Breach of contract

Breach of contract is provided by articles L. 1237 to L 1237-16 of the French Labor code (“code du travail”) from the legislation n°2008-596 of the 25^th of June 2008 on the modernization of labor market.

It allows a breach of a contract of employment by an agreement between the employer and the employee. It is not imposed and gives possibility to reparations.

This agreement is made in a legal framework and in respect of the parties’ consent.

CHAPTER 1. THE SCOPE:

Possible remedies:

The breach of contract concerns French workers’ permanent contracts (“CDI”) and French employees working in a foreign company as long as they have signed a French law permanent contract. It is possible to sign it with a protected employee, a lawyer employee, an employee whose working contract is suspended.

Forbidden remedies :

The subsequent remedies are forbidden: those of public officers placed in private schools, public officers (“fonctionnaires”) under a contractual statute, employees under fixed term contracts (« Contrat à durée déterminée CDD ») and during a trial period.

Possibilities of employees benefiting from a specific protection against dismissal:

In the event of an incompetence of professional origin, the employee on sick leave due to a work incident or a professional sickness who after a period of absence takes on his position and is declared twice unfit by a doctor possesses a definite incompetence. The case-law has considered that the protective rules of the employee exclude breach of contract.

This also applies to the employee in the process of being incompetent, first visit only.

The French Court of cassation, on the other hand, has indicated that breach of contract was accepted for a sick employee in a case on the 30^th of November 2013.

In 2014, the French Court of cassation decided and declared that except in the case of fraud or defective consent (“vices de consentement”) the breach of contract could be concluded in the event of a work accident or professional accident.

In the event of a sick employee declared fit but under conditions, the French Court of cassation considered on the 28^th of May 2014 that it is possible to sign a breach of contract except in case of fraud of defective consent (“vices de consentement”).

Breach of contract concluded in contentious circumstances:

The principle is the parties’ agreement. If a conflict exists and that one of the parties proves that the breach was imposed on him then the breach is void. The importance is to check if there was defect of consent (“vices de consentement”).

CHAPTER 2. PROCEDURE:

One or several interviews :

Article L1237-12 of the French labor code (“Code du travail”): breach of contract is subject to one or several interviews with or without representation. There is no obligation of notification to the employee for a formal interview, the problem will be probationary.

It has to be proved that the employee was informed that he could be represented.

Three interviews are necessary: one for negotiations (“pourparlers”), a second one where the breach is genuinely negotiated and a third one to sign the breach of contract. The more there is interviews, the more possible claims for defect of consent (“vices de consentement”) are excluded.

The amount of compensation has to be informed as well as the date of breach, the upholding or not of the competition clause. It is possible to negotiate whatever is wanted.

Assistance of the parties :

Article L1237-12 of the French labor code: “The parties to a contract agree to a principle of breach of contract during one or several interviews during which the employee can be assisted:

1° Either by a person of his choice belonging to the company’s staff, being an employee holder of a trade union mandate (“mandate syndical”) or an employee member of a representative institution of staff or any other employee;

2° Either, in the absence of a representative institution of the company’s staff, by a councilor of the chosen employee on a list drafted by the administrative authority.”

Possibility for an employee to gather information and opinions necessary to his decision:

The parties can agree by mutual consent on the assistance of a lawyer. If the employee decides to be assisted, he can inform his employer and vice versa. There is no formality or time-limit. The employer must be informed during the interviews of the possibility to contact employment services.

The lack of time-limit between the interview and the signature of the agreement :

There is no time-limit to respect therefore it is possible to conduct an interview where the parties speak, negotiate and sign the agreement.

CHAPTER 3. BREACH OF CONTRACT FORM AND DEMAND FOR OFFICIAL APPROVAL (“HOMOLOGATION”):

Official form :

A breach of contract has to be completed with the possibility of inserting enclosures with the official form to be sent to the Regional department of companies’ competition, consumption, labor and employment (« Direction régionale des entreprises de la concurrence, de la consommation, du travail et de l’emploi DIRECCTE »). This form can also be completed on internet.

Signature of the form:

The parties have to personally sign the breach of contract that has to be dated under penalty. An original copy has to be signed by the employee: one for the regional department of companies’ competition, consumption, labor and employment (« DIRECCTE ») and one for the employer.

Content of the agreement :

The agreement must indicate the amount of the compensation due to breach of contract.

