France: Changes to the Civil Code

Ordinance No. 2016-131 on the reform of contract law and the general regime for proof of obligations was published on 10 February 2016. It amends Titles I, II, III, IV and IV bis of Book III of the French Civil Code. The purpose of the amendments is to make the Code clearer and less open to interpretation by the judiciary, to codify existing case law, to simplify certain archaic wordings and to introduce new legal concepts into contract law.

The changes will affect all contracts, including insurance and reinsurance contracts, which are subject to French law and which incept or renew on or after 1 October 2016.

The following amendments are particularly relevant to insurance and reinsurance contracts.

• Article 1112-1 on the duty to inform: The party that knows information that is relevant for the consent of the other party to enter into the contract must inform the other party. This requirement does not apply to information about the value of the benefit provided under the contract. Any information that has a direct link with the content of the contract or the quality of the parties to the contract is critically important. The person that believes that information was due to it must prove that the other party owed this information to it and the onus is on the other party to prove that the information was provided. The parties to the contract are not permitted to limit or exclude this duty to inform. If this duty to inform is breached, the contract may be cancelled in accordance with Article 1130ff.
• Article 1195 on unpredictability: If there is an unexpected change in circumstances after the contract has been concluded that makes the contract excessively burdensome for one party, who had not agreed to assume the additional risk, that party may ask the other party to renegotiate the contract. Both parties must fulfil their existing contractual obligations until the contract has been renegotiated to mutual agreement. In the event of refusal or failure to renegotiate, the parties may agree to terminate the contract at a time and under conditions agreed by them or ask a judge to adjust the contract.
• Article 1213 on the extension of a contract: A contract may be extended if both parties agree to do so before the expiry of the contract. The extension may not infringe the right of third parties. Extension of a contract does not give rise to a new contract.
• Article 1214 on renewal of a contract: A fixed term contract may be renewed by the operation of a law or by agreement of the parties. Renewal gives rise to a new contract that is identical in content to the previous contract but is open-ended with an indefinite duration.
• Article 1215 on tacit renewal: If, at the end of a fixed term contract, the parties to the contract continue to perform their obligations then tacit renewal occurs. Tacit renewal gives rise to a new contract that is identical in content to the previous contract but is open-ended with an indefinite duration. Note that under the French Insurance Code, tacit renewal cannot be for more than one year.

In France, the provisions of the French Insurance Code take precedence over the provisions of the French Civil Code. Consequently, the Civil Code only applies if the matter is not covered in the Insurance Code.

Managing agents are advised to review their insurance and reinsurance policy wordings to ensure that they comply with the changes to the French Civil Code.

Ordinance No. 2016-131 is available here in French and a consolidated version of the Civil Code as at 1 October 2016 is available here in French.

Further information

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