Using General Terms and Conditions of Sale to Prevent Disputes and Non-Payment

General terms and conditions of sale play a decisive role in French commercial litigation. When payment is contested, courts do not merely verify whether goods were delivered or services performed; they examine whether the creditor may validly rely on its contractual clauses. In practice, many recovery actions fail because the supplier cannot prove that its general terms were properly communicated and accepted before the transaction.

Duty to communicate general terms in B2B relationships

Under Article L. 441-1, II of the French Commercial Code, any producer, service provider, wholesaler, or importer who establishes general terms and conditions of sale is required to communicate them to any professional buyer who requests them, using any medium that constitutes a durable record. A refusal to communicate applicable terms may give rise both to civil liability under Article 1240 of the Civil Code and to administrative sanctions (Article L. 441-1, IV, with fines up to €75,000 for legal entities).

Although the post-2019 wording refers to operators who “establish” general terms, prior case law had already made clear that the absence of pre-drafted terms does not excuse non-communication (Cass. com., 18 January 1994, no. 92-11.425). Pending clarification under the new regime, prudence dictates maintaining written terms.

The obligation to communicate applies only to actual or potential customers. A competitor cannot rely on this duty to demand disclosure (Cass. com., 1 June 1999, no. 97-15.421).

Differentiated general terms by customer category

Article L. 441-1, II expressly allows suppliers to draft different general terms for different categories of buyers, provided the categorisation is based on objective criteria and does not amount to abuse. The supplier may lawfully refuse to disclose terms applicable to another category if it can establish that the requesting buyer does not belong to it (Cass. com., 29 March 2017, no. 15-27.811).

Case law confirms that a supplier may even draft category-specific terms for a single client, provided the distinction is objectively justified (CEPC, Opinion no. 08-12-19-02). Conversely, refusal to communicate the correct category terms may give rise to damages where the buyer demonstrably falls within that category (Cass. com., 28 September 2022, no. 19-19.768).

Mandatory clauses and useful risk-management provisions

Pursuant to Article L. 441-1 of the Commercial Code, general terms must set out:

• pricing mechanisms (including unit price scales where applicable);

• price reductions;

• payment terms.

Payment terms must also specify late-payment penalties and their applicable rate, in accordance with Article L. 441-10, II.

Beyond these mandatory elements, general terms are a primary tool for preventing disputes. Properly drafted clauses may legitimately allow the supplier, among other things, to suspend ongoing orders in the event of non-payment, or to retain ownership of goods until full payment is received (reservation of title), provided such clauses are lawfully incorporated.

Requirement of prior knowledge and acceptance by the client

A supplier may rely on its general terms only if it can prove that the buyer was able to take notice of them and accepted them before ordering. This rule, long established by case law, is now codified in Article 1119, paragraph 1 of the Civil Code, which provides that general terms have effect only if they were made known to the other party and accepted.

Acceptance does not necessarily have to be in writing. Courts recognise electronic acceptance mechanisms, including “click-wrap” systems, provided the buyer had the possibility to consult, save, and print the terms prior to ordering (CJEU, 21 May 2015, C-322/14; CJEU, 24 November 2022, C-358/21).

Conversely, general terms printed on the back of invoices, in illegible font, or not referenced in the contractual documents, have repeatedly been held unenforceable (Cass. com., 16 March 2022, no. 20-22.269).

Signature as the safest form of proof

Although not legally mandatory, obtaining the buyer’s signature remains the most secure means of proving acceptance. Courts consistently uphold the enforceability of general terms appearing on the reverse side of an order or quote, provided the front page clearly refers to them (Cass. com., 29 October 2002, no. 00-20.074; Cass. com., 2 June 2015, no. 14-11.014).

Where a contract is signed, an express clause stating that the general terms were communicated and accepted is sufficient to render them applicable (Cass. com., 6 October 2015, no. 14-13.522). However, a signed acknowledgment may be neutralised if it is proven that the terms were never actually provided to the client (Cass. com., 19 February 2013, no. 11-22.827).

Tacit acceptance: limited and risky

Article 1119 does not exclude tacit acceptance, but in practice it is difficult to prove. Courts admit tacit acceptance mainly in the context of long-standing commercial relationships, where the buyer has repeatedly received and paid invoices referring to the same terms (Cass. com., 23 November 1999, no. 96-21.869; Cass. civ. 1st, 17 February 2010, no. 08-12.749).

By contrast, a single prior transaction is insufficient to establish tacit acceptance (Cass. com., 25 September 2019, no. 18-13.483). As a practical safeguard, suppliers may transmit their general terms by email attachment and request confirmation, which helps demonstrate prior knowledge (Cass. com., 20 March 2012, no. 11-11.570).

Conflict between seller’s and buyer’s terms

Buyers increasingly rely on their own general terms of purchase. Under Article 1119, paragraph 2 of the Civil Code, where both parties invoke general terms and those terms contain incompatible clauses, the conflicting clauses are without effect. There is no automatic priority in favour of the seller’s terms.

In particular, a reservation-of-title clause may be neutralised where the buyer’s purchasing terms expressly exclude it, unless the seller can prove acceptance of its own terms (Cass. com., 10 January 2012, no. 10-24.847).

That said, Article L. 441-1, III of the Commercial Code provides that, where established, the seller’s general terms constitute the “single basis for commercial negotiation”. The Court of Cassation has relied on this provision to invalidate buyer clauses that attempted to exclude the seller’s terms wholesale, without negotiation (Cass. com., 27 May 2015, no. 14-11.387).

As a matter of prudence, suppliers are therefore advised to include an express clause excluding the application of buyers’ general terms, subject to mandatory rules and negotiated exceptions.

