The legal effects of formal notice: practical consequences

A formal notice is a key stage in the life of an obligation. It marks the transition from an amicable phase to a pre-litigation phase. Beyond its apparent simplicity, this legal act has considerable effects that deserve attention.

The main effects of a formal notice

Official summons of the debtor

The formal notice calls the debtor to account for his delay. It formalises the creditor's impatience. As specified in article 1344 of the Civil Code, it may take the form of a summons or an act of "sufficient interpellation".

The demand must be clear, precise and unequivocal. Case law requires that the formal notice "clearly express the creditor's desire to obtain satisfaction" (Cass. civ. 1re, 24 June 1975, no. 74-10.644).

Triggering default damages

Central effect: the formal notice triggers default interest. Article 1344-1 of the Civil Code states that in the event of an obligation to pay, it triggers interest at the legal rate without the creditor having to prove any prejudice.

In a ruling handed down on 14 October 2010, the Court of Cassation confirmed that "interest on arrears accrues from the date of formal notice" (Cass. civ. 1re, 14 Oct. 2010, no. 09-12.921).

Please note: this only applies to default damages. For compensatory damages, case law has adopted a different position.

Transfer of risk to the debtor

Article 1344-2 of the Civil Code provides for the transfer of risks. When the obligation relates to the delivery of a thing, the formal notice places the risks on the defaulting debtor.

This mechanism protects the creditor. If the item perishes after formal notice has been given, the debtor will not be able to claim force majeure as a defence.

Specific applications in various fields

Contractual liability: a prerequisite

In contractual matters, article 1231 of the Civil Code states that "unless the non-performance is definitive, damages are only payable if the debtor has first been put in default".

This rule is based on the principle of fairness. The debtor must be given a chance to perform before incurring penalties.

However, the Cour de cassation has qualified this requirement. In a judgment of the mixed chamber of 6 July 2007, it ruled that "formal notice is unnecessary where the non-performance of a contract has occurred and is causing damage" (Cass. ch. mixte, 6 July 2007, no. 06-13.823).

Resolutory clause: necessary precautions

In the case of resolutory clauses, articles 1225 and 1226 of the Civil Code require prior notice to be given. This must expressly mention the resolutory clause and warn the debtor of the consequences of non-performance.

To be valid, the formal notice must :

• Explicit reference to the resolutory clause
• Mention that the creditor will be entitled to cancel the contract
• Giving the debtor a reasonable period of time

Failure to do so may render the clause unenforceable.

Insurance contracts: a specific regime

When it comes to insurance, the Insurance Code imposes specific formalities. Article L.113-3 stipulates that cover can only be suspended 30 days after formal notice has been given by registered letter.

Case law has specified that the insurer does not have to prove receipt of this letter (Cass. crim., 14 Dec. 2010, no. 09-88.616). Sending it is sufficient.

This formal notice must state precisely the amount of the premium due (Cass. civ. 2e, 13 June 2013, no. 12-21.019).

Recovery of social security debts: a compulsory prerequisite

For social security contributions, Articles L.244-1 and L.244-2 of the Social Security Code require a formal notice to be served before any enforcement action is taken.

This formal notice is not a mere formality. It must enable the contributor to know "the nature, cause and extent of his obligation" (Cass. civ. 2e, 7 Apr. 2022, no. 20-19.959).

Strict formalities apply. Case law verifies that the debtor has received sufficient information to be able to settle or contest the situation.

Limits and exceptions

Situations where formal notice is unnecessary

Case law has identified a number of cases where formal notice is not required. Understanding these exemption situations enables us to understand how its effects can occur even in the absence of this formal act.

1. When non-performance is definitive and irreversible (Cass. ch. mixte, 6 July 2007, no. 06-13.823)
2. When the debtor has expressly stated that he refuses to perform (Cass. civ. 3e, 3 Apr. 1973, no. 72-10.247)
3. Serious conduct justifying unilateral termination (Cass. com., 9 July 2019, no. 18-14.029)
4. On cessation of business or compulsory liquidation (Cass. civ. 1re, 3 March 1998, no. 95-10.293)

Consequences of formal irregularities

The consequences of an irregular formal notice vary from one area to another. To ensure that it is valid and fully effective, it is crucial to mastering drafting and notification techniques.

For credit, case law is strict. A loan cannot be accelerated without a valid formal notice (Cass. civ. 1re, 10 Nov. 2021, no. 19-24.386).

In the case of social security contributions, an insufficiently reasoned formal notice invalidates the subsequent enforcement action (Cass. civ. 2e, 18 March 2021, no. 19-23.477).

However, certain formal defects may be tolerated. The omission of certain administrative information does not necessarily affect the validity of the deed (Cass. civ. 2e, 5 July 2005, no. 04-30.196).

If there are several debtors, beware: a formal notice sent to one debtor only has effect with regard to the others if there is joint and several liability (Cass. civ. 1re, 20 Dec. 2017, no. 16-12.129).

Sources

• Articles 1231, 1344 to 1345-3 of the Civil Code
• Articles L.113-3 and R.113-1 of the Insurance Code
• Articles L.244-1, L.244-2 and R.133-3 of the Social Security Code
• Cass. ch. mixte, 6 July 2007, no. 06-13.823
• Cass. civ. 1re, 10 Nov. 2021, no. 19-24.386
• Cass. civ. 2e, 7 Apr. 2022, no. 20-19.959
• Deharo G., "La contrainte: de l'acte unilatéral à la contradiction", RJC July-August 2022, No. 4
• Répertoire de procédure civile, "Mise en demeure", Dalloz, 2022