Commercial negotiation: mastering the General Terms and Conditions, annual agreements and General Terms and Conditions

By Yasmine EDDAM8 April 2025

Every year, the commercial negotiation period is a key event in the life of many companies, particularly between suppliers and distributors. It's an intense and often complex time, when the terms and conditions governing business relations for the coming year are defined. Far from being a simple informal discussion, this process is governed by precise legal rules designed to ensure the protection of the interests of both parties. transparency and a certain balance. At the heart of this system are the General Terms and Conditions of Sale (GTS), the written summary agreement, and sometimes the General Terms and Conditions of Purchase (GTCP).

Understanding the role and legal requirements of each of these documents is fundamental to navigating these negotiations with peace of mind and securing your commercial agreements. Misunderstanding or neglect can lead to disputes, damaging contractual imbalances and even administrative sanctions. This article explains these essential tools of B2B commercial negotiation.

The General Terms and Conditions of Sale (GTS): the essential starting point

Your General Terms and Conditions of Sale are more than just an informative document. The law gives them a central role: as specified in article L.441-1 of the French Commercial Code, they constitute the a single foundation for commercial negotiation. It is on this basis that discussions must begin.

Mandatory communication (on request)

Any producer, service provider or wholesaler who draws up General Terms and Conditions of Sale must send them to any professional buyer who so requests. This communication must be made by a means that constitutes a "durable medium" (for example, a PDF sent by email, a paper document, made available on a secure area). It is not compulsory to send them systematically, but refusing to send them to a buyer who requests them constitutes a fault.

It is possible to have Differentiated terms and conditions according to buyer categories (for example, different conditions for wholesalers and retailers), provided that these categories are defined according to objective and non-discriminatory criteria. In this case, you will only provide a buyer with the terms and conditions that apply to their category.

The essential content of the General Terms and Conditions

To serve as a solid basis for negotiation, your GCS must include a certain amount of key information, detailed in Article L.441-1 of the French Commercial Code:

The conditions of sale themselves (ordering procedures, transfer of ownership, transfer of risks, possible guarantees, etc.).
Le scale of unit prices or how the price is calculated.
The price reductions (discounts, rebates, refunds) and the criteria for granting them, which must be objective and verifiable.
The terms of paymentThese must comply with the legal ceilings (as set out in our previous article and defined in article L.441-10 of the French Commercial Code). This includes payment terms, discount terms for early payment, late payment penalty rates and the fixed recovery indemnity.

Specific information for agricultural and food products

The legislator, in particular with the successive EGalim laws, has strengthened the obligations in the general terms and conditions of sale for agricultural and food products, in order to better take into account the costs of agricultural production. As a result, when indicators production costs exist (those published by the inter-professional organisations or by the Observatoire de la formation des prix et des marges), the General Terms and Conditions of Sale must refer to them and explain how they are taken into account in determining the price (article L.443-4 of the French Commercial Code).

In addition, for these same products, article L.441-1-1 of the French Commercial Code requires a greater transparency on the share of agricultural raw materials in the supplier's price list. The supplier must choose one of the following three options in its General Terms and Conditions:

Present the proportion of each agricultural raw material (and processed product that is predominantly agricultural) in the composition of the product.
Present the aggregate share of these agricultural raw materials and processed products.
Provide for the intervention (at its own expense) of an independent third party who will certify, in the event of a price change, the proportion of this change linked to the cost of agricultural raw materials. This certificate should then be provided to the distributor.

The aim of these mechanisms is to ensure that the cost of agricultural raw materials is protected in the negotiations.

General terms and conditions of sale as a single basis: an anti-abuse rule

Why does the law insist that the GTCs are the "sole basis" for negotiation? The aim is clear: to prevent the negotiation process from being turned on its head, with a powerful buyer imposing its own General Terms and Conditions of Purchase (GTCP) as the indisputable starting point, ignoring the supplier's terms and conditions. Discussions should start with the seller's proposals (its GTCs) and then lead to a formal agreement.

The written agreement: formalising the outcome of negotiations

Once negotiations have been completed, an agreement must be formalised in writing. This is the purpose of the annual (or multi-year) summary agreement.

When is an agreement compulsory?

The principle laid down in Article L.441-3 of the French Commercial Code is that a written agreement must be concluded between the supplier and the distributor (or service provider) in order to mention mutual obligations to which they have committed themselves as a result of the negotiations. This may take the form of a single document or an annual framework contract supplemented by implementation contracts.

The law distinguishes between two main systems for the content of this agreement:

The "base" agreement (article L.441-3) applicable by default to all supplier/distributor relationships (including wholesalers).
The "FMCG" agreement (article L.441-4) agreement: applicable to suppliers and distributors (excluding wholesalers) for mass-market products (the list of which is set by decree). This agreement must include the elements of the base agreement, plus specific additional information.

