When a counterparty stops paying or stops performing, the real problem is rarely the theory of breach. The real problem is time. A contract can continue to produce effects while you argue about seriousness of the breach, whether the debtor deserves “one last chance,” and what a judge should do. During that time, the debtor may keep using the asset, keep occupying premises, keep benefiting from services, or keep delaying payment. If you want leverage, you need a termination mechanism that works in the real world.
In French law, one of the strongest tools for this is the automatic termination clause, also called resolutory clause or, in French, “clause résolutoire” or “clause de résolution de plein droit”. When drafted correctly, it shifts the dispute away from “should the contract be terminated?” and toward “did the clause’s conditions occur?” That difference matters. It can reduce uncertainty, speed up the process, and limit the debtor’s ability to negotiate by delay.
This guide explains, in a practical and operational way:
- why relying on judicial termination is often slower and less predictable;
- what a resolutory clause can do (and what it cannot do);
- how judges interpret clauses and what wording courts commonly reject;
- how to structure a clause that is clear, enforceable, and evidence-friendly;
- how the formal notice (“mise en demeure”) should be handled;
- what happens in court (including urgent proceedings);
- what changes if the debtor enters safeguard, judicial reorganisation, or liquidation;
- how debtors try to resist termination and how to reduce those risks at the drafting stage.
Target audience: French and foreign companies (UK, EU, US, UAE, India, China, etc.) contracting with counterparties in France, and any business that wants to secure its contracts, improve enforcement, and reduce “time lost” when the other party defaults.
Important: This article is for general information. It is not legal advice. The practical steps described must be adapted to your contract type (sale, services, commercial lease, distribution, etc.), your evidence, and the debtor’s situation.
1. Why plan for termination upfront?
1.1 Judicial termination: slow, uncertain, and often used as a negotiation weapon
If your contract has no strong termination mechanism, you may need to seek judicial termination (“résolution judiciaire” for contracts; “résiliation judiciaire” for leases). This often becomes a long route because:
- The judge may consider that the breach is not serious enough to justify termination.
- The judge may grant the debtor time to perform or pay (grace periods), which can neutralise your leverage.
- The debtor can raise arguments and factual disputes that make the case more complex and slower.
In other words, even when you feel the situation is obvious (“they did not pay”), the legal outcome may still depend on a judge’s assessment of seriousness and fairness. For a creditor, that is a weak position.
1.2 What a resolutory clause changes in practice
A resolutory clause is designed to remove as much discretion as possible. It is not magic and it does not eliminate disputes, but it can:
- make termination more predictable;
- reduce the debtor’s ability to request “one more chance”;
- allow you to pursue faster proceedings (often urgent proceedings, depending on the contract);
- strengthen your bargaining position in settlement discussions.
A well-drafted clause is not a decorative sentence. It is a process in contract form: it defines the trigger, the notice, the time period, and what happens next.
A resolutory clause shifts the balance of power.
1.3 Termination by notification: a third route (useful but risky)
French law also allows termination by notification (Civil Code, article 1226). This sits between judicial termination and a resolutory clause. It can be attractive because you do not wait for a judge to terminate the contract. But it is done at your own risk: if the debtor challenges the termination, you may need to prove the seriousness of the breach, and you can end up litigating the same uncertainty you were trying to avoid.
For many businesses, the resolutory clause remains the more structured and defensive approach—especially when you want the process to be clear, evidence-based, and enforceable.
2. The resolutory clause under French law: nature, scope, and limits
2.1 Legal definition and statutory basis
Under French law, a resolutory clause (clause résolutoire) is a contractual provision by which the parties agree in advance that the contract will be terminated automatically if one of the obligations expressly designated in the clause is not performed. This mechanism is now codified in Article 1225 of the French Civil Code, which provides that:
“A resolutory clause specifies the commitments whose non-performance will result in termination of the contract. Termination is effective once the debtor has been given formal notice to perform, unless otherwise agreed.”