Date of the breach :

According to the date of breach, article L1237-13 mentions that it can intervene only the day after the official approval (“homologation”).

CHAPTER 4. WITHDRAWAL:

There is no specific formality for withdrawal, it has to be a letter addressed by any means that has to however attest of the date of receipt. It could be by email as long as it is possible to attest the date of receipt.

Articles 641 and 642 of the French civil procedure code (“Code de procedure civile”) and R1231-1 of the French labor code (“Code du travail”) establish that as soon as the planned time-limit expires on a bank holiday or a holiday it is extended to the subsequent first working day.

The time-limit starts from the receipt of the withdrawal however this receipt must intervene before the end of the 15 day time-limit.

The consequences of this withdrawal involve that the employment contract continues as if nothing happened.

CHAPTER 5. OFFICIAL APPROVAL (« HOMOLOGATION ») OF THE BREACH OF CONTRACT:

At the expiration of the withdrawal limit, the most diligent party must send a demand for official approval (“homologation”) to the administrative authority with a copy of the breach of contract ( article L1237-13 of the French labor code).

The consignment must be done the next day if not it is void. It does not necessitate any specific formality.

The regional department of companies’ competition, consumption, labor and employment (« DIRECCTE ») has 15 working days upon receipt to officially approve (“homologuer”) the breach of contract. On receipt of the breach of contract, the regional department of companies’ competition, consumption, labor and employment (« DIRECCTE ») must send a proof of receipt (however that is not done in practice).

It has to check that the considered date of breach of contract intervenes the next day after the end of the official approval time-limit, it checks the date of signature and end of the withdrawal limit. The regional department of companies’ competition, consumption, labor and employment («DIRECCTE ») has to check for all the formalities of the breach of contract validity. It can also investigate and call the parties.

The work inspector has two choices, he either accepts or refuses.

The lack of reply in the 15 day time-limit for official approval (“homologation”) shall be understood as the acceptation of official approval (“homologation”).

The refusal has to mandatorily be explicit but does not have to be motivated.

The refusal of official approval (“homologation”) can lead to two situations: the employee continues to work or a second breach of contract can be filed and redone correctly.

The employee can be dismissed if there is a dismissal motive. The refusal to official approve (“homologation”) cannot constitute negligence of the employer.

The employment contract is terminated if the official approval (“homologation”) is accepted. The contract is breached minimum the next day after the withdrawal time-limit, “envisaged date of the breach of the employment contract” section to be completed in the form. If the official approval (“homologation”) demand is not completed, the instruction time-limit does not run.

The instruction time-limit is of 15 working days, if not subject to a return to the regional department of companies’ competition, consumption, labor and employment (« DIRECCTE ») during this 15 working days time-limit, tacit acceptation of the breach of contract is considered.

CHAPTER 6. LITIGATION:

Competence of the Labor Court (« Conseil Prud’hommaux CPH») :

Although the regional department of companies’ competition, consumption, labor and employment (« DIRECCTE ») is an administrative authority, it is not of the administrative order that is competent.

The litigations of official approval (« homologation ») and breach of contract are not separate.

All litigation that refers to the agreement, official approval (“homologation”) or refusal is exclusively of the competence of the Labor Court (“CPH”) excluding all other administrative or remedies of litigation.

If the Labor Court (“CPH”) cancels the refusal of official approval (“homologation”), the regional department of companies’ competition, consumption, labor and employment («DIRECCTE ») is obligated to official approve (“homologuer”). This department has circumscribed power (“competence liée”) and can only approve the breach of contract.

On the other hand, the Labor Court (“CPH”) is not competent to give the agreement official approval (“homologation”), it can only cancel or confirm the refusal to officially approve (“homologuer”) (circular of the 17^th of March 2009).

However, Courts are not necessarily in line with this and certain labor courts (“CPH”) have usurped this right. The French Court of Cassation has still not settled this question.

Time-limit to act :

The prescription is of two years, however there are derogations as it has to be 12 months from the official approval (« homologation ») to reconsider the validity of the breach of contract.

The starting point is appreciated on the next day of the instruction time-limit termination.

Defect of consent (« vice du consentement ») in breach of contract:

The French Court of Cassation in a case on the 23rd of May 2013 has indicated that in litigious circumstances a defect of consent (“défaut de consentement”) is not necessarily constituted except in the case of recognized moral harassment.

