance no. 45-2138 of September 19, 1945. In fact, Mecarungis confined itself to managing the central fund and monitoring invoicing on behalf of its members, without carrying out a full accounting or auditing assignment.
The rules governing sudden termination of established commercial relations apply even between shareholders.
On the second plea, the Court ruled that the rules governing the sudden termination of established commercial relations applied, since the relationship between GRG and Mecarungis concerned the provision of services, irrespective of the fact that GRG was a shareholder in Mecarungis.
Conclusion
The French Supreme Court rejected GRG’s appeal, confirming the decision of the Court of Appeal, and ordered GRG to pay Mecarungis 202,700 euros in damages, plus 3,000 euros under article 700 of the French Code of Civil Procedure.
This ruling reaffirms the principle that the rules governing the abrupt termination of established commercial relations can be applied even between companies with capital ties, as long as the commercial relationship is based on the provision of a service.
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