Since the 2016 reform of French contract law, a business can end a contract its partner is not performing without waiting for a judgment: through a termination clause, or by simple notice where the breach is sufficiently serious (Civil Code, arts. 1224 to 1226). Unilateral termination is, however, at the terminating party’s own risk. It requires prior formal notice drafted in the terms the Code demands and, if the other party challenges it, it is for the party that terminated to prove the seriousness of the breach. A badly prepared termination backfires on its author.
An online cosmetics brand based in Montpellier outsourced its logistics in 2024 to a provider that stores its products, picks orders and ships them. The contract, for three years, provides for a 98% service level and 24-hour dispatch. Since the spring, orders have been leaving in three to five days, 6% of parcels contain errors, and the June stock-take revealed a gap of 1,100 units. Customer reviews are collapsing. The managing director has found another provider, ready to start in November, and wants to leave the contract before its term without paying for the remaining eighteen months.
He can, but not any old way. This page presents the range of remedies the Civil Code gives the creditor of an unperformed obligation, then the termination clause, termination by notice, the role of withholding performance, the effects of termination, the pitfalls specific to established commercial relationships, and how to build the file before sending the first letter.
1. A range of remedies, of which termination is only the most radical
A party towards whom an undertaking has not been performed, or has been performed imperfectly, may refuse or suspend performance of its own obligation, seek specific performance, obtain a price reduction, bring about termination of the contract, and claim damages for the consequences of non-performance; compatible remedies may be combined (Civil Code, art. 1217). The provision applies to contracts concluded since 1 October 2016; earlier contracts remain governed by former Article 1184, which in principle required termination to be sought from the court, subject to case law that already accepted unilateral termination for serious misconduct (Cass. 1re civ., 13 October 1998, no. 96-21.485).
Before terminating, one should ask whether another remedy would do. After formal notice, the creditor may have the obligation performed by a third party, within a reasonable time and at reasonable cost, at the debtor’s expense (art. 1222); in case of imperfect performance, it may notify a proportionate price reduction if it has not yet paid (art. 1223). For a brand paying its logistics provider monthly on invoice, reducing the price of the defective services after formal notice is sometimes a faster and less risky lever than termination. But when trust has gone and a replacement is ready, termination is the answer.
2. The termination clause: effective if precise and if the notice refers to it
Termination results either from a termination clause or, for a sufficiently serious breach, from notice by the creditor or a court decision (Civil Code, art. 1224). The termination clause is the safest route, on two conditions. It must specify the undertakings whose breach will lead to termination; a clause referring to “any breach by the provider of any of its obligations” is fragile, and courts construe it narrowly. And, unless otherwise agreed, termination is subject to formal notice that has gone unheeded, which only takes effect if it expressly mentions the termination clause (art. 1225).
The first step is therefore to reread the logistics contract. If it contains a termination clause covering the service level and dispatch times, with a thirty-day cure period after formal notice, the path is clear: formal notice citing the clause, describing the breaches with figures, and stating that unless remedied within the period termination will follow. The court, if seised, then merely checks that the clause’s conditions are met, without assessing the seriousness of the breach. That is the whole point of the clause: it removes the court’s discretion.
3. Termination by notice: at one’s own risk
Without a clause, or if the clause is unsuitable, the creditor may, at its own risk, terminate the contract by notice (Civil Code, art. 1226). The procedure is set by the text, and every step counts. Save in urgency, it must first put the defaulting debtor on formal notice to perform within a reasonable time; that notice must expressly state that, failing performance, the creditor will be entitled to terminate. If the breach continues, it notifies the debtor of termination and the reasons for it. The debtor may at any time go to court to challenge the termination, and the creditor must then prove the seriousness of the breach.
Three things sink terminations by notice. A formal notice that does not mention the possibility of termination is not a formal notice within Article 1226, and a termination notified afterwards is irregular. Too short a period (forty-eight hours to reorganise a warehouse) is not reasonable, and the court will say so. Finally, and above all, seriousness is assessed against the contract’s economics: a 6% error rate and dispatch times tripled under a contract whose very purpose is fast and reliable shipping amount to a serious breach; a few delays during a peak period do not. Seriousness is proved with figures recorded over time, not with complaining emails.
One example shows what is at stake. If the brand notifies termination on 15 October relying only on its email exchanges, without compliant prior formal notice, then moves its stock to the new provider on 1 November, the logistics provider can go to court arguing that the Article 1226 procedure was not followed, that the stock discrepancies are disputed, that the delays were due to order peaks the brand had not announced, and claim the eighteen months of minimum services guaranteed by the contract, a sum that may exceed the total cost of the failures suffered, while the brand has to show, documents in hand and months after the event, a seriousness it did not bother to establish when the evidence was within reach. The risk is reversed. So is the burden.
The risk is real, and the client must be told: if the court finds the breach was not sufficiently serious, the termination is unjustified, and the party that terminated becomes the debtor. It may have to pay for the services remaining until the term, or damages for wrongful termination. The court may also, depending on the circumstances, acknowledge or order termination, order performance with time to perform, or award damages only (art. 1228).
4. Withholding performance: suspend rather than terminate
Between patience and termination, the Civil Code offers a middle way. A party may refuse to perform its obligation, even though it is due, if the other party does not perform its own and the breach is sufficiently serious (Civil Code, art. 1219). It may even suspend performance where it is clear that the other party will not perform when due and the consequences are sufficiently serious for it, provided it gives notice of the suspension as soon as possible (art. 1220).