The content of the written agreement

The "base" agreement (L.441-3) must at least specify, in order to help determine the agreed price :

The conditions of sale resulting from negotiation: this includes any specific price reductions negotiated in relation to the initial GCS.
Services falling under the commercial cooperation These services, rendered by the distributor to promote the marketing of the supplier's products, must be distinct from the simple obligations to buy and sell.
The other obligations intended to promote the commercial relationship between the parties (for example, specific logistics commitments, even though the EGalim 3 law now encourages these to be dealt with in a separate logistics agreement - see article L.441-3 I bis).
The purpose, date, terms and conditions of performance, remuneration and products concerned for any service provided by a foreign entity linked to the distributor (particularly agreements with international purchasing groups).

Focus on "commercial cooperation

This term covers the specific services that the distributor can provide to the supplier to promote its products: display at the head of the shelf, specific promotional operations, point-of-sale advertising, etc.

It is essential that these services are distinct from simple salesand are subject to proportionate remuneration. A flat-rate or excessive remuneration, with no link to an identifiable and effective service, could be requalified as a disguised price reduction ("false commercial cooperation") or fall foul of the prohibition on obtaining an advantage without consideration (set out in article L.442-1, I, 1° of the French Commercial Code). The agreement must therefore describe these services and their remuneration in detail.

The March 1st deadline

Except for products subject to a particular marketing cycle (where the deadline is two months after the start of the period), the annual agreement must be signed before 1 March. This deadline is imperative. Failure to meet this deadline is punishable by a specific administrative fine, potentially very high, introduced by the EGalim 3 law (article L.441-6 of the French Commercial Code).

In addition, on an experimental basis (until March 2026), the EGalim 3 law provides that if negotiations fail by 1 March, the supplier may choose either to terminate the commercial relationship without the buyer being able to invoke a sudden break, or to request the application of a standard notice period (opening the way to mediation).

What role do General Purchasing Conditions (GPCs) play?

The General Terms and Conditions of Purchase (GTCP) are the equivalent of the GTCP, but from the buyer's point of view. They express the conditions under which the buyer would ideally like to contract (desired payment terms, logistical penalties, conditions for receiving goods, etc.).

However, it is essential to remember that CGAs cannot legally form the basis for negotiations. Attempting to impose your GTCs without taking account of the supplier's GTCs and without any real room for negotiation is a risky practice.

Case law, particularly in cases involving mass retailing (such as the Galec case), has clearly sanctioned the imposition of non-negotiated GTCs or GTCs containing manifestly unbalanced clauses to the detriment of the supplier, on the basis of the significant imbalance (article L.442-1, I, 2° of the French Commercial Code).

In practical terms, when you receive a buyer's GTCs, analyse them carefully, compare them with your own GTCs and identify the points that require negotiation to reach a balanced agreement, which is then formalised in the written agreement.

Important clauses and penalties

In addition to the general structure, certain specific clauses deserve particular attention, and breaches of the rules of formalism are punishable.

The price renegotiation clause

For contracts with a performance period of more than three months relating to agricultural and food products whose prices are affected by fluctuations in the cost of raw materials (agricultural, energy, transport, packaging), Article L.441-8 of the French Commercial Code requires the inclusion of a "price cap". renegotiation clause. This must define the procedures for taking account of these variations in costs (both upwards and downwards) in order to adjust the agreed price. This is an essential tool for maintaining the economic equilibrium of the contract in volatile markets.

Agreements for specific manufactured products

Special formalities also apply to purchases of manufactured products made at the buyer's request to be integrated into its own production (for example, a car parts manufacturer purchasing specific parts). If the annual amount exceeds a threshold set by decree (currently €500,000), a written agreement detailing the agreed terms is required, in accordance with article L.441-5 of the French Commercial Code.

Administrative penalties

Failure to comply with the formal rules of commercial negotiation may result in administrative fines (imposed by the DGCCRF):

Le failure to communicate the GCS at the request of a professional buyer may result in a fine of up to €15,000 for an individual and €75,000 for a legal entity (article L.441-1 of the French Commercial Code).
Le failure to comply with the rules governing written agreements (absence of an agreement, incomplete content, failure to meet the 1 March deadline) is punishable by fines of up to €75,000/€375,000 (or even €1m/€5m for certain specific obligations relating to FMCGs or aggravated failure to meet the deadline), in accordance with article L.441-6 of the French Commercial Code.

These sanctions underline the importance that the legislator attaches to transparency and formalism in commercial negotiations.

Annual commercial negotiations are a demanding exercise, where the financial and legal stakes are high. Mastering the legal framework of terms and conditions, agreements and general terms and conditions is essential if you are to defend your interests as effectively as possible, whether you are a supplier or a distributor. Our firm can help you in the drafting and review of your contractual documents, and in the preparation and conduct of your negotiations, in order to secure your agreements and prevent disputes. For an analysis of your situation and tailored support, please do not hesitate to contact us.