The reform of contract law, orchestrated by the Order of 10 February 2016 and finalised by the Ratification Act of 2018, introduced a far-reaching provision into the Civil Code: article 1171. This text extends protection against terms that create a significant imbalance beyond consumer law alone, to apply to a vast category of contracts that were previously less protected. It is aimed directly at situations where a party, whether an individual or a business, has contractual terms imposed on them without any real room for negotiation. Understanding how this article works has therefore become a major challenge in securing commitments. Go to the key article for a comprehensive understanding of significant imbalance in French law.
Introduction to Article 1171 of the Civil Code: a major innovation
Article 1171 of the French Civil Code marks a break with the traditional concept of a contract. Before the 2016 reform, the fight against unfair terms was mainly confined to relations between a professional and a consumer. The legislator wanted to extend this control to other types of contractual relationships, particularly those between professionals or private individuals, where an imbalance of economic power prevents fair negotiation. The aim is clear: to provide a legal tool to neutralise stipulations that take advantage of the absence of negotiation, giving one party a disproportionate advantage over the other.
The introduction of this mechanism into ordinary law responds to an economic reality where many contracts are standardised and non-negotiable. The Ratification Act of 20 April 2018 clarified and refined the mechanism, in particular by redefining its scope. In temporal terms, it is essential to distinguish between two regimes. The first version of article 1171, resulting from the 2016 Ordinance, applies to contracts concluded between 1 October 2016 and 30 September 2018. The current version, as amended by the Ratification Act, applies to all contracts entered into on or after 1 October 2018. This distinction is important because the criteria for application have changed, making analysis of the date on which the contract was concluded an essential first step.
The contract of adhesion: a sine qua non for the application of article 1171
The protection offered by article 1171 is not universal; it is strictly reserved for a well-defined category of contracts: the contract of adhesion. Unlike a contract of mutual agreement, where each clause is in principle freely negotiated between the parties, a contract of adhesion is one which, according to article 1110 of the Civil Code, "contains a set of non-negotiable clauses determined in advance by one of the parties". For a contract to be classified as a contract of adhesion, three cumulative criteria must therefore be met.
Firstly, there must be a "set of clauses". This concept implies that a single non-negotiable clause is not enough to bring the contract into this category. Case law will have to specify what this "set" covers, but it is likely to be a body of stipulations sufficiently dense to structure the contract significantly. It may include general terms and conditions of sale or service, or a set of specific clauses governing important aspects of the contractual relationship.
Secondly, this set of clauses must be "non-negotiable". This criterion does not refer to the absence of actual negotiation, but to the impossibility for one of the parties to discuss the content. Proving non-negotiability can be tricky. It may arise from the very nature of the contract (standard insurance contract, contract with an energy supplier, conditions of use of an online platform) or from the circumstances in which it was concluded. The fact that certain clauses have been negotiated does not rule out the classification of a contract of adhesion if a substantial set of clauses has been imposed.
Finally, these clauses must have been "determined in advance by one of the parties". This criterion underlines the unilateral nature of the preparation of the contract. The party in a position of economic or informational strength drafts the contract to his or her own advantage, and the other party simply has to agree to it en bloc. It does not matter whether the person drafting the contract is a third party (a lawyer, a professional body); what matters is that one of the parties to the contract has imposed its content. It is the combination of these three elements that opens the door to the review of significant imbalance.
Classification of a significant imbalance under ordinary law
Once a contract has been classified as a contract of adhesion, the judge may examine whether one of its non-negotiable clauses creates a "significant imbalance" between the rights and obligations of the parties. The imbalance lies in the clause itself. It is not a question of assessing the overall economic balance of the contract, but rather the excessive advantage that a particular stipulation confers on one party without sufficient consideration for the other. Unlike certain branches of law, such as restrictive competition practices, it is not necessary to prove wrongful behaviour or abuse on the part of the dominant party. The review is objective: it focuses on the content of the clause and its legal effects.
The assessment method is based on a concrete analysis. The judge must assess whether the disputed clause creates a clear breach of equality between the contracting parties. The imbalance must be "significant", which implies a certain threshold of seriousness. A simple clause that is slightly more favourable to one party will not suffice. Judges will probably draw on criteria already tried and tested in consumer law, such as the absence of reciprocity (a right granted to one party but denied to the other), the granting of excessive unilateral powers, or an unreasonable limitation of the member's rights.
However, the legislator has placed a significant limit on this power of control. Paragraph 2 of article 1171 states that the assessment of a significant imbalance "shall not relate to the definition of the main subject matter of the contract or to the adequacy of the price for the service provided". This exclusion is fundamental. The judge cannot use this text to redraft the contract or to rule that a price is too high in relation to the service or good provided. It cannot review the economic balance of the transaction. These are therefore the so-called "ancillary" clauses: liability clauses, termination clauses, penalty clauses, jurisdiction clauses, and so on. It is within these clauses that the imbalance may be sanctioned.