When there is a defect of consent (“vice du consentement”), the breach of contract is necessarily reconsidered. In that event, the breach of contract is void and will lead to a dismissal with no real and serious cause.

Breach of contract and previous demand of judicial cancellation of the contract:

The employer cannot make a judicial cancellation demand except in a contract of apprenticeship.

The demand of judicial cancellation is at the initiative of the employee, if it is lagging behind, the employee can ask for breach of contract once the official approval (“homologation”) has passed and 12 months have passed, the French Court of cassation establishes that if the time-limit is expired, the demand of judicial cancellation has no scope, thus, the demands are rejected.

CHAPTER 7: COMPENSATION FOR THE EMPLOYEE:

Amount of the specific compensation for breach : at least the legal dismissal compensation:

The specific compensation cannot be inferior to the legal compensation for dismissal, more precisely, 1/5^th of a month’s salary by year of seniority, to which is added 2/15^th of a month’s salary by year over 10 years of experience.

For companies in the scope of the 11^th of January 2008 professional national agreement (“Accord national interprofessionnel ANI”) (MEDEF, CGPME, UPA ect.), the agreement compensation will have to be paid if it is more beneficial than the dismissal compensation.

Calculation basis of specific breach of contract compensation :

The basis of calculation is identical to the one of dismissal compensation, hereby:

1. Either 1/12^th of the salary of the last 12 months preceding the dismissal
2. Either 1/3^rd of the last three months, in this event, any bonus or annual or exceptional gratuity incentive paid to the employee during this period is only taken into account in the limit of an amount calculated in equivalent proportions.

It is always the most favorable one that is maintained.

Compensation for employees having at least one year experience :

In the scope of breach of contract, there is only little case-law. The Montpellier French Court of appeal on the 1^st of June 2011 establishes that even if the employee has less than one year experience, he is allowed to have a dismissal compensation that will be calculated pro rata. The dismissal compensation is derogatory.

Other compensations :

In addition to the center for the registration and revisions (“CERFA”) form, an agreement can be made, that allows to foresee everything.

The agreement can foresee the payment of all compensations that the parties have agreed on.

The employee also has a right to all the elements of salary that are owed by the employer at the date of the breach of contract. For example: compensatory allowances correspond to the balance of the reduction in working hours (“RTT”).

CHAPTER 8: CONSEQUENCES OF THE BREACH:

Documents to be given to the employee :

In a classic breach of an employment contract, the employer is obligated to return all the documents that are imposed by law such as employment certificates, national employment agency (“Pôle emploi”) certificates, last pay-slip and the receipt for the balance of all accounts.

New declaratory obligations concerning breach of contracts:

The obligation to declare a breach of contract has been introduced in 2009 and provided for in article L1221-18 of the French labor code (“Code du travail”). Every staff employer salaried or assimilated must send a declaration to the social security contribution collection office (“URSAFF”) at latest on the 31^st of January indicating the number of salaried aged of 55 years or over that have benefited of a breach of contract during the previous year.

An absence of declaration is criminally punished by an amount equal to 600 times the hourly rate of the minimum growth wage in France (“SMIC”).

There is a fear that these type of breach of contracts are done on senior employees.

Right to insurance-unemployment benefits :

The employees whose breach of employment contract resulted from an officially approved (“homologué”) breach of contract benefit from the payment of insurance-unemployment benefits in the conditions settled by the law.

fichier à telecharger:
160314 Breach of contract_0

New provisions have been implemented by the law n°2015-990 of the 6^th of August 2015 for the growth, activity and equality of economic chances referred to as the Macron law.

The changes are visible in articles 71, 81, 82 and 98 of this law.

TERMINATION OF THE LEASE:

The change of use:

Article 81 of the Macron law adds a new disposition: article L. 631-7-1 B in the French code of construction and habitation (“Code de la construction et de l’habitation”) that states:

« une délibération du conseil municipal peut définir un régime de déclaration préalable permettant d’affecter temporairement à l’habitation des locaux destinés à un usage autre que l’habitation, pour une durée n’excédant pas quinze ans.

« Si la commune est membre d’un établissement public de coopération intercommunale compétent en matière de plan local d’urbanisme, la délibération est prise par l’organe délibérant de cet établissement.

