Termination of Contracts in Civil Law Jurisdictions

Overview

• Examination of the possibility to terminate a contract for breach under German, French, and Dutch law.

German Law

• Core Provision: Paragraph 323 of the German Civil Code.
  • Termination Conditions:
    • Creditor can terminate if there is late or defective performance by the debtor.
    • Applies to bilateral contracts with counter performances.
    • Creditor must give debtor additional time to fulfill obligations.
    • Termination not allowed for trivial breaches (subparagraph 5).
  • Exceptions (subparagraph 2):
    • No second chance needed if:
      • Debtor refuses to perform.
      • Specific date for performance has passed.
      • Special circumstances justify immediate termination.
  • Alternative Grounds:
    • Paragraph 324: Breach of duty under paragraph 241 subparagraph 2.
    • Paragraph 326: Performance becomes impossible or debtor has right to refuse performance on the basis of paragraph 279 subparagraphs 1,2 and 3.

French Law

• General Possibilities: Article 1224 of the French Civil Code.
  • Termination Conditions:
    • Termination clause in the contract.
    • Sufficiently severe non-performance.
    • Court decision allowing termination.
  • Further Provisions:
    • Article 1225: Details on termination clause, supporting party autonomy.
    • Article 1226: Unilateral termination by creditor for serious breach; second chance generally required unless urgent.
    • Article 1227: Court intervention for termination if necessary.

Dutch Law

• Core Provision: Article 265 of Book 6 of the Dutch Civil Code.
  • Termination Conditions:
    • Every deficiency allows termination unless trivial.
    • Performance must be impossible or debtor in default.
  • Default and Notice Requirements:
    • Article 82: Second chance needed if performance possible.
    • Article 83: Some situations where debtor is automatically in default (e.g., fatal time period, clear statement of non-performance).
  • Consequences:
    • Article 271: Parties released from obligations; performances to be undone if already conducted.

Comparative Analysis

• Varying thresholds for breach seriousness across jurisdictions.
• Some require fundamental breach, others allow termination for any non-trivial breach.
• Additional requirements like second chances or default notices may apply.

Conclusion

• Important to understand specific jurisdictional requirements for contract termination.
• Different laws stipulate whether breach must be serious or if any non-trivial breach suffices.
• Proper notification and opportunity to remedy often necessary.