Framework agreement: definition, clauses and long-term management

The framework agreement is defined by Article 1111 of the French Civil Code, introduced by Ordinance No. 2016-131 of 10 February 2016 and applicable since 1 October 2016: “A framework agreement is an agreement by which the parties agree on the general features of their future contractual relationship. Implementing contracts set out the terms of its performance.”

The text therefore sets two levels. The first sets the general rules of the relationship. The second specifies performance, transaction by transaction.

The mechanism meets a simple need: not reopening the discussion with each order. It is found, for example, in recurring purchasing, distribution or repeated services relationships. The name of the document is not enough: what matters is its content, and classification is a matter of legal analysis.

The implementing contract can take various forms depending on the relationship: an order, a purchase order, a work order, or a specific contract. Article 1111 sets neither its form nor its name.

The French Civil Code sets no general rule of precedence between the two levels. In practice, it is first the documents signed by the parties that organize how they fit together. Other provisions do, however, shed light on the link between several contracts:

• Interpretation. Under Article 1189, where, in the common intention of the parties, several contracts contribute to the same transaction, they are interpreted in light of that transaction.
• Termination of one contract. Under Article 1186, where several contracts are necessary for the same transaction and one of them ceases to exist, the contracts whose performance becomes impossible, and those for which it was a decisive condition of a party’s consent, may lapse. Lapse (caducité) requires that the party against whom it is invoked knew of the overall transaction when giving consent.
• Modification. Under Article 1193, contracts may only be modified or revoked by mutual consent of the parties, or on grounds authorized by law.

These provisions describe a general framework. How they apply to a given contract depends on its wording and the facts, and is a matter for your counsel.

The framework agreement has its own rule on price. Article 1164 of the French Civil Code provides that the parties may agree that the price will be set unilaterally by one of them, provided that party justifies the amount if it is challenged.

In the event of abuse in setting the price, a claim for damages and, where appropriate, for termination of the contract may be brought before the court. The report to the President of the Republic on the 2016 ordinance links this provision to the plenary assembly judgments of the French Supreme Court (Cour de cassation) of 1 December 1995.

This mechanism requires the parties’ agreement. It does not remove the need to know, for each order, which price was applied and why. It is a tracking point in its own right.

The French Civil Code does not provide a list. Practice does, however, show recurring topics, to be reviewed with a lawyer depending on the relationship. This list describes topics and does not suggest any drafting:

• the purpose and scope of the relationship;
• how implementing contracts are placed and accepted;
• the order of precedence between the framework agreement, its annexes, its amendments and the implementing contracts;
• the price or how it is determined, and its revision;
• whether or not there is exclusivity or a minimum volume;
• the term, renewal and end of the relationship;
• what happens to ongoing implementing contracts when the framework ends.

For a reviewer or a buyer, the useful question is where each rule sits. A condition may appear in the framework agreement, in an annex, or in the order. Tracking starts with this mapping.

The framework agreement follows the general rules on duration of the French Civil Code, unless a specific statute applies:

• Perpetual commitments are prohibited (Article 1210).
• For an open-ended agreement, either party may terminate it at any time, subject to the agreed notice or, failing that, reasonable notice (Article 1211).
• For a fixed-term agreement, the contract must be performed until its term, and no one may demand its renewal (Article 1212).
• An extension requires the parties to express their intention before expiry (Article 1213).
• Renewal gives rise to a new contract with identical content, but of indefinite duration (Article 1214).
• Tacit renewal (tacite reconduction) results from continued performance after the term, and has the same effects as renewal (Article 1215).

The term of the framework agreement is therefore not just an administrative date. Continuing to place orders after that date may raise a legal question, to be submitted to your lawyer. In addition, Article L. 442-1 of the French Commercial Code makes a party liable if it abruptly terminates an established commercial relationship without sufficient written notice.

A framework agreement is negotiated once and lived with for years. Meanwhile, the team that negotiated it changes, and the people placing orders have not always read the original text. Several gaps then appear:

• Scattered applicable terms. The framework, its annexes, its amendments and the orders live in different places.
• Diverging conditions. An order uses old rates or a different lead time, without anyone noticing.
• Unmeasured commitments. A minimum volume or a cap exists on paper, but no one tracks consumption.
• Forgotten revisions. A price revision date or formula passes without being applied or discussed.
• A term discovered too late. Orders continue while the framework is reaching its end date or has already passed it.

A few organizational habits reduce these gaps, whatever the tool:

• Keep the documents together. The framework agreement, its annexes, its amendments and the implementing contracts must be findable together.
• Maintain a summary sheet. Dates, notice, price, revision, commitments, owner, with a reference to the source of each piece of information.
• Appoint an owner. One person must be accountable for the deadline, the revision and the relationship with the partner.
• Schedule the dates. The term, the notice and the revisions must trigger a reminder early enough to leave time to decide.
• Frame how orders are placed. Business teams must know which framework applies, and whom to consult when there is a discrepancy.
• Track changes. Each contract amendment must be linked to the framework, and the summary sheet updated the same day.
• Review periodically. A regular check-in with the partner and the users helps compare the contract with its performance.

To check the status of several framework agreements at once, you can rely on our contract audit method.

You can standardize a framework agreement and its annexes as templates, then generate orders and amendments from the same clauses approved by legal. The contract, its amendments and its supporting documents stay filed in its folder, and the counterparty directory lets you find what binds you to a supplier.

Reminders can be scheduled on the end date, the notice date, a fixed date or a custom attribute. They go to the document’s participants or to the people you designate. Checking consistency between the framework and its implementing contracts remains a decision for your team.