FRANCE Trends and Developments Contributed by: Thierry Laloum, Jordan Pontal, Julie Sarny and Gabin Dupont-Guianvarch, Willkie Farr & Gallagher LLP
most conservative estimates to avoid paying any excessive compensation to the private contract - ing party. Practically speaking, this means that the admin - istrative authorities could be even less inclined to negotiate or settle matters in good faith, except when indemnities are set below the actual harm suffered by the private contracting party. The administrative judge’s potential ruling against them makes any dispute before this judge likely to favour the administrative authority. In view of the above, it can be hoped that future case law will clarify these compensation condi - tions and bring new beneficial solutions to the parties in general, and to the private contracting party in particular. Advantages of Establishing a Principle of Good Faith in the Performance of Administrative Contracts One principle that is widely accepted in private law is the principle of good faith in the context of the performance of contracts. This principle in fact appeared as early as 1804 in the third para - graph of Article 1134 of the French Civil Code. In accordance with the ordinance of 10 February 2016 reforming contract law, general terms and proof of obligations, the scope of this principle was expressly extended to the negotiation and formation of contracts. As a result, new Article 1104 of the French Civil Code now states that “contracts must be negotiated, formed, and per- formed in good faith. This provision is of public order” . When it comes to the performance phase of a contract, good faith is traditionally viewed as involving a dual duty on the part of the parties: a duty of loyalty and a duty of cooperation. These
duties undoubtedly help ensure that contracts are fully effective. With regards to administrative contracts, for a long time, administrative case law completely overlooked the notion of good faith in contrac - tual matters. Finally, in 2009, in the famous Commune de Béziers case, or “Béziers I” , the Council of State first invoked the requirement of loyalty in con - tractual relationships. This allowed for some flexibility in judicial review of the validity of a contract. Specifically, a judge must verify that “the irregularities raised by the parties [against the contract] are those they can, considering the requirement of loyalty in contractual relation- ships, bring before the court” . In line with this case law, the requirement of loy - alty in contractual relations is not yet a behav - ioural norm, particularly when it comes to admin - istrative contracts. Unfortunately, the Council of State stopped short in 2009. However, there is good reason to believe that it is likely that the Council of State could, in the future, establish good faith as a behavioural norm. This would have immense benefits, directly impacting the performance of administrative contracts. The advantages of such a move could be seen at two levels: first, in the way administrative authorities exercise their contractual powers, and second, in how contracting parties fulfil their obligations. Good faith in the exercise of administrative authorities’ contractual powers As mentioned above, because of the adminis - trative nature of these contracts, administrative
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