“Cause” for Concern: France has Removed “Cause” as a Requirement for Contract, Should Louisiana?

by Hayden Bigby, Senior Associate

Introduction

Every first-year law student at Louisiana State University receives an in-depth introduction to the civil law. Students learn the unique characteristics of various civil law jurisdictions, and how those jurisdictions have impacted Louisiana’s version of the civil law. French influence is prominent in Louisiana in many ways, including in Louisiana civil law. Recently, France reformed its law pertaining to contracts,[1] and it is time for Louisiana to follow suit.

I. Why France Needed a Revision

France’s revised contract law came into force on October 1, 2016.[2] The revision marked the first overhaul of French contract law in over 200 years; the previous law had remained untouched from the 1804 Code.[3] The previous law remained viable for such an extended period of time, through advances in technology and society, due to the ability of courts to adapt the application of the law as written to changing circumstances. The civil law uniquely allows for such flexibility in the courts. Over time, however, the law became nearly unrecognizable from the language of the code articles. Interpretation of the law required reliance on judicial interpretation only, a departure from civil law tradition.

French lawmakers were also discouraged by the French Civil Code’s disfavor in other Civil Law countries. Countries who had previously used the 1804 Code as a guide in making their own law were no longer looking to France for direction when revising their own laws. Interestingly, European civil law jurisdictions began pushing for a uniform, European code and French jurists felt that their input was being overlooked.[4]

Similarly, as French law became apparently disfavored as a source for jurisdictions developing their own law, French law also became unimportant as a source for developing international business law. Common law contract principles were viewed as more suitable to commercial transactions, resulting in the selection of the law of England or New York as the governing law of transactions.  The “Doing Business” reports, published by the World Bank between 2004 and 2006, ranked France as the 44th place for ease of doing business.[5] As the law of contract across Europe and the rest of the world began to pass French law by, French jurists realized that the time for revision had come.

II. The Removal of Cause

While France’s revision was thorough as to the entire law of contract, one alteration was more controversial than the rest: the number of requirements needed to form a contract changed from four to three.[6] Previously, French law maintained the same requirements to form a contract as Louisiana law: consent, capacity, cause, and object.[7] France decided to remove the requirement of cause.[8] The new French code article 1128 requires only three conditions: consent; capacity to contract; and that the contract has content which is lawful and certain.[9]

Cause became problematic for several reasons. First, the concept is hard for common law lawyers to grasp. Consistent with the rationale of France’s contract law revision, cause contributed to some of the discomfort experienced by business people resulting from the use French law in international transactions.  Second, cause allowed French courts to interfere with contracts too often. Courts would use cause as an avenue to rebalance contracts that were viewed as unfair to one of the parties, or in some cases, to annul a contract that became unfair to a party.

III. Louisiana Should Follow Suit

Like France, Louisiana finds itself a civil law jurisdiction surrounded by the common law. The unfamiliar Civil Code is likely confusing to lawyers and business people from other states who have only practiced within the common law. Louisiana is also not highly rated among the States as far as “ease of doing business” goes. The parallels between Louisiana and France are apparent. If Louisiana hopes to create a more business friendly environment, Louisiana should consider aligning its law of contract with that of France.

Conclusion

The effect of France’s revision remains to be seen. Louisiana jurists and lawmakers would be wise to keep an eye on the results of the changes made to the French law of contract. If France achieves its desired outcome from its revision Louisiana should once again look to France as an influence for its own law. Following France, Louisiana can create a more business friendly legal framework in the state.


[1] Solene Rowan, The New French Law of Contract, 66 Int’l & Comp. L.Q. 805 (2017).

[2] Id.

[3] Id.

[4] Id.

[5] ‘Doing Business in 2004: Understanding Regulation’ (Washington DC: World Bank and OUP 2003), ‘Doing Business in 2005: Removing Obstacles to Growth’ (Washington DC: World Bank and OUP 2004), ‘Doing Business in 2006: Creating Jobs'(Washington DC: World Bank and OUP 2005). Doing Business in 2005: Removing Obstacles to Growth (World Bank & Oxford Univ. Press 2005); Doing Business in 2006: Creating Jobs (World Bank & Oxford Univ. Press 2006).

[6] Rowan, supra note 1.

[7] Art. 1131-1133 of the 1804 Civil Code. La. Civ. Code arts. 1131-33 (1804).

[8] Rowan, supra note 1.

[9] C. Civ. Art. 1128 (2019).

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