A reminder seems necessary. A formal notice is the act by which a creditor asks his debtor to fulfil his obligation. It marks the starting point for default interest and crystallises the recipient's default. This unilateral legal act challenges and informs the addressee of the creditor's demands. For a broader view of the principles and issues involved, discover the fundamentals of formal notice.
But this step, often seen as essential, is not always compulsory. The law provides for situations where it can legitimately be dispensed with.
Legal exemptions
Definitive or irreversible non-performance
Where non-performance has occurred and caused damage, formal notice becomes superfluous. The Court of Cassation, in a mixed chamber ruling of 6 July 2007, clearly established that "formal notice is unnecessary where the non-performance of a contract has been established and causes prejudice to a party". (Cass., ch. mixte, 6 July 2007, no. 06-13.823).
This principle applies in particular when:
- This had to be done by a specific deadline which has now expired.
- Execution is materially impossible
- The contractual breach has already been established and is irreversible (CA Orléans, 18 Nov. 2021, no. 20/005871).
A real emergency
Article 1226 of the Civil Code specifies that formal notice is not required in cases of urgency. This is a significant exception which allows action to be taken without delay when circumstances so require.
Commercial case law confirms this position. The Court of Cassation has ruled that "the seriousness of the conduct of one party to a contract may justify the other party terminating it unilaterally at its own risk, without being required to give the other party prior notice". (Com. 9 July 2019, no. 18-14.029).
Explicit refusal to perform
When the debtor takes the initiative of declaring that he refuses to perform his obligation, formal notice becomes unnecessary. This position has been consistent in case law for decades (Req. 4 Jan. 1927, DH 1927. 65; Com. 24 July 1967; Civ. 3e, 3 Apr. 1973, no. 72-10.247).
Common sense prevails here. Why formalise a request for execution when the refusal to comply has already been explicitly formulated?
Contractual exemptions
Contractual forecasting
Article 1344 of the Civil Code is clear: the debtor can be put on notice "if the contract so provides, by the mere payability of the obligation".. The parties may therefore agree that formal notice will be given automatically without any particular formality.
Similarly, article 1225 of the Civil Code concerning resolutory clauses specifies that resolution may be acquired without formal notice. "if it was agreed that the non-performance would result solely from the fact of non-performance"..
This contractual freedom enables the parties to organise their relationship in advance and to anticipate any potential failures.
Limits to freedom of contract
This freedom is not without limits. Case law ensures that these exemptions do not create unjustified imbalances between the parties.
In the case of loans, for example, the Cour de cassation requires that the waiver of formal notice be "express and unequivocal". (Civ. 1st, 22 May 2019, no. 18-13.246; Civ. 1st, 25 May 2022, no. 20-20.513).
Consumer protection and unfair terms
This is a particularly sensitive issue when it comes to consumer contracts. The Court of Cassation is questioning the compatibility of clauses dispensing with formal notice with consumer protection against unfair terms.
In an important judgment of 16 June 2021, the First Civil Chamber referred to the CJEU the question of whether these contractual dispensations can constitute unfair terms within the meaning of Directive 93/13/EEC (Civ. 1re, 16 June 2021, no. 20-12.154).
This can be seen as a desire to prevent the strong party to the contract from imposing provisions that create a significant imbalance to the detriment of the consumer.
Practical implications of the exemption
Legal risks for the creditor
Dispensing with formal notice is not without risk. Creditors who act without this formality run the risk of having their action contested if the exemption is not clearly established. It is therefore essential to be familiar with the situations in which formal notice is required and to know how to how to draft and notify it effectively.
Particular care must be taken with resolutory clauses. Failure to give proper notice, when required, can have serious consequences. Case law shows that in commercial leases, the absence of regular notice of default allows the refusal to renew to stand, but entitles the tenant to an eviction indemnity (Civ. 3e, 19 Dec. 2012, no. 11-24.251). It is therefore crucial to measure the legal effects and practical consequences of the formal noticeincluding when its exemption is at stake.
Proof of exemption
Proof of a legitimate exemption from formal notice is the responsibility of the person claiming it. For legal exemptions, it will be necessary to demonstrate that one of the cases listed is actually the case (definitive non-performance, urgency, explicit refusal).
For conventional exemptions, you will need to produce the contract and prove that the clause invoked is sufficiently clear and precise.
Current position in case law
Current case law reveals a pragmatic approach. While formal notice remains the principle, judges willingly recognise legitimate exceptions.
In the case of loan contracts, the tendency is to require a notice of default prior to the forfeiture of the term, unless there is an express and unequivocal provision to the contrary (Civ. 1re, 10 Nov. 2021, no. 19-24.386).
Even recent decisions confirm this position, such as the judgment of 4 April 2024, which states that "the notice of default prior to the acceleration of the loan only sufficiently notifies the borrower that, in the event of non-payment, the lender may invoke the acceleration of the loan". (Civ. 1re, 4 Apr. 2024, no. 21-12.274).
This rigour is designed to protect debtors from penalties that they may not have clearly anticipated. Given the complexity of these rules, it is always advisable to consult expert lawyers to secure your procedures and the management of your disputes and receivables.
Sources
- Civil Code, articles 1225, 1226, 1231, 1231-1, 1344 to 1345-3
- Cass., mixed court, 6 July 2007, no. 06-13.823
- Com. 9 July 2019, no. 18-14.029
- CA Orléans, 18 Nov. 2021, no. 20/005871
- Req. 4 Jan. 1927, DH 1927. 65
- Civ. 3e, 3 Apr. 1973, no. 72-10.247
- Civ. 1st, 22 May 2019, no. 18-13.246
- Civ. 1st, 25 May 2022, no. 20-20.513
- Civ. 1st, 16 June 2021, no. 20-12.154
- Civ. 3e, 19 Dec. 2012, no. 11-24.251
- Civ. 1st, 10 Nov. 2021, no. 19-24.386
- Civ. 1st, 4 Apr. 2024, no. 21-12.274
- Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts
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