« Jusqu’à l’expiration du délai mentionné au premier alinéa, les locaux peuvent, par dérogation à l’article L. 631-7, retrouver leur usage antérieur.

« En cas de location d’un local temporairement affecté à l’habitation en application du présent article, le contrat doit mentionner le caractère temporaire de cette affectation. Sous cette réserve, le retour des locaux à leur usage antérieur est un motif légitime et sérieux, au sens de l’article 15 de la loi n° 89-462 du 6 juillet 1989 tendant à améliorer les rapports locatifs et portant modification de la loi n° 86-1290 du 23 décembre 1986. Il ne constitue pas un événement au sens de l’article 11 de cette même loi ».

The principle of article L.631-7 is that, in certain local districts, changes of use of premises destined to habitation are subject to a preliminary authorization.

The aim is to avoid that living premises are replaced by offices or businesses making it even more difficult, especially in tense areas, to access to housing.

The owner could fear that by transforming for example, offices into housing, he would be forced to keep this new use except by if he obtained the authorization from the local district to come back to a commercial use of offices.

This fear at least disappears in the local districts that have chosen for this specific mechanism of article L. 631-7-1 B because under the condition of a simple preliminary declaration the change of use is not irreversible: at any moment, the owner can decide without having to ask for an authorization to the local district to reallocate his premise to its previous use.

CONTENT OF THE TENANCY AGREEMENT AND THE INVENTORY OF FIXTURES:

Article 3 of the 6th of July 1989 law has been rewritten by the ALUR law.

In the new mandatory mentions, there is a mention of the indication of the amount and the date of payment of the last rent paid by the previous tenant: this allows to control the respect of the levelling-off (« plafonnement ») of the increase of the authorized rent between two successive tenants (Decree n°2015-931 of the 29 July 2015).

The possibility offered to the tenant by the ALUR law is to ask the landlord or his representative to complete the inventory of fixtures in a time-limit of 10 days starting from his establishment. This however only applies to the arrival inventory of fixtures.

The legislator has standardized the mandatory mentions in a lease contract for furnished or unfurnished housing. Article 3 of this law provides for the universal guarantee of leases (article 24-2 of the 6 July 1989 law).

A notice of information on the rights and obligations of tenants and landlords must be enclosed with the contract as well as for furnished housing.

Article 3 foresees that the lease contract must respect a type of contract defined by decree. Article 25-7 applies the same condition to furnished housing.

CO-TENANCY:

Article 8-1 of the 6th of July 1989 law has been created by the ALUR law in order to confer a co-tenancy status: possibility to give a flat rate to the amount of the apportionable service charges and to limit in time the solidarity (article 8-1 VI). The changes operated by the Macron law are both formal and substantial.

– Firstly, article 8-1 VI has rewritten the solidarity distinguishing two possibilities:

The solidarity of one of the co-tenants and one of the person that acts as guarantor for him terminates at the date of the effect of the leave regularly delivered and when there is a new tenant to the lease.

On the other hand, if this does not happen, it was foreseen by the ALUR law that the solidarity of the leaving co-tenant terminated at least 6 months after the date of the effect of the leave.

The solidarity of the deposit is terminated not by the effect of the leave but from the extinction of the co-tenant’s solidarity.

• Secondly, from a substantial point of view, the scope of the co-tenant’s status is revised. Leases exclusively given to married couples or civil partners at the moment of the initial conclusion of the contract are excluded.

EXECUTION OF THE LEASE:

Determination of the rent:

The formalities concerning the determination of the rent of furnished housing have changed. The ALUR lad subjected these leases to the framework of rents according to article 25-9 of the 6^th of July 1989. This article has been completed by two provisions.

• Firstly, the increase of the rent agreed between the parties or legally established applies to the rent of renewed lease.  However, if the increase is over 10%, it is applied by an annual third to the renewed lease and for future renewals.

Article 17-2 distinguishes two modalities of determination of the renewed lease rent according to if the rent is situated in the rent framework or not.

However, it is foreseen in both cases that the increase is applicable by a third or a sixth according to the duration of the contract and according to if the increase if superior or not to 10%. The Macron law only authorizes a gradation of the rent over three years.

• Secondly, the Macron law now subjects leases to the revision of the rent (article 17-1 I) and the increase if the rent in the event of improvement works (article 25-9-III).

