E-newsletter  -  March 2017

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Business Law
Significant imbalance in the relationships between suppliers and distributors: The judge can check the contract price

Stéphanie Yavordios

The Cour de Cassation (French Supreme Court) recently held that a price reduction clause contractually agreed upon between a supplier and its distributor can create a significant imbalance in the rights and obligations of the parties, within the meaning of Article L. 442-6 I §2 of the French Commercial Code.

The concept of “significant imbalance”, sometimes criticized for its vagueness, is addressed in a growing number of court decisions that provide a concrete illustration thereof through a factual analysis of behaviors and contractual provisions agreed upon between business partners.

The decision commented in this article is particularly noteworthy because it recalls that, as per the terms of the above-mentioned Article, the judge is empowered to check the price set by the parties.

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Banking & Finance
A first demand guarantee is not transferrable when the beneficiary of such guarantee is split-up

Catherine Nommick

In a decision dated January 31, 2017, the Commercial Chamber of the Cour de Cassation (French Supreme Court) held that “unless otherwise agreed upon between the parties, the first demand guarantee, that does not follow the guaranteed obligation, is not transferred in case of a split-up”.

This position has already triggered many comments and conflicting views. It deserves special attention given that, in particular, first demand guarantees are an essential issue for businesses and supposed to ensure legal certainty for their beneficiaries.

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Business Law
DGCCRF’s 2016 activity report

Geoffroy Lacroix

On February 23, 2016, the Direction Générale de la Concurrence, de la Consommation et de la Répression des Fraudes (General Directorate for Competition, Consumer Protection and Frauds, hereinafter “DGCCRF”) released it 2016 activity report.

In this report, the DGCCRF – which monitors the proper operation of the markets to the benefit of consumers and businesses – highlights the salient facts of 2016 concerning inter alia the balance of business relationships, the fight against late payments and the fight against anti-competitive practices. It also provides a status report on its activity concerning the rules on economic protection of consumers and the fight against abusive practices.

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Corporate Law
Corporate groups: The termination of employment within the parent company does not automatically entail the termination of corporate mandates held in subsidiaries

Chems Idrissi

Holding several corporate mandates is a common practice in corporate groups. In general, it is assuredly useful to ensure a coherent management of the various group entities, in line with the group’s global policy.

Yet, when the relevant corporate officer no longer fits the bill and when the group wishes to terminate him/her, the situation is all the more complex if he/she has varied and diversified duties/mandates within the group. Indeed, the termination of employment within the parent company for whatever reason does not necessarily entail the termination of the mandates held in subsidiaries. This principle was recently recalled in a decision handed down by the Court of Appeals of Paris.

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Experts’ contributions
A Study into the Current Risks and Opportunities for International Executives and Employers

We are pleased to publish this month a contribution entitled Taxation of Internationally Mobile Executives, authored by our colleague Mark Abbs, Expat Tax Partner at Blick Rothenberg, a market leading UK accounting, tax and advisory practice, in collaboration with University of Exeter Business School.

Increased globalisation in recent decades has changed the face of the way in which multinational enterprises conduct their business across the world. As part of this trend the movement of employees across borders has evolved from a pattern of long executive assignments to one of increasingly short term engagements.  The increasing number of countries to which employees are being sent creates a complex environment for multinational employers. The diversity of rules and regulations in each jurisdiction leads to significant risk, at a time when the cost of international assignments is under closer scrutiny.

This research is intended to understand how the taxation of internationally mobile executives in selected locations areas actually operates and whether there is a difference between what should happen in theory and what actually happens in practice with income tax, social security, payroll and pensions. The research focuses on the director, executive and employees that work for multinational entities and makes a number of recommendations on changes to global tax policy.

Read the Summary Report

Read the Full Report

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