The provision of product stock, a furnished showroom, restocking on demand, and an advertising budget constitute significant consideration for an exclusive supply clause, according to a ruling by the Paris Court of Appeal on May 15, 2025.
This case involves a company specializing in the sale of coffins and other products for funeral homes and funeral professionals (“Supplier”) and a company specializing in funeral services and marble (“Buyer”).
On February 26, 2018, the two companies entered into a contract under which the Supplier would be the exclusive supplier of coffins to the Buyer, who would be responsible for selling them.
A dispute arose between the parties over the performance of this contract, leading the judges of the Paris Court of Appeal to rule on its validity.
The Buyer claimed that the contract was null and void due to the existence of exclusive supply and resale, at a price set unilaterally by [the Supplier], in return for non-existent or negligible benefits.
After recalling the applicable regulations—namely Articles 1103 and 1104 of the Civil Code and Article 1169 of the Civil Code (“A contract for valuable consideration is void when, at the time of its formation, the consideration agreed upon for the benefit of the party entering into the contract is illusory or derisory”) – the judges affirmed that « exclusive supply contracts without a territorial clause are contracts whereby a distributor undertakes to obtain supplies exclusively from a supplier or a third-party company that it has appointed to distribute its products, with the supplier or company remaining free to supply other distributors. The distributor agrees to source exclusively from the supplier in return for benefits granted by the supplier. The supplier undertakes to provide assistance to the distributor. »
On the basis of these principles, the judges of the Paris Court of Appeal consider that, in this case, the provision of a stock of products, a furnished showroom, restocking on order, and an advertising budget constitute a non-derisory consideration for the exclusive supply clause provided for in the contract; therefore, the contract is valid.
This is an opportunity to recall that exclusive supply clauses must be drafted with care, ensuring that they provide real and non-negligible consideration.
Please do not hesitate to contact us for assistance in drafting your supply contracts.