Short answer. A company that ends, even partially, an established commercial relationship without sufficient written notice is liable under Article L. 442-1, II of the Commercial Code. The notice owed is measured by the duration of the relationship, trade usage and the partner’s degree of dependence; in practice, courts often award around one month per year of the relationship, and a party who has given eighteen months of notice is safe from any challenge on duration. The indemnity compensates the gross margin lost during the missing notice period, calculated as expected revenue less variable costs not incurred. The action is time-barred after five years and falls within the jurisdiction of eight specialised courts, with a single route of appeal to the Paris Court of Appeal. Since 20 August 2026, a substantial reduction in order volumes, even a temporary one, can also give rise to liability.
A long-standing client announces by email that it is stopping orders next month. A principal delists an entire product range, or cuts its volumes by two-thirds “while renegotiating.” A supplier you wish to leave after fifteen years, without knowing how many months of notice to give. In each of these cases, the same statute applies, and the same mistake recurs: believing that the absence of a written contract, or the presence of a termination clause, settles the question. It does not. This article explains what the law actually says in 2026, what recent Cour de cassation rulings mean in practice, how the indemnity is calculated, and how the firm builds a sudden-termination case, whether bringing or defending the claim.
What Article L. 442-1, II of the Commercial Code says in 2026
The statute makes liable “any person carrying on production, distribution or service activities” who suddenly terminates, even partially, an established commercial relationship, “in the absence of written notice that takes into account, in particular, the duration of the commercial relationship, with reference to trade usage or interprofessional agreements.” Three elements are therefore required of the victim: an established commercial relationship, a termination, and the absence of sufficient written notice. The statute reserves two grounds for termination without notice, the other party’s failure to perform its obligations and force majeure, which are the two classic defences available to the party ending the relationship.
Law no. 2026-796 of 18 August 2026, in force since 20 August 2026, added a paragraph that changes the reading of the statute for supply relationships: “the liability of its author may also be engaged by a substantial reduction, in the course of negotiating a contract, of order volumes sent to a commercial partner, including where temporary, if it is such, by its scale, its unusual character or the conditions in which it occurs, as to jeopardise the balance of the established commercial relationship.” In other words, a cut in orders used as a negotiating lever, a common practice in large retail but also among many industrial principals, becomes a standalone fault, without any need to show a definitive termination. The same law added a sixth ground to paragraph I of the article, targeting repeated calls for tender whose frequency or terms create a significant imbalance. Both additions are recent and their scope will be settled by the specialised courts over the coming years; they already give suppliers under volume pressure a new basis for a claim.
What is an established commercial relationship?
The relationship need not be formalised by a contract. A succession of orders, services or renewed fixed-term contracts is enough, provided the relationship is regular, significant and stable, and the victim could reasonably expect it to continue. This is the point defendants most often dispute: they argue that each order was a standalone contract, that volumes fluctuated, that the partner knew the relationship was precarious (annual tender, public contract, one-off assignment). The case is won or lost on documented proof of continuity: a year-by-year revenue history, the share of that revenue in the victim’s activity, correspondence announcing joint projects, investments made in reliance on the relationship.
The range of persons concerned is broad. The Cour de cassation held that a homeowners’ association, a civil-law entity, could be the author of a sudden termination against its caretaking contractor, because it had maintained with that contractor a commercial relationship falling within the scope of the statute (Cass. com., 28 June 2023, no. 21-16.940, published). An association, a public industrial and commercial establishment, or a civil-law company can therefore find itself on the terminating side. Conversely, some professions escape the statute because their own regulatory regime organises the end of the relationship: the Cour de cassation held on 1 July 2026 that, in road freight transport, where the parties have not stipulated a notice period in writing, it is the standard contract approved by decree that fixes that period, and Article L. 442-1, II does not apply; it becomes applicable again if a written contract stipulates a notice period, but a party who has granted a period at least equal to that of the standard contract cannot be sued (Cass. com., 1 July 2026, no. 24-19.356, published).
How many months of notice? What the courts look for
The law sets no fixed scale; it sets criteria: the duration of the relationship, trade usage, interprofessional agreements, and, for the price charged during the notice period, market conditions. In practice, specialised courts also weigh the victim’s degree of economic dependence, the share of its revenue generated with the terminating party, specific investments made, the difficulty of finding a replacement partner, the product’s reputation, and the time needed to redeploy. The benchmark most often observed is around one month of notice per year of the relationship, adjusted in both directions: less where the victim can quickly redeploy, more where it is in a position of dependence or exclusivity. A ten-year relationship with a client accounting for 40 percent of revenue frequently leads to notice periods of twelve to eighteen months being awarded; a three-year, low-dependence relationship, to three or four months.
Since Ordinance no. 2019-359 of 24 April 2019, the statute gives the terminating party a safe benchmark: “in the event of a dispute between the parties over the length of notice, the liability of the party ending the relationship cannot be engaged for insufficient duration once it has given eighteen months’ notice.” Eighteen months is therefore the safety ceiling. It does not mean eighteen months is always owed, nor that a shorter notice period is necessarily insufficient; it means that beyond that point, the debate over duration is closed. Contractual notice, where it exists, does not bind the court: a clause providing for three months’ notice does not prevent the victim from arguing that twelve months were owed given the duration of the relationship. This is one of the reasons a well-drafted contract does not remove the need for a termination strategy.