Judicial annulment (« résolution judiciaire »):

In the event where the tenant has not paid his rent or charges according to the ALUR law, subject to the inadmissibility of the demand, the landlord must in certain cases seize the commission of coordination of actions preventing the expulsion of tenants (“Commission de coordination des actions de prevention des expulsions locatives CCAPEX”). He must also systematically notify his summons to the representative of the State in the district.

The Macron law also foresees the acquisition of the clause of defeasance (“clause résolutoire”) or the decision of the judicial annulment through an additional demand.

Smoke detector:

The Macron law has modified article 5 of the 9th of May 2010 law that now foresees that landlords that have signed a smoke detector purchase contract at the latest on the 8^th of March 2015 satisfy this obligation as long as the smoke detector is installed by the 1^st of January 2016.

THE LEAVE AND DURATION OF THE LEASE IN THE CASE OF CO-OWNERSHIP:

Leave:

The leave given in a lease of furnished housing can be personally handed against receipt or initialing.

If a landlord wishes for a tenant of more than sixty-five years and whose annual resources are inferior to a set-limit, he must propose an offer for relocation.

The Macron reform has extended this obligation to the tenant who is in charge of a person over sixty-five years that usually lives with them and whose combined annual resources of all people living in the house is inferior to a set-limit.

Article 15 has modified the consequences of the purchase of housing.

In the event where a purchased accommodation is occupied:

• When the term of the ongoing lease contract intervenes more than three years after the purchase, the landlord can give leave to his tenant to sell the accommodation according to the ongoing lease contract.
• When the term of the ongoing lease contract intervenes less than three years after the date of purchase, the landlord must give leave to his tenant to sell his property at the end of the first tacit renewal or the first renewal of the ongoing lease contract;
• When the end of the ongoing contract intervenes less than two years after the purchase, the leave for renewal given to the tenant at the end of the ongoing lease contract only takes effect at the expiration of two years starting from the date of purchase.

The Macron law continues to distinguish the leave to sell from the leave for renewal.

For a leave to sell, the law distinguishes according to the time-limit left to run between the purchase and the end of the ongoing lease with a duration of three years as reference.

For a leave to renew, only the situation of a short-term maturity contract (less than two years after the purchase) is envisaged.

Duration of the lease and co-ownership:

The Macron law also changes article 11-2 of the 6th of July 1989 law concerning sale in cuts.

When a building used for housing or mixed housing and professional purposes of five or more buildings situations in one of the zones mentioned at article 17 and that has been put into co-ownership:

• The ongoing leases whose term intervenes three months after the date of co-ownership is extended by right to three years
• Other ongoing lease are extended for a duration permitting the tenant to occupy the accommodation during six months since the co-ownership.

ADVANTAGES OF THE ENERGETIC TRANSITION LAW:

The law n°2015-992 of the 17^th of August 2015 concerning the energetic transition for green growth has completed article 6 of the 6^th of July 1989 law.

It added a new parameter to the definition of decent housing: it should not have any manifest risk that could jeopardize the physical security or health and should respect a minimal energetic performance criterion as well as have the elements making it conform to a living use.

It is also added that a decree defines the minimal energetic performance criteria to be respected and the graded calendar for implementation.

fichier à telecharger:
160317 Macron reform on tenancy agreements_0

COUNTRY-BY-COUNTRY REPORT:

The OECD’s (“Organization for Economic Co-operation and Development”) project BEPS (“Base Erosion and Profit Shifting”) foresees, in order to improve transparency in favor of administrations, the implementation of a communication of fiscal information country by country (“Country-By-Country Reporting”).

On the 17^th of December 2015 the French National Assembly approved an amendment to the 2016 Finance Bill definitively implementing the country-by-country reporting. This measure was approved by the French constitutional court on the 29^th of December 2015 and subsequently entered into force as article 223C of the French tax code (“Code général des impôts”).

The companies concerned are those with consolidated accounts; those with annual consolidated group revenue equal or superior to 750 million EUR; those who control directly or indirectly subsidiaries located abroad or that have branches located abroad; those not owned by another French entity already within the scope of this measure or owned by a foreign entity falling within the scope of a similar provision under its foreign local legislation.

These companies will have to specify the distribution of profit and activities country by country as well as the turnovers (“chiffre d’affaire”), pre-tax profit, paid tax, assets and workforce.

