Helping a UK business manage risk in a French law commercial contract
What we achieved:
- Advised the UK subsidiary of a US engineering company on a French law supply agreement with a French customer.
- Reviewed and negotiated the contractual terms governing the supply of specialist industrial ovens used in the precious metals and aerospace sectors.
- Provided detailed advice on the client’s potential liability under French law, including the enforceability of limitation of liability provisions.
- Explained the distinction between obligations of means (obligation de moyens) and obligations of result (obligation de résultat) and the impact on contractual risk.
- Successfully negotiated amendments to achieve a balanced allocation of risk and secure a commercially acceptable agreement.
- Enabled the parties to complete the contract on terms that pleased our client.
Navigating French law requirements in a cross-border supply contract
Our client, the UK subsidiary of a US manufacturer of specialist industrial ovens, was negotiating a significant supply agreement with a French company. The ovens were designed to melt precious metals and were used in highly specialised industries, including the aerospace sector.
As is often the case in cross-border transactions, our client’s customer insisted that the contract be governed by French law. While our client was keen to move forward with the project, they wanted to understand the legal implications of operating under an unfamiliar legal system and ensure that their commercial interests were properly protected.
A particular concern was the extent to which liability could be limited under French law, especially given the technical nature of the equipment and the potentially significant financial consequences of any performance issues.
Understanding liability and performance obligations under French law
One of the key issues in the negotiations involved the French legal distinction between an obligation de moyens (obligation of means) and an obligation de résultat (obligation of result).
This distinction can have a substantial impact on contractual liability. Depending on how contractual obligations are characterised, a supplier’s responsibilities and exposure to claims will differ significantly. Our client needed clear and practical advice on how French courts might interpret the contractual provisions and how risks could be managed through careful drafting.
Achieving a balanced commercial outcome
Our French Law team reviewed the proposed agreement and advised on the effectiveness of liability limitation clauses, warranty provisions and performance obligations under French law. Working closely with our client, we identified the areas of greatest legal and commercial risk and developed a negotiation strategy designed to achieve a fair balance between the parties.
We negotiated amendments to several key provisions, including those relating to liability, performance standards and contractual remedies. Through a detailed understanding of French commercial law and the client’s commercial objectives, we were able to challenge aspects of the original draft and secure more balanced contractual terms.
The negotiations ultimately resulted in a practical compromise that provided the French customer with the assurances they required while ensuring that our client’s liability exposure remained proportionate. The contract was signed to our client’s satisfaction, allowing the project to proceed successfully.
Supporting international businesses with French law contracts
Our French Law team regularly advises UK businesses on commercial agreements governed by French law, including supply contracts, distribution agreements, agency arrangements and other cross-border trading contracts. By combining French legal expertise with an understanding of UK commercial practice, we help businesses negotiate effective agreements and manage legal risk when doing business in France.