The essential feature of the resolutory clause is therefore not severity, but anticipation. The parties remove, ex ante, the uncertainty that normally surrounds termination by agreeing that certain breaches will automatically trigger the end of the contract. The judge is not asked to assess whether termination is justified in equity; rather, the judge is asked to verify whether the contractual mechanism has been correctly implemented.
2.2 What distinguishes a resolutory clause from judicial termination
In the absence of a resolutory clause, a creditor seeking to terminate a contract must generally bring an action for judicial termination (résolution judiciaire), pursuant to Article 1227 of the Civil Code. This route exposes the creditor to two structural risks.
First, the judge retains full discretion to assess whether the breach is “sufficiently serious” to justify termination. French case law is constant on this point: judges may refuse termination if they consider that the breach, although real, does not justify annihilating the contract (Cass. civ. 3rd, 15 July 1999, no. 97-16.001).
Second, even where the breach is established, the judge may grant the debtor grace periods (délais de grâce), thereby postponing the effects of termination and depriving the creditor of immediate leverage.
The resolutory clause is designed precisely to neutralise these two risks. Once the clause is validly drafted and properly triggered, the judge no longer has the power to assess the seriousness of the breach or to delay the effects of termination, except in the limited cases expressly provided by law.
2.3 What a resolutory clause does not allow
It is essential to understand that a resolutory clause does not operate outside the legal framework of French contract law. In particular, such a clause cannot provide that the contract will be terminated solely as a result of the opening of insolvency proceedings against the debtor. Any clause providing for automatic termination in the event of safeguard, judicial reorganisation, or liquidation is unenforceable, as it violates the public policy rules governing collective proceedings (see, for example, Commercial Code, Article L. 622-13).
Similarly, a resolutory clause does not dispense the creditor from complying strictly with the procedural steps provided for in the contract and, where applicable, by statute. In practice, many clauses fail not because they are conceptually invalid, but because they are improperly implemented.
3. Interpretation of resolutory clauses by French courts
3.1 The requirement of precision under Article 1225 of the French Civil Code
Article 1225 of the Civil Code imposes a strict requirement: the clause must specify the obligations whose breach will trigger termination. French courts interpret this requirement rigorously. If the clause is vague, ambiguous, or generic, judges will refuse to treat it as a true resolutory clause and will instead relegate the creditor to judicial termination.
Moreover, pursuant to Article 1190 of the Civil Code, any ambiguity in a contract is interpreted against the party who proposed it, which in practice is often the creditor. This rule explains why courts frequently neutralise poorly drafted clauses.
3.2 Clauses that are not considered resolutory clauses
French case law provides numerous examples of clauses that are insufficient to deprive the judge of discretion.
A clause stating that “in the event of non-performance, the contract shall be terminated” is generally treated as a mere restatement of the law and not as a resolutory clause. Likewise, a clause providing that the creditor “may seek termination” merely preserves the right to bring an action for judicial termination and does not establish automatic termination (Cass. civ. 3rd, 24 February 1999, no. 96-22.664).
Even clauses stating that “non-performance will result in termination” may be insufficient if they do not clearly exclude the possibility of judicial grace periods. In such cases, courts may still allow the debtor time to perform.
3.3 Clauses recognised as true resolutory clauses
By contrast, courts recognise as resolutory clauses those provisions that clearly state that termination will occur de plein droit, after a defined formal notice, and without the possibility of judicial moderation.
Clauses expressly providing that the contract will be terminated automatically if payment is not made by a specified deadline, following an unheeded formal notice, are consistently upheld. In such cases, judges limit themselves to verifying that the contractual conditions have been met and cannot refuse termination or grant grace periods (see, for example, Cass. civ. 3rd, 5 February 1992, no. 90-18.557).
When payment stops, time works against you. Automatic termination limits delay tactics.
4. The strategic value of the resolutory clause for the creditor
4.1 A powerful leverage mechanism
The resolutory clause constitutes a particularly effective pressure mechanism. The debtor knows that, once the formal notice has been served and the contractual period has expired, there is no realistic hope of judicial leniency. This certainty often leads to rapid regularisation or to structured negotiations under the creditor’s control.