The country by country report will be exchanged automatically between the pertinent tax administrations in accordance with applicable tax treaties and/or EU regulations under the condition of reciprocity but will remain confidential.

The format of the report that will be based on an international standard will be defined and established by a separate decree that will be published in a few months.

The report will have to be filed electronically for each fiscal year. Failure to comply could end up in the payment of annual penalties up to 100,000 EUR for each French entity.

This regulation will be applicable during the 2016 fiscal year for all fiscal years opened on or after the 1^st of January 2016. The first reports will have to be filed by the end of 2017 and automatically exchanged between the countries in 2018.

French companies will have to ensure that the fiscal information collected is reliable and coherent with other published or communicated indicators.

COMMON REPORTING STANDARD:

In October 2014, France adopted the OECD’s Common Reporting Standard (“Norme Commune de Déclaration”) that should be implemented by September 2017.

French groups will have to adapt to the different norms and statutes according to the countries with which they operate.

The Common Reporting Standard entails that tax administrations will have systematic knowledge of financial assets detained in foreign countries by tax residents. The information will have the possibility to automatically be exchanged between the countries have adopted the Common Reporting Standard.

In order to identify the resident of a Common Reporting Standard jurisdiction, the financial institution needs to obtain the holder’s account self-certifications. The self-certification must include information of the state or states of tax residence as well as their fiscal identification number.

The financial institutions will transmit informations concerning the identity of the person having a tax residence in a Common Reporting Standard country, their accounts and the balance of their accounts as well as their financial incomes including items of sale.

The OECD Common Reporting Standard was adopted at the European Union level with the directive 2014/107/EU known as “DAC 2” that has been implemented by France in its article 1649 AC of the French Tax Code (“Code général des impôts”) modified by article 44 of the law n° 2015-1786.

AUTOMATIC TRANSFER OF TAX RULINGS:

On the 18^th of March 2015, the European Commission presented a number of measures in its Tax transparency package including the automatic transfer to other member states of tax rulings. This would also concern price transfer prior agreements.

Often, a member state is not aware that a tax ruling has been given elsewhere that could have an impact on their own tax base. The Commission wants to avoid the effect of this lack of transparency enabling companies to use this to artificially reduce their tax contribution.

At the moment, it is at the member states’ discretion to communicate decisions that could be relevant for another country. However, the Commission wants to remove this discretion.

Member states would be obliged to automatically exchange every three months informations of final tax rulings that would have a cross-border nature. National tax authorities will have to send this information in a short report on all cross-border tax rulings. The states receiving this information have the possibility to ask for precisions if needed.

These rules allow Member States to detect certain abusive tax practices by companies and take necessary action in response. It also encourages healthier tax competition, as tax authorities will be less likely to offer selective tax treatment to companies once this is open to scrutiny by their peers.

OTHER TRANSPARENCY OBLIGATIONS IMPOSED BY FRENCH LAW:

Companies have a requirement of documentation on price transfers. Indeed, since 2014, they have the obligation to provide a simplified documentation on price transfers to the administrations.

They also must prepare the complete documentation in the event of tax controls on the account recordings file (“Fichier des écritures comptables”).

Large companies must present their analytical accounting in the event of tax control.

For those who have chosen to participate in the experiment of the relationship of trust (“relation de confiance”), they will have to transmit several documents on the company’s activities, their accountancy and their operations (including external legal consultations).

fichier à telecharger:
160315 Companies’ tax transparency_0

The article 1025 of the French Civil Code (“Code civil”) states that:

“The testator can name one or several executors that benefit of the full civil capacity to ensure and handle the execution of his wishes.

The Executor that has accepted is mission is bound to accomplish it.

The powers of the executor are not transferable in case of death.”

THE EXECUTOR’S OBLIGATION TO ACCOMPLISH HIS MISSION:

As judged by the law previous to the 23^rd of June 2006 legislation, the executor that has replaced himself by a third party to accomplish his mission personally handed to him, has committed an offence justifying his removal from office by the Court ( Seine first instance court “TGI” May 19^th, 1962).

The executor’s mandate can be revoked by the Court for serious reasons.

If the executor refuses his mission, a third party cannot replace him if not he will be held liable.

According to article 1025 subparagraph 2, the executor is bound to accomplish is mission from the moment he accepts it except if he is replaced by the Court or if the appointment of an administrator limits his powers.