Notice must be in writing, dated and real
Three published 2025 rulings set out what valid notice must look like. First, the starting point: the Cour de cassation held that “the writing by which a company notifies its intention not to continue an established commercial relationship only starts the notice period owed to the company suffering the termination if it specifies the date on which the relationship will end” (Cass. com., 26 February 2025, no. 23-50.012, published). A letter announcing that “the relationship cannot continue on current terms,” without a date, starts no notice period at all; the time elapsed after that letter will not be counted. For the terminating party, the letter must therefore fix an end date; for the victim, the absence of a date is a decisive argument.
Next, the requirement that notice be real: during the notice period, the relationship must continue on its previous terms, without substantial change. A notice period during which orders collapse or prices are degraded is not notice at all. The Court has clarified the limits of this rule, holding that where the terminating party has granted particularly long notice, exceeding by two years the duration set by trade usage, and informed its partner of this from the outset, it may stop maintaining the previous terms beyond the first year if the relationship continued without substantial change during that year (Cass. com., 19 March 2025, no. 23-23.507, published). Finally, a stock-clearance period granted after the end of the notice period does not count as notice if its terms did not allow the victim to reorganise, and the proceeds drawn from that clearance are not deducted from damages (Cass. com., 19 March 2025, no. 23-22.182, published).
How the indemnity is calculated: gross margin on the missing notice
The indemnity does not compensate the termination itself, which is lawful, but its suddenness, that is, the insufficiency of the notice given. It therefore corresponds to what the victim would have earned during the months of notice it was denied. The Cour de cassation set the method in 2023: the main harm “is assessed by reference to the expected gross margin, that is, the difference between expected revenue net of tax and the variable costs net of tax not incurred during the period of insufficient notice” (Cass. com., 28 June 2023, no. 21-16.940, published). The reasoning proceeds in three steps: determine the notice that should have been given, deduct the notice actually given, then apply the variable-cost margin to the average monthly revenue of recent years over the missing period.
An order of magnitude to fix ideas: a supplier generating 1,200,000 euros in annual revenue with a client, or 100,000 euros a month, with a variable-cost margin of 30 percent, who was denied eight months of notice, will obtain an indemnity of around 240,000 euros. The decisive item is the margin rate: defendants systematically dispute the basis by arguing that certain fixed costs should have been saved, and an accountant’s certificate, sometimes a court-ordered expert report, is often necessary. Additional heads of loss can be added if distinct from the lost margin: redundancies made necessary, specific inventory rendered unusable, unamortised investments made at the terminating party’s request. These are awarded sparingly and must be documented item by item.
Partial termination, order cuts, new terms
The statute targets termination “even partial.” A sudden and lasting drop in orders, the discontinuation of a product range, withdrawal from a territory, or the imposition of pricing terms the partner cannot accept, are all forms of partial termination that may give rise to compensation, provided they are shown to be substantial and not justified by market developments. The addition made by the law of 18 August 2026 strengthens this branch: a substantial reduction in volumes used as a negotiating tool becomes a fault in itself, including where temporary. For a supplier, this means it is no longer necessary to wait for the relationship to actually end before taking action; for a buyer, it means a “pause” in orders during a renegotiation must be justified, proportionate, and documented as such.
New terms imposed under threat of termination are a common scenario: a 15 percent price cut to be accepted within two weeks, extended payment terms, transferred logistics costs. A partner who refuses and suffers termination as a result can bring a claim; one who accepts under duress can invoke, in addition to sudden termination, the significant imbalance provision of Article L. 442-1, I, 2°, and, in the most serious cases, abuse of economic dependence under Article L. 420-2. The choice of legal basis depends on the available evidence, since the burden of proof and the competent courts are not the same.
Which court, what deadline, what evidence
The action falls within the jurisdiction of specialised courts. Article L. 442-4, III delegates to a decree the designation of the competent courts, and Articles D. 442-2 and D. 442-3 set the list: eight commercial courts (Paris, Marseille, Bordeaux, Lille, Lyon, Nancy, Rennes and Fort-de-France) and the corresponding judicial courts where the defendant is not a trader, with a single route of appeal to the Paris Court of Appeal. Filing suit before a non-specialised court is met with a plea of inadmissibility and costs several months. The action is time-barred five years from the termination (Article L. 110-4 of the Commercial Code), but evidence of the relationship fades well before that; it is prudent to act within the year.
Article L. 442-4 also opens the action to the minister responsible for the economy and to the public prosecutor, who can seek an order to stop the practices and a civil fine of up to the higher of five million euros, three times the wrongfully obtained advantage, or 5 percent of revenue net of tax generated in France. This fine does not concern a supplier acting on its own behalf, but it weighs on major principals whose practices are monitored by the DGCCRF. The interim relief judge can order the practices to stop and any provisional measure, which, in cases of acute dependence, can secure the temporary continuation of deliveries pending judgment on the merits.