Importantly, Article 1224 of the Civil Code does not require the breach to be “sufficiently serious” for a resolutory clause to apply. The parties’ agreement prevails.
4.2 Interaction with insolvency proceedings
When insolvency proceedings are opened, the creditor may no longer seek termination of the contract on the basis of pre-opening payment defaults (Commercial Code, Articles L. 622-21 and L. 641-11-1). However, if the resolutory clause has already produced its effects before the opening judgment, the creditor may seek judicial recognition of the termination (Cass. com., 18 November 2014, no. 13-23.997; Cass. com., 13 September 2023, no. 22-12.047).
This makes timing decisive. Creditors who delay formal action until insolvency is declared often lose the benefit of the clause.
5. Drafting a resolutory clause that withstands judicial scrutiny
A resolutory clause should not be drafted as a threat, but as a procedure embedded in the contract. It must identify the trigger, the notice mechanism, the cure period, and the automatic effect of termination.
In practice, the clause should clearly identify the contractual obligations whose breach will trigger termination, specify whether a formal notice is required, indicate the method by which that notice must be served, and state the precise period granted to the debtor to cure the breach. It should also state unequivocally that termination will occur automatically if the breach is not cured within that period.
Where the creditor wishes to retain flexibility, the clause may provide that termination will occur “at the creditor’s discretion.” This allows the creditor to accept late performance without forfeiting the clause.
6. Formal notice (mise en demeure): a decisive procedural step
6.1 Mandatory content and legal framework
Unless the clause expressly excludes it, termination is conditional upon an unsuccessful formal notice. Article 1225, paragraph 2, of the Civil Code requires that the notice expressly refer to the resolutory clause. Since the 2016 reform, courts interpret this requirement strictly.
In practice, it is advisable to reproduce the clause verbatim in the formal notice and to describe precisely the breaches relied upon. Failure to do so may allow the debtor to argue that they were not properly informed of what was required to avoid termination.
6.2 Sector-specific formalities
Certain contracts are subject to mandatory notice formalities. For example, in commercial leases, Article L. 145-41 of the Commercial Code requires that the formal notice be served by a bailiff (commissaire de justice), specify the breach, and grant a minimum period of one month to regularise. Any clause providing for a shorter period is null and void (Cass. civ. 3rd, 11 December 2013, no. 12-22.616).
7. Judicial proceedings and the limited role of the judge
Although termination operates automatically, it must generally be declared by a judge in order to be enforced. The creditor may seize the summary proceedings judge (juge des référés) to have the termination recorded, provided no serious dispute exists (Cass. civ. 3rd, 26 June 1991, no. 89-19.489).
Where the clause is clear and the breach undisputed, summary proceedings offer a fast and effective route. However, if the debtor raises a serious dispute, the creditor may be forced into ordinary proceedings, with longer timelines.
8. Limits to judicial intervention
Once a resolutory clause has been validly triggered, judges cannot consider the proportionality of the sanction or the good faith of the debtor. French case law is unequivocal on this point: even minimal outstanding amounts or partial performance do not prevent termination once the contractual conditions are met (Cass. civ. 3rd, 10 March 1993, no. 91-12.031; Cass. civ. 3rd, 24 September 2003, no. 02-12.474).
Grace periods are, in principle, excluded once the clause has taken effect, subject to limited statutory exceptions, notably in commercial lease matters.
In insolvency, timing decides everything. A well-triggered clause can preserve your rights.
9. Conclusion: a clause that must be treated as a legal mechanism, not a formula
The resolutory clause is one of the most effective contractual tools available to creditors under French law. When properly drafted and rigorously implemented, it transforms contract termination from a discretionary judicial remedy into a predictable legal mechanism.
Its effectiveness depends on four cumulative factors: precise drafting, strict compliance with notice requirements, disciplined contract management, and timely action in the face of default. Used correctly, it significantly strengthens the creditor’s position, including against sophisticated debtors and in high-risk situations such as impending insolvency.