Relationship of article 1171 with special rights
The introduction of a general law mechanism to combat unfair terms inevitably raises the question of its relationship with pre-existing special provisions. Article 1105 of the Civil Code sets out the principle that special rules derogate from general rules (specialia generalibus derogant). In practice, this means that article 1171 is mainly subsidiary.
In relations between a professional and a consumer, consumer law remains the priority regime. Its arsenal is much more developed, in particular with lists of terms presumed to be unfair (the "black" and "grey" lists of article R. 212-1 et seq. of the Consumer Code) and the possibility for consumer associations to take collective action. For more information, visit distinguish between the treatment of significant imbalance under ordinary law and that under consumer lawHowever, it should be remembered that it is almost always in the consumer's interest to rely on special law, which is more protective and procedurally more accessible.
Similarly, in commercial relationships governed by article L. 442-1 of the French Commercial Code, this special text takes precedence over ordinary law. The mechanism for combating significant imbalances in business-to-business relations is also broader, as it allows for price control and does not require the contract to be classified as a contract of adhesion, but rather proof of a "submission". A professional who is the victim of a practice restricting competition will therefore have to take action on this specific basis. Understanding the specific features of significant imbalance in business-to-business relations is therefore essential to ensure that the wrong legal basis is used.
The practical value of article 1171 therefore lies in areas not covered by these special rights. These are mainly contracts between individuals, or between professionals who do not fall within the scope of the Commercial Code (certain liberal professions, for example). It is in these grey areas that ordinary law is most relevant, providing a safety net where none existed before.
The sole sanction: the clause deemed unwritten
When a judge finds that a non-negotiable clause in a contract of adhesion creates a significant imbalance, the penalty is unique and radical: the clause is "deemed unwritten". This sanction is highly effective. It involves neither nullity, which could destroy the entire contract, nor revision, which would allow the judge to modify the clause to make it more balanced. The judge simply sets aside the disputed clause, as if it had never existed.
The main consequence is that the contract is maintained, but purged of its unfair stipulation. It continues to produce its effects for all its other provisions, provided, of course, that it can survive without the annulled clause. If the clause was essential to the balance of the contract, its deletion could lead to the annulment of the entire contract, but this situation should remain exceptional. In most cases, the contract will continue, simply with the unbalanced clause removed.
From a procedural point of view, this sanction has a considerable advantage: an action for a declaration that a clause is unwritten is not time-barred. This means that the victim of such a clause can take legal action at any time, without being constrained by the five-year limitation period applicable to most contractual actions. This non-applicability of the statute of limitations considerably strengthens the protection of the weaker party. However, there are limits. The sanction does not allow for damages to be awarded for any loss suffered as a result of the past application of the clause. Moreover, it does not provide for collective redress, as each victim must act individually to assert his or her rights.
Practical implications for businesses and individuals
The existence of article 1171 has practical consequences for all those who draft and sign contracts. For companies that use standard contracts or general terms and conditions (service providers, franchisors, commercial lessors, etc.), a contractual audit is essential. It is vital to ensure that non-negotiable clauses do not create excessive unilateral advantages. Particular attention should be paid to clauses limiting liability, setting penalties, or organising the terms and conditions for terminating the contract. A clause found to be unfair may in fact be neutralised, depriving the company of the protection it was counting on.
For individuals or small businesses who are offered a membership contract, this text provides a new means of redress. If a clause seems manifestly unfair, it is now possible to challenge it in court, even outside the protective scope of consumer law. In such cases, it is essential to consult a lawyer, both to analyse the relevance of the action and to bring it to a successful conclusion. The lawyer's role is twofold: upstream, he or she helps to negotiate clauses that can be negotiated and to identify the risks associated with non-negotiable clauses; downstream, he or she assists the injured party to challenge an unbalanced stipulation.
The case law relating to article 1171 is still developing, but it is already outlining the contours of a strengthened judicial review of the contractual balance in adhesion contracts. Future decisions will undoubtedly specify the types of clauses most often penalised and the situations in which the imbalance will be deemed 'significant'.
For an in-depth analysis of your membership contracts and to assess the risks or remedies associated with a potentially unbalanced clause, consult our expert commercial lawyers to analyse and secure your membership contracts.
Sources
- Civil Code, articles 1105, 1110 and 1171
- Consumer Code, articles L. 212-1 et seq., R. 212-1 et seq.
- French Commercial Code, Article L. 442-1
- Order no. 2016-131 of 10 February 2016 reforming the law of contracts, the general system and proof of obligations
- Act No. 2018-287 of 20 April 2018 ratifying Order No. 2016-131
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