French Business Law

French law contains no explicit provision obliging a seller to warrant that the goods sold do not infringe third party intellectual property rights. According to French case law however, such a warranty may be inferred from article 1626 of the Code Civil (French Civil Code), which obliges a seller to warrant the purchaser against dispossession of the purchased goods. The seller’s obligation to warrant the purchaser that the goods sold…

Although standard, the so-called “miscellaneous” provisions must not be overlooked while reviewing or drafting a contract. Below is a description of such provisions and an explanation why they are important: Independent contractors If the relationship between a service provider and its client is, or transforms into, one of dependence, a risk exists that such relationship could be qualified as an employment contract, an agency agreement or a partnership, with potentially…

Commercial agency agreements (and the activity of commercial agent) are strictly regulated in France. The agent enjoys considerable protection as a matter of law, and commercial agency agreements must be drafted with caution to protect both the interests of the agent and those of the principal. Most legal provisions regarding the status and protection of commercial agents are mandatory and may not be contracted out. Who may be qualified as…

In France, a commercial company must be designated by a corporate name, which is written into its articles of association. The corporate name of the company is freely chosen by the shareholders. The corporate name may be related to the company’s purpose, it may include the first or last name of one or more shareholders, or it may be a fancy name. In a decision dated April 19, 1974, the…

French law considers that resale at a loss is incompatible with the establishment of healthy competition and that it does not yield into any advantage for consumers, hence its prohibition. In fact, the loss incurred on items which are sold at a loss is most often offset by the profit made on others. This is why, article L 442-5, I-§1 of the French Commercial Code prohibits the resale of any…

French Company Registration – Which Form to Choose To register a limited liability company in France, you must first determine which company form you would like to choose. Indeed, French law provides for three types of limited liability companies: a SARL (“société à responsabilité limitée”), which a simple to operate however a little rigid form of French ltd; a SAS (“société par actions simplifiée”), which is a more flexible limited…

Corporate income tax in France mainly concerns the profits of certain companies and legal persons domiciled in France. Determination of profits taxable at corporate income tax rates in France In application of the provisions of I of article 209 of the French Tax Code (“Code Général des Impôts”) relating to the rules of territoriality, the place of business operations determines in principle – subject to derogations resulting in particular from…

Pursuant to article L. 1262-1 of the French Labour Law Code, an employer established outside France may temporarily post workers on the French territory, provided that there is an employment contract between said employer and the employees, and provided further that the employment relationship between the employer and the employees continues during the period of the posting. The employees who are posted to France by a foreign company are entitled…

On incorporation of a French company, the shareholders are obliged to subscribe for the entire issued share capital of the company (that is, the share capital registered in its bylaws), although they may pay up only a fraction thereof (for example, 50% of the issued share capital of a SAS and 25% of the issued share capital of a SARL). The amount of unpaid share capital must however be paid…

On incorporation of a SAS, the shareholders of the company must subscribe the entire amount of issued share capital (that is, the amount of registered share capital, which corresponds to the amount of share capital indicated in the bylaws). Thus, if the registered share capital of a SAS is 10.000€ divided into 10.000 shares of 1€ par value each, all of the 10.000 shares must be subscribed for by the…