Refusing to Sell, Imposing Cash Payment and Suspending Contracts in France

A Practical Legal Guide for Businesses Facing Non-Paying Clients

In commercial life, few situations are as uncomfortable as dealing with a customer who no longer pays on time, whose financial situation deteriorates visibly, yet who continues to place orders and demand deliveries. For suppliers and service providers operating in or with France, this raises an essential question: can you legally refuse to sell, impose immediate payment, or suspend contract performance without exposing yourself to liability?

French law provides clear answers — but they are nuanced, case-specific, and strictly supervised by the courts. Acting too late exposes businesses to unpaid debts and insolvency risk. Acting too aggressively can lead to litigation, damages, or even criminal sanctions in certain contexts.

This article offers a comprehensive and practical overview of when refusal to sell is lawful, when it becomes illegal, how payment conditions may be tightened, and how contracts can be suspended as a defensive tool rather than a source of liability. It is written for business leaders, financial directors, and legal teams dealing with unpaid invoices, fragile clients, or commercial disputes in France.

Refusal to Sell to a Business Customer: A Legitimate Protective Measure

In business-to-business relationships, French law recognises an essential principle: a supplier is not required to finance its customers. This principle underlies much of the case law governing refusal to sell.

A company may lawfully refuse to accept or fulfil a new order from a professional client when objective circumstances demonstrate a real financial risk. Courts have consistently validated refusals where the client is notoriously insolvent, where unpaid invoices have accumulated to an excessive level, or where the supplier’s exposure has become disproportionate to the guarantees offered.

In practice, the legality of a refusal to sell does not depend on hostility or strategy, but on risk assessment. When a supplier can demonstrate that continuing deliveries would amount to extending unsecured credit to a financially weakened client, refusal is generally upheld.

This logic was firmly established by French courts decades ago and remains fully applicable today. Judges have repeatedly ruled that a supplier who previously granted payment terms does so because it can normally offset that risk through banking mechanisms such as discounting or credit insurance. Once these mechanisms disappear — for example because banks refuse to discount the client’s payment instruments — the supplier cannot be forced to continue supplying goods or services, even against immediate payment, if the overall risk becomes unreasonable.

In other words, creditworthiness is not frozen in time. A client who was solvent yesterday may not be today, and French law allows suppliers to react accordingly.

Anticipating Difficulties Through Contractual Clauses

Although refusal to sell may be legally justified even in the absence of specific contractual language, experienced businesses do not rely solely on litigation logic. They anticipate disputes.

French courts strongly favour suppliers who have clearly warned their clients in advance, particularly through well-drafted general terms and conditions. Clauses allowing refusal to sell, or the imposition of stricter payment terms in the event of late payment or deterioration of credit, are widely accepted — provided they are clear, proportionate, and properly communicated.

Such clauses typically provide that if a buyer fails to meet its payment obligations under a previous transaction, the supplier may refuse subsequent orders unless outstanding invoices are settled and satisfactory guarantees are provided. These clauses often also exclude any discount for immediate payment once trust has been broken.

From a legal and strategic perspective, these provisions serve two purposes. First, they strengthen the supplier’s position in court by demonstrating transparency and good faith. Second, they act as a deterrent, encouraging payment before disputes escalate.

However, drafting matters. Overly aggressive or ambiguous clauses may be challenged. This is why businesses operating in France — especially foreign companies — benefit greatly from having their contractual documentation reviewed by lawyers familiar with French commercial litigation.

When a Business Cannot Refuse to Sell

While French law protects suppliers against abusive financial risk, it does not allow refusal to sell to be used as a tool of pressure unrelated to payment or solvency.

Courts carefully examine the context. If a refusal appears arbitrary, retaliatory, or disconnected from objective indicators of risk, it may be deemed abusive. This is particularly sensitive when the supplier occupies a dominant position or when the client is economically dependent.

A supplier must therefore be able to demonstrate consistency. Refusing to sell to one client while continuing to supply others in identical situations can raise suspicions. Likewise, imposing disproportionate conditions designed to force the client out of the market may backfire.

French judges are pragmatic but demanding. They expect suppliers to act firmly, not vindictively.

Refusal to Sell to Consumers: A Fundamentally Different Regime

What is lawful in B2B relationships becomes potentially criminal in dealings with consumers.

Under French consumer law, refusing to sell a product or provide a service to a private individual is, in principle, an offence. This rule reflects a strong public policy objective: protecting consumers from arbitrary exclusion from the market.

A professional who refuses to sell to a consumer may face criminal fines, with significantly higher penalties for companies than for individuals. The sanction applies not only to outright refusal, but also to unjustified refusal to renew a service contract or provide access to a facility open to the public.

