Termination clause (clause résolutoire)

Without a clause, the party harmed by a failure to perform has two options. It can ask a court to order termination, which takes time. It can also give notice of termination at its own risk, where the failure is sufficiently serious: if the court later finds that the breach did not justify it, that party is the one at fault.

A termination clause reduces this uncertainty. The parties decide in advance which breaches end the contract. The debate over how serious the breach is, which would be central without a clause, is largely settled at signature. Article 1224 of the French Civil Code lists the termination clause among the three ways to terminate a contract, alongside notice and a court decision. In any event, the creditor keeps the option of asking a court for termination, under Article 1227.

The obligations covered. Article 1225 requires the clause to specify the obligations whose non-performance will lead to termination. According to recent case law, the debtor must be able to identify them clearly and unambiguously. Broad wording, or a reference to “material” obligations without further detail, remains open to dispute.

The formal notice. As a rule, termination requires a formal notice (mise en demeure) that has remained unanswered. The parties may agree that termination will result from the mere fact of non-performance, provided they say so clearly.

The reference to the clause. The formal notice only takes effect if it expressly mentions the termination clause. A simple reminder letter is therefore not enough.

The cure period and formalities. No general rule requires a set period, but the contract should set the time allowed to remedy the breach, the form of the notice and the effective date.

The party relying on it first checks that the breach falls within the scope of the clause. It then sends the formal notice, in the agreed form, expressly mentioning the clause. If the breach continues when the period expires, it records the termination and notifies the other party, keeping evidence of each step.

A court may hear the matter in case of disagreement. It checks that the conditions of the clause are met, without assessing, as a rule, how serious the breach is. It also reviews good faith: Article 1104 of the French Civil Code requires contracts to be performed in good faith, and case law holds that a clause enforced in bad faith does not take effect.

Under Article 1229 of the French Civil Code, termination ends the contract. When it results from a clause, it takes effect under the conditions set by that clause.

What happens to services already performed depends on their usefulness. If they could only be useful through full performance of the contract, the parties return everything they obtained from each other. If they were useful as the contract went along, there is no restitution for the period before the last performance that did not receive its counterpart: this is then called résiliation. Restitution follows Articles 1352 et seq. of the French Civil Code.

Not every clause falls away. Article 1230 of the French Civil Code preserves those intended to apply despite the end of the contract, such as dispute resolution, confidentiality and non-compete clauses. Termination does not rule out damages either, under Article 1217, and a limitation of liability clause still applies to that compensation.

Commercial lease. Under Article L. 145-41 of the French Commercial Code, the termination clause only takes effect one month after a formal demand (commandement) that has remained unsuccessful, which must state this period. The court may grant extra time and suspend the effects of the clause.

Residential lease. Article 24 of the Law of 6 July 1989 governs the clause and requires a formal demand for payment. The Law of 27 July 2023 reduced the period from two months to six weeks, with specific rules for leases already in progress on that date. The court has its own powers in this area.

Consumer contracts. This page covers contracts between businesses. Consumer law provides its own rules, which are not described here.

Insolvency proceedings. The opening of safeguard or reorganization proceedings sharply limits the use of the clause: Article L. 622-13 of the French Commercial Code rules out terminating an ongoing contract solely because the proceedings were opened. Article L. 622-21 also interrupts or prohibits any action for termination based on non-payment of a claim that arose before the opening judgment.