October 26, 2011

The French legal position concerning ARCs concluded by Service providers

Created in 20051 under the impulsion of minister Châtel, the article L136-1 of the code de la consommation deals with the tacit renewal of a contract, concluded by a professional service provider. It imposes a duty from a service provider to its customer, to inform him the earliest 3 months and the latest 1 month before the end of the minimum contract period that the contract will be renewed, in order to leave the time to the customer to switch his provider, should he want to.

This article does not concern merely the communciations market, but all service providers. Although those are yet to be defined by the legislator, it appears that a lot of professionnals are concerned. It is the case of the Internet providers, phone providers, a subscription to a cinema, a theatre or a bus company, would they conclude a contract in which a clause of tacit renewal would be inserted.

Exceptions to this broad domain of application, a fourth alinéa was added in 20062, excluding the water suppliers from this duty of information. A sentence, added to it in 20083, provides that this article applies to the profit of customers, traditionnal protected subject of the code, and, which is more surprising, to the non-professionnals. It would mean that not only customers, physical persons, would be protected by this article, but also whoever legal person not deemed as a professionnal.

The consequences of not respecting this rule are, according to this article, the possibility of ending the contract without penalty for the customer and the refund of his financial advances. As we can see, not going as far as Ofcom does about ARCs in the communication market, the french legislation targets not only this market but tries to put in place a wider principle of protection against the tacit renewal of contract concluded between a professionnal and a non-professionnal.

1 Loi n°2005-67 du 28 janvier 2005 - art. 1 JORF 1er février 2005 in force on the 28th july 2005

2 Loi n°2006-1772 du 30 décembre 2006 - art. 66 JORF 31st december 2006

3 Loi n°2008-3 du 3rd january 2008 - art. 33

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