Main clauses to be included in General Terms and Conditions of Sale

General Terms and Conditions of Sale are not a decorative annex to commercial documents. When properly drafted and effectively incorporated, they constitute a decisive risk-management instrument. Their primary function is not to restate the law, but to anticipate conflict, structure proof, and rebalance the relationship in favour of the supplier in the event of dispute or non-payment.

French courts do not assess General Terms in the abstract. They examine each clause through the lens of enforceability, proportionality, and acceptance. Clauses that are clear, justified, and contractually integrated will generally be upheld. Others, even if legally sound in theory, will be neutralised if poorly drafted or improperly imposed.

1. Price determination and scope of services

The first source of commercial disputes lies in price ambiguity. General Terms must therefore clearly define how prices are formed and what they cover.

This includes, in particular:

• unit price scales or pricing principles (Article L. 441-1, I, Commercial Code),

• clarification as to whether prices are exclusive or inclusive of VAT,

• the precise scope of services or goods included in the price.

Courts consistently sanction suppliers who rely on vague pricing mechanisms or who attempt to claim additional sums without contractual support. Where the General Terms fail to delimit the scope of the supplier’s obligations, the interpretation most favourable to the customer is often retained, in accordance with Article 1190 of the Civil Code.

2. Payment terms and enforcement mechanisms

Payment conditions are a mandatory component of General Terms (Article L. 441-1 and L. 441-10, Commercial Code). From a risk-prevention perspective, this section is central.

At a minimum, the General Terms should specify:

• the payment deadline (fixed date or number of days from invoice),

• late-payment penalties and their rate,

• the flat-rate recovery indemnity of €40 applicable in B2B relations (Article D. 441-5, Commercial Code).

Beyond these statutory elements, well-drafted General Terms frequently include clauses allowing the supplier to:

• suspend ongoing deliveries or services in the event of non-payment,

• refuse new orders while previous invoices remain unpaid,

• require payment in advance where the customer’s financial situation deteriorates.

Such clauses are regularly upheld by the courts, provided they are proportionate and clearly drafted, and provided the customer has accepted them prior to contracting.

3. Retention of title (reservation of ownership)

The retention of title clause is one of the most effective tools available to suppliers to secure payment. Properly drafted, it allows the seller to retain ownership of goods until full payment of the price, even after delivery.

French law expressly recognises the validity of such clauses (Articles 2367 and following of the Civil Code), and their effectiveness in insolvency proceedings, provided they were agreed in writing before delivery.

However, this clause is frequently neutralised in practice due to drafting or integration defects, particularly where:

• the General Terms were not accepted,

• the clause conflicts with the buyer’s general purchasing conditions,

• or the clause is ambiguous as to the goods concerned.

Case law is strict: where contradictory general conditions coexist, incompatible clauses are deprived of effect (Article 1119, paragraph 2, French Civil Code; Cass. com., 10 January 2012, no. 10-24.847). This makes proper contractual hierarchy essential.

4. Transfer of risk and delivery conditions

Delivery disputes often arise not from the fact of non-delivery, but from uncertainty as to when risks passed from seller to buyer.

General Terms should clearly state:

• whether delivery is deemed to occur at the seller’s premises or at the buyer’s location,

• at what moment risks are transferred,

• the buyer’s obligation to inspect goods upon delivery and to raise reservations.

In B2B relationships, clauses placing transport risks on the buyer are generally valid, provided they are clear and accepted. In contrast, consumer sales are subject to stricter rules, with risk transferring only upon physical possession by the consumer (Article L. 216-2, French Consumer Code).

A well-drafted clause on delivery and risk allocation significantly limits opportunistic non-payment based on alleged transport damage.

5. Acceptance of goods and limitation of disputes on conformity

To prevent post-delivery disputes, General Terms often include clauses organising the acceptance process.

Such clauses typically provide that:

• goods are deemed accepted in the absence of written reservations at delivery,

• apparent defects must be reported immediately,

• hidden defects must be notified within a defined timeframe.

French courts accept such clauses provided they do not deprive the buyer of statutory warranties and provided the defect was objectively detectable at delivery (Cass. civ. 1st, 26 June 2001, no. 99-17.631). The practical value of these clauses lies less in excluding liability than in structuring proof.

6. Limitation or exclusion of liability

In B2B contracts, liability-limitation clauses are, in principle, valid. They are frequently used to cap damages or exclude indirect losses.

However, their effectiveness is subject to strict limits:

• they cannot exclude liability for gross negligence or wilful misconduct,

• they must be proportionate to the contract,

• they must not contradict the essential obligation of the contract.

Courts scrutinise these clauses closely. Poorly drafted exclusions are often neutralised, not because they are unlawful per se, but because they are imprecise or excessive.

7. Jurisdiction and governing law clauses

From a litigation-prevention standpoint, jurisdiction clauses are essential. They allow the supplier to anticipate where disputes will be heard and under which law.

In B2B relationships, clauses attributing jurisdiction to a specific commercial court are generally valid, provided they are clearly drafted and accepted (Article 48, Code of Civil Procedure). The Court of Cassation requires that such clauses be “very apparent” to the contracting party.

Numerous disputes arise because jurisdiction clauses appear only on invoices or in illegible print. Courts consistently refuse to enforce them in such cases (Cass. com., 16 March 2022, no. 20-22.269).

8. Exclusion of the buyer’s general purchasing conditions

One of the most strategic clauses in General Terms of Sale is the clause expressly excluding the application of the buyer’s general purchasing conditions.

This clause does not automatically prevail over contradictory terms, but it reinforces the supplier’s position during negotiations and reduces the risk of silent neutralisation of key clauses, such as retention of title or payment penalties.

Its effectiveness depends, once again, on prior communication and acceptance.