The documents that make a case are always the same: the revenue history by financial year (invoices, customer ledger), the share of that revenue in total activity, correspondence showing continuity and joint projects, the termination letter or emails cutting orders, order schedules before and after, investments and hires made for the relationship, and an accountant’s certificate on the variable-cost margin. In defence, the case is built around the partner’s own failures (delays, non-conformities, unpaid invoices), the absence of dependence, the known precariousness of the relationship, and the reality of the notice given.
Relationship with a foreign partner: which court, which law
Where the terminating party is established abroad, the first question is which court has jurisdiction, and it depends on the applicable framework. Within the European Union, the Court of Justice held in Granarolo that a damages claim for sudden termination falls within contractual matters under the Brussels I Regulation where a tacit contractual relationship existed between the parties (CJEU, 14 July 2016, C-196/15), which most often points to the court of the place of delivery or performance, and gives full effect to jurisdiction clauses. Outside the scope of EU law, the Cour de cassation held in 2025 that the action is tortious in nature, which opens the jurisdiction of the French court of the place of the harm (Cass. 1re civ., 12 March 2025, no. 23-22.051, published). The question of the applicable law remains open: the First Civil Chamber referred a question to the Court of Justice on 2 April 2025 asking whether the action falls within contractual or tortious matters for the purposes of the Rome Convention and the Rome II Regulation (Cass. 1re civ., 2 April 2025, no. 23-11.456, published). The answer will determine whether a French supplier can invoke Article L. 442-1, II against a foreign client whose contract is governed by foreign law.
In practice, these questions are addressed when the distribution or supply contract is drafted: a jurisdiction clause, choice of law, a stipulated notice period, an arbitration clause. The firm, which practises international commercial litigation, acts both to have a termination decided by a European or American partner judged in France and to defend a foreign company sued in Paris by a former French distributor.
How the firm helps
For the victim of a termination, the first step is an assessment consultation: is the relationship established, what notice was owed, what is the missing notice worth, what evidence is missing. That assessment allows a choice between immediate negotiation, backed by a documented calculation, and filing suit. A reasoned formal notice frequently secures an extended notice period or a settlement indemnity, because the terminating party weighs the risk of a published judgment against it. Where negotiation fails, the firm files suit before the specialised commercial court, seeks interim measures where appropriate, and conducts the proceedings on the merits. Expect twelve to eighteen months for a first-instance judgment in Paris, and a comparable period on appeal.
For a company that wants to end a relationship, the work is preventive: auditing the relationship (duration, the partner’s dependence, known investments, sector usage), setting a secure notice period, drafting a termination letter that fixes an end date and maintains conditions during the notice period, managing orders and inventory at the end of the relationship, and preparing evidence of non-performance where the termination is based on the partner’s own failures. The cost of this preparation is not comparable to that of being ordered to pay twelve months of gross margin. The firm also acts for principals reorganising their supplier panel, to stagger notice periods and avoid a volume reduction being characterised as partial termination under the statute introduced by the law of 18 August 2026.
Where the terminating party is established abroad, the question of jurisdiction and applicable law takes precedence over that of notice; see the section above.
Are you facing a termination, a sudden drop in orders, or do you need to end a long-standing relationship? A consultation lets you assess the notice owed and the amount at stake before any decision. Tell us about your situation.
Need assistance? See our page Sudden Termination of Commercial Relationships and our French business law practice.
Frequently Asked Questions
What notice must be given to end an established commercial relationship?
The law sets no fixed duration: notice must take into account the length of the relationship, trade usage and the partner’s dependence. Courts often look to around one month per year of the relationship, adjusted for dependence. Since the ordinance of 24 April 2019, a party who has given eighteen months’ notice can no longer be sued for insufficient duration (Article L. 442-1, II of the Commercial Code).
How is the indemnity for sudden termination calculated?
It corresponds to the expected gross margin over the missing notice period, that is, expected revenue net of tax less variable costs not incurred (Cass. com., 28 June 2023, no. 21-16.940). Distinct heads of loss, such as unamortised investments or redundancies, can be added if proven.
Can a drop in orders amount to sudden termination?
Yes. The statute covers termination even if only partial, and Law no. 2026-796 of 18 August 2026 added that a substantial reduction in order volumes during a negotiation, even a temporary one, can give rise to liability if it jeopardises the balance of the relationship.
Does an email announcing the end of the relationship start the notice period?
Only if it specifies the date on which the relationship will end. The Cour de cassation has held that a writing which does not fix that date does not start the notice period (Cass. com., 26 February 2025, no. 23-50.012).
Which court has jurisdiction and how long do I have to act?
Eight specialised commercial courts, including Paris, and the corresponding judicial courts, with appeal to the Paris Court of Appeal (Articles L. 442-4, III, D. 442-2 and D. 442-3 of the Commercial Code). The action is time-barred five years from the termination (Article L. 110-4).