That said, the law recognises that refusal is sometimes justified. A refusal may be lawful if based on a legitimate reason, such as proven insolvency, abnormal demand, unavailability of stock, or objectively inappropriate behaviour. The assessment is made case by case, and the burden of proof rests squarely on the professional.

French courts have convicted businesses for refusals that may seem trivial from a commercial perspective: refusing to sell an item displayed in a shop window, declining to renew a parking contract without formal justification, or denying access to services without proper procedural safeguards.

Conversely, courts have accepted refusals where customer behaviour was persistently abusive or insulting, or where the nature of the business had legitimately changed.

The lesson is clear: consumer refusals are legally dangerous territory and should never be handled casually.

Discriminatory Refusal: Severe Criminal Consequences

The most serious risk arises when a refusal to sell or provide services is linked to discrimination.

French criminal law treats discriminatory refusal as a distinct offence, punishable by heavy fines and imprisonment. The scope of protected criteria is broad, covering origin, nationality, religion, gender, health status, disability, family situation, and more.

When discrimination occurs in a place open to the public or is used to deny access to services, penalties increase further. Companies may also face ancillary sanctions, including exclusion from public contracts, judicial supervision, closure of establishments, and mandatory publication of the conviction.

Importantly, criminal liability may attach not only to the company, but also to its managers and employees. Courts have not hesitated to sanction real estate agents, restaurateurs, tourism offices, and service providers whose practices indirectly facilitated discrimination.

No business should ever attempt to justify a refusal to sell without careful legal analysis when personal characteristics of the customer are involved.

Imposing Cash Payment: A Lawful Response to Financial Deterioration

Refusing to sell is not the only defensive option available to suppliers. French law allows businesses to tighten payment conditions when trust erodes.

The principle of equal treatment applies only between customers presenting comparable guarantees of solvency. When objective indicators undermine confidence — repeated late payments, unpaid bills, rejected payment instruments, increasing outstanding balances, or withdrawal of banking support — the supplier may lawfully impose immediate payment.

This may include reducing payment terms, requiring payment before delivery, demanding a certified cheque, or withdrawing customary discounts associated with prompt payment. Courts have consistently upheld such measures when proportionate and justified by concrete financial indicators.

However, imposing cash payment must remain reasonable. French judges are sensitive to abuses, particularly when a supplier attempts to impose conditions that deviate radically from commercial practices or that are designed to destabilise the client rather than secure payment.

Here again, anticipation through contractual clauses is strongly recommended. Clients warned in advance that cash payment may be imposed in case of difficulty are far less likely to succeed in challenging such measures.

Suspending Contract Performance: The Exception of Non-Performance

One of the most powerful — and often misunderstood — tools in French contract law is the exception of non-performance.

Under the French Civil Code, a party may refuse to perform its obligation if the other party fails to perform its own and if that failure is sufficiently serious. For suppliers, this means that deliveries or services may be suspended when the client does not pay.

This mechanism allows businesses to protect themselves without immediately resorting to court proceedings. It is particularly effective in preventing the accumulation of additional unpaid invoices and in encouraging rapid settlement.

Crucially, suspension does not terminate the contract. It simply pauses performance until payment is made. Once the client fulfils its obligation, the supplier must resume its own.

Even when contracts provide for late-payment penalties, the exception of non-performance remains available. French courts have explicitly confirmed that contractual penalties do not deprive suppliers of this defensive right.

Advance Suspension Before Default

French law goes even further by allowing suspension before actual non-payment, in situations where it is manifest that the client will not perform at the due date and where the consequences would be sufficiently serious.

This anticipatory suspension is strictly regulated. The supplier must act in good faith and must notify the client promptly. Failure to notify may expose the supplier to liability.

When properly implemented, this mechanism allows businesses to limit losses and avoid being trapped into delivering goods or services that will never be paid for.

Limits and Judicial Control

None of these tools is unlimited.

French courts insist on proportionality. A minor unpaid amount will not justify a drastic suspension. Nor will suspension be tolerated where it causes disproportionate harm to a client in a situation of economic dependence, particularly if no prior attempt at amicable resolution was made.

Judges carefully examine whether the supplier acted prudently, whether warnings were issued, whether negotiations were attempted, and whether the response matched the gravity of the breach.

In emergency situations, clients may apply to summary proceedings to force resumption of deliveries. In such cases, courts may order provisional payments or require funds to be deposited with a third party as security.

This judicial oversight does not weaken suppliers’ rights — but it does mean those rights must be exercised strategically.