FRENCH UPDATE – M&A: Key Takeaways for Dealmakers on the Modernization of French Contract Law

Executive Summary/Highlights:

October 1 saw the coming into effect of the most significant reform of French contract law since the Napoleonic code was first promulgated in 1804.  We survey below some of the key takeaways for dealmakers.

The reform was notably motivated by a desire to maintain the attractiveness of French law. One of the foremost goals in this respect was to codify French jurisprudence in order to make the law clearer and more accessible.  Other changes were designed to modernize French contract law by eliminating archaic formalisms, providing parties with contractual tools consistent with those available in other jurisdictions, and resolving doctrinal disputes and areas where French courts had reached inconsistent results.

For present purposes, we are principally in the realm of contracts, and certain of the changes can be contracted around.  However, even these provisions merit some attention: First, sophisticated parties to business transactions should actively and affirmatively contract around certain provisions.  Second, because certain changes relate to the pre-contractual period, the parties will need to consider and treat these issues at an early stage of their negotiation (likely in the confidentiality agreement entered into at the start of their discussions).

Others provisions cannot be contracted around.  We provide some initial, general thoughts on how parties may seek to change their conduct in the face of these new provisions.  Evidently, doing so effectively and judiciously will be a case-by-case exercise, drawing on the experience and creativity of the parties and their advisors.

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