October 22, 2011

Rollover contracts in France

Follow-up to Rollover contracts in the UK and in the EU legislation from Florent's blog

In the third Title of the first book of the french consumer code,chapter 6, called "Reconduction des contrats" (renewal of contracts) there is an article L136-1 ,created by the "Châtel" Bill of the 28th january 2005, which specifies that a provider must inform in a written form the consumer, the soonest 3 months and the latest 1 month before the end of the period autorising the reject of the renewal that he has the possibility not to renew the contract he signed with a tacit renewal clause.

The paragraph 2 specify that if this obligation of information has not been adressed to the consumer in accordance of the provisions given in the first paragraph, the consumer can terminate the contract free of charge at any moment from the date of the renewal.

The third paragraph add that this article doesn't interfere with other provisions which legally submit other contracts to particular rules concerning the information of the consumer.

A new Bill of the 30 December 2006 added that those 3 paragraphs are not relevant for operators of drinking water services and sanitation.

A last Bill of the 3 January 2008 completed that those paragraphs are relevant for consumers and non-professionals.

The"Châtel" Bill of the 28th january 2005 tending to reinforce the trust and the protection of the consumerhas been voted in order to facilitate the termination of tacit renewal contracts in all areas and especially for mobile phones contract. This vote appeared to be necessary after the french Consumer rights group "UFC-que choisir" showed that it will make the market more competitive. Indeed there is a monopoly of the 3 biggest telecoms providers of the country who represents 75% of the sector and they already have been accused of raising barriers to effective competition. In 2005, the Competition Council inflicted a penalty record of 534 millions euros for having an agreement between each other to distort competiton by exchanging confidential informations concerning the number of new subscriptions and terminations.

Today, in France, the biggest issue is to avoid the abuses of the operators trying to renew a contract by offering an application to the consumer in his package without telling him that this application will renew his contract and that he has only 7 days to withdraw his acceptance.

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