Unfair term: no protection for professionals (French Supreme Court, 1996)

You are the owner of a small shop in Castelsarrasin and have just signed a finance lease contract for customer management software. But a term seems too unbalanced: the supplier can terminate the contract without notice, while you are bound for five years. Can you invoke the law on unfair terms? The answer from the French Supreme Court is categorical: no, as soon as this contract is directly related to your professional activity.

This decision of 30 January 1996 (No. 93-18.684) is a real blow for entrepreneurs. It reminds us that consumer protection does not benefit those acting in the course of their professional activity. But then, how can one defend oneself against unfair terms in a professional contract? Let's delve into the details.

The facts: a story that happens every day

In 1989, the company André Bernis, whose registered office is in Montauban, signed a finance lease contract with the company La Cogest (whose rights were later acquired by Crédit de l'Est). The subject of the contract: the acquisition of "customer marketing management" software intended to manage the customer database. An investment of 150,000 francs (approximately €23,000) over five years. But very quickly, malfunctions appeared: the software did not meet the needs, updates were non-existent. Bernis sued Cogest to obtain rescission of the contract due to the supplier's breach.

The Commercial Court of Montauban ruled in favour of Bernis in 1991: it ordered the rescission of the main contract and, as a consequence, the termination of the finance lease. But Cogest appealed. The case went up to the French Supreme Court, which had to decide a preliminary question: could Bernis rely on the legislation on unfair terms (Article L.132-1 of the Consumer Code) to have certain clauses of the contract declared void?

The reasoning of the court — dissected

The French Supreme Court recalls the text of Article L.132-1 of the Consumer Code: "clauses in contracts concluded between professionals and non-professionals or consumers which are abusive shall be deemed unwritten". But it immediately adds a crucial clarification: this protection does not apply to contracts that have a direct connection with the professional activity carried out by the contracting party.

In this case, Bernis acquired customer management software for its activity. The purchase is directly related to its business. It is therefore neither a "non-professional" nor a "consumer" within the meaning of the law. The judges specify that the status of non-professional is assessed in concreto, i.e., according to the link between the contract and the activity. Here, the direct connection is obvious.

This reasoning confirms a consistent line of case law since the 1990s. The Court rejects Bernis's argument that it sought to be treated as a consumer because it was not a specialist in software. No matter: as soon as a contract serves a professional activity, the specific protection for consumers disappears. However, the parties can still rely on the general law of obligations (Article 1131 of the Civil Code, now Articles 1170 et seq.) to challenge an unfair term, but this is more difficult to prove.

What this means for you — practically

For landlord proprietors: if you lease business premises to a professional, the rent review clause you insert in the lease is not subject to the law on unfair terms. Example in Montauban: a professional landlord who rents a warehouse to a tradesperson cannot invoke this protection if the indexation clause is unbalanced.

For professional tenants: you cannot hide behind consumer protection to challenge an early termination clause in your equipment lease contract. However, you can act on the basis of significant imbalance (Article L.442-1 of the Commercial Code) if the other party is a professional. But beware, the turnover thresholds are demanding.

For purchasers of a business (fonds de commerce): the non-competition clause in the transfer deed is a professional contract. If it is too broad (e.g., prohibition to operate within a 200 km radius for 10 years), you cannot invoke consumer law. You will have to demonstrate that it infringes your freedom to conduct business, which is more legally burdensome.

In practice, a professional who suffers from an unfair term must turn to the general law of contracts: defect of consent (mistake, fraud), abuse of right, or the concept of potestative condition (a condition depending solely on the will of the debtor). These avenues are possible but require stronger evidence and longer litigation.

Four tips to avoid this type of dispute

• Negotiate each clause before signing: do not rely on the phrase "contract of adhesion". As a professional, you have the right to discuss the terms. Do so in writing.
• Have the contract reviewed by a specialist lawyer: a preliminary 30-minute consultation (approx. €45) can save you years of proceedings. Maître Zakine provides rapid assistance in Montauban and Castelsarrasin.
• Keep all exchanges and documents: in case of a dispute, evidence of negotiation (emails, letters) is essential to demonstrate a possible defect of consent.
• Check the purpose of the contract: ensure that the goods or services purchased are directly related to your activity. If not, you might benefit from consumer protection (e.g., purchase of a computer for mixed use).

Further reading: related case law and developments

This decision is part of a consistent line. A few years later, the French Supreme Court clarified (Civ. 1st, 24 January 2006, No. 03-17.892) that even a mixed-use contract (professional and personal) may escape protection if the professional use is predominant. Conversely, for residential leases, unfair terms are strictly sanctioned (Law of 6 July 1989).

The current trend is towards a tightening of professional contract law: the Law of 20 November 2018 (known as the EGAlim Law) strengthened the fight against significant imbalances in commercial relations. But this only concerns contracts between professionals, not those between a professional and a consumer. The boundary thus remains crucial.

For the future, EU Directive 2019/2161, transposed in 2022, extends the scope of unfair terms to digital contracts, but still within a consumer context. The professional remains excluded from this benefit, unless they are a micro-entrepreneur acting outside their activity (CJEU decision, 3 September 2015, Case C-110/14).

What you absolutely must remember

1. Check whether you are considered a professional or a consumer: if the contract is directly related to your business, you cannot rely on Article L.132-1 of the Consumer Code.
2. Use other legal bases: general contract law (defect of consent, potestative condition), competition law (significant imbalance), or an action for contractual liability.
3. Anticipate the dispute: before signing, have a legal audit of the contract. In case of an unfair term, you can apply to the Commercial Court (for professionals) or the Judicial Court (for individuals).
4. Respect the time limits: the action to have an unfair term declared void is subject to a five-year limitation period from the date of signature (Article 2224 of the Civil Code). After this period, the term becomes final.
5. Consult a lawyer: each situation is unique. A quick initial analysis can guide you towards the best strategy.

Are you in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of proceedings — and often much more. Book an appointment →