Withholding performance is a means of pressure, not an exit. A brand that stops paying its logistics provider pushes it to react, but faces the same debate on seriousness and risks giving the provider a pretext to hold on to the stock. In logistics that risk is not theoretical: a provider holding goods may invoke a right of retention for unpaid sums. Suspending payments before recovering the stock is a mistake of sequence.
5. Effects of termination: restitution and clauses that survive
Termination ends the contract. It takes effect, as the case may be, under the terms of the termination clause, on the date the debtor receives the creditor’s notice, or on the date set by the court (Civil Code, art. 1229). In a contract for continuing performance such as a logistics contract, the services exchanged were useful as they were performed, and there is no restitution for the period before the last service not paid for; termination then operates only for the future. The brand does not recover the invoices paid for the months when the service was provided, but owes nothing for the period after termination.
Termination does not affect dispute resolution clauses or clauses intended to apply even on termination, such as confidentiality and non-compete clauses (art. 1230). Nor does it affect the right to damages: the brand can claim from the provider the cost of the 1,100 missing units, the extra cost of changing provider and, if it can prove it, lost turnover. Finally, reversibility must be organised, that is, the return of stock and data, which the contract sometimes governs and which must otherwise be negotiated or ordered in interim proceedings.
6. Established commercial relationships: the link with sudden termination
Between businesses, a termination justified under the Civil Code may still be attacked under the Commercial Code. A party that suddenly ends an established commercial relationship without sufficient written notice incurs liability; but those rules do not prevent termination without notice in the event of the other party’s breach of its obligations or of force majeure (Commercial Code, art. L. 442-1, II). The breach relied on must then be serious enough to justify the absence of notice, which mirrors the requirement of Article 1226. A well-founded termination therefore also protects against a sudden termination claim. A badly founded one exposes its author to two awards instead of one. The rules specific to sudden termination are discussed in the article on sudden termination of commercial relationships.
7. Draft a termination clause that works, starting today
Most of the difficulties described above disappear when the contract contains a well-drafted termination clause. It should be addressed at signature, or when an existing contract is renewed, not when the provider starts to fail. An effective clause identifies the obligations whose breach will lead to termination, and quantifies them where possible: a minimum service level, a dispatch time, a maximum error rate, measured over a defined period by an agreed method. It sets a cure period suited to the service, eight days for non-payment, thirty days for an operational reorganisation. It specifies the form of the formal notice and of termination (registered letter, email to a designated address), and recalls that the formal notice must refer to the clause, as Article 1225 requires.
It must also organise what comes after. A reversibility clause provides for the return of goods, stock and data within a short period, without the provider being able to invoke a right of retention for disputed sums. A step-in clause allows the customer to hand the service immediately to a third party during the transition. And an evidence clause sets the data that will be authoritative (warehouse management system extracts, monthly reports), which avoids, when the day comes, arguing about seriousness on figures each side disputes. Such a clause takes nothing away from the general law of Articles 1224 to 1226. It makes its application predictable, which is exactly what a business entrusting a critical function to a third party is looking for.
8. Build the file before the first letter
Termination is won before the formal notice, which is why sequence matters more than drafting. For the Montpellier brand, the evidence must come first: extracts from the warehouse management system, dispatch time history, time-stamped customer complaints, the June stock-take report, ideally a report by a commissaire de justice on the state of the stock. Then the contract must be reread: the termination clause and its conditions, the reversibility clause, any notice period, the jurisdiction clause. The stock must be secured before anything is announced, for instance by a gradual transfer to the new provider. Only then should formal notice go out, citing the clause or Article 1226, describing the breaches with figures, setting a reasonable period, thirty days in this case, and announcing termination failing a cure. If the provider cures, the brand has what it wanted. If not, it notifies a reasoned termination and approaches any litigation with a file whose seriousness speaks through the figures. Terminating first and looking for evidence afterwards is the most common mistake, and the most expensive.
The firm advises businesses that want to leave a badly performed contract, and those challenging a termination served on them: analysis of the contract, drafting of formal notices and termination letters, exit negotiations, litigation. Its page on business law describes this work, and the contact form allows a situation to be outlined in a few lines.
Frequently asked questions
Can a contract be terminated in France without going to court?
Yes, for contracts concluded since 1 October 2016: either under a termination clause or by notice in case of a sufficiently serious breach (Civil Code, arts. 1224 to 1226). Termination by notice requires prior formal notice, save in urgency, and is at the risk of its author, who must prove the seriousness of the breach if the other party goes to court.
What must the formal notice contain before termination?
For a termination clause, it must expressly mention the clause (Civil Code, art. 1225). For termination by notice, it must give a reasonable time to perform and expressly state that, failing performance, the creditor will be entitled to terminate the contract (art. 1226). A notice omitting these statements deprives the termination of its basis.
What is the risk if the termination is held unjustified?
The party that terminated becomes liable for the breakdown: it may be ordered to pay what the contract would have produced until its term or damages, and, between businesses, compensation for sudden termination of an established commercial relationship. The court may also order the contract to continue or award damages only (Civil Code, art. 1228).
Can one stop paying a provider that is not performing?
Yes, by withholding performance, if the breach is sufficiently serious (Civil Code, art. 1219), and even in advance where it is clear the other party will not perform, provided notice of the suspension is given (art. 1220). It is a means of pressure, not a way out of the contract, and should be used with care where the provider holds goods or data.
Does termination end the non-compete and jurisdiction clauses?
No. Termination affects neither dispute resolution clauses nor those intended to apply even on termination, such as confidentiality and non-compete clauses (Civil Code, art. 1230).
On the same subject: defects of consent, the six points that decide a nullity action; force majeure and hardship clauses in international contracts; abuse of economic dependence in France.