He must report in the six months of the execution of his mission, article 1031 of the French civil code (« Code civil »).

POSSIBLE CONFLICT OF POWER WITH A PROCEDURAL REPRESENTATIVE (“MANDATAIRE”):

The power of the executor can compete with those of a procedural representative (“mandataire”) in charge of administrating the inheritance, in particular when his mission is not to monitor but to proceed to the execution of the deceased’s wills.

Therefore, when the deceased has nominated a procedural representative (« mandataire ») posthumous to the effect of administering and handling all or part of the inheritance, this representative will exercise his powers subject to the powers conferred by the executor (Article 812 subparagraph 1 of the French civil code).

As a result of this hierarchy, the posthumous procedural representative (“le mandataire”) cannot exercise his management and administration powers on inheritance assets under mandate of the damages of those entrusted to the executor.

The latter can exercise his powers without the possibility for the procedural representative to oppose himself.

For example, if the posthumous procedural representative (“mandataire”) rents an inheritance building whilst the executor duly authorized wishes to sell it (article 1030-1 of the French civil code), this conflict is settled in favor of the executor.

This rule is put in place to respect the last will of the testator and the confidence he has placed in the executor.

It is also justified by the consideration that the procedural representative (“mandataire”) can administer the hereditary property only if the devolution decided by the testator has been followed (Report of the National Assembly n° 2850, p.268. Senate report n°343, p.253).

CONFLICTS WITH OTHER INHERITANCE PROCEDURAL REPRESENTATIVES (“MANDATAIRES SUCCESSORAUX”):

Even if the judge has designated a procedural representative (“mandataire”) to temporarily administer the inheritance due to inertia, deficiency or negligence from one or several successors in this administration resulting from disagreements, conflict of interests or complexity of the inheritance situation (article 831-2 of the French civil code), he can only act to the extent compatible with the executor’s powers article 813-2 of the French civil code.

It must be understood that the successors cannot oppose the executor’s powers by entrusting the inheritance administration to a procedural representative (“mandataire”) designated by an agreement according to article 813 of the French civil code.

The judge can maintain the executor in his monitoring functions during the duration of the execution of the will, however, in the event of a forced execution, he cannot subject the executor to his functions more than three years.

BANNED RESIGNATION EXCEPT UNDER STRICT CONDITIONS:

The executor must suitably execute his mission, at the risk of damages, judicial revocation (article 1026 of the French civil code), or the appointment of judicial administrator that would limit his powers.

However, some regularly accepted events are capable of prematurely ending his mission although limited: the death of the executor, his incapacity, or his removal from office. As a result, the executor can himself end his mission.

The subparagraph 2 of article 1025 of the French Civil Code confirms it as it foresees that if he has accepted it, he has to accomplish his mission, if necessary a judicial administrator can be appointed as accepted in case-law (French Civil court 15^th February 1965).

His resignation will not be possible except if he has obtained his removal from office by the judge.

The executor’s mission can be terminated by the Court due to serious reasons (article 1026 of the French civil code).

This new article has consecrated the case-law. The French first instance court can terminate the executor’s mission for example if the accomplishment of his task jeopardizes his health, his negligence, a conflict with the successors (National Assembly report p270), or that causes him damage (Senate report p 254).

The demand for removal of office can emanate from the executor himself (especially for health reasons), his successors (especially in case of conflict), or legatees (“légataire”) and creditors (especially in case of negligence).

The case-law will have to determine what is meant by “serious reasons” justifying a removal of office.

EXECUTOR’S LIABILITY:

If the civil liability (“reponsabilité civile”) of the executor can in theory be borne without having to wait for the end of his mission, it is in practice in its continuation that his liability is the most likely to be engaged at the request of any person interested in the execution of the will (especially a legatee).

The executor can also be criminally liable for breach of trust or theft (articles 1025 to 1034).

The executor takes on the same liability as a procedural representative’s (“mandataire”) (article 1033 subparagraph 3 of the French civil code) for free (article 1033-1 of the French civil code).

His negligence should be appreciated with more leniency than if he was paid (article 1992 of the French civil code).

His responsibility will on the other hand be assimilated to the one of an employed procedural representative (“mandataire”) even if he is awarded by a “diamond” as settled by case-law.

The resignation must not be unexpected subject to the executor’s liability.

fichier à telecharger:
160311 The executor (exécuteur testamentaire)