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Unfair competition: I’ve been accused of diverting customers & unfair competition

What is unfair competition?

Unfair competition is a business practice that consists in violating existing competition rules to gain an advantage over competitors in an illegal manner. It can take many forms, such as: counterfeiting, commercial parasitism, misleading advertising, misappropriation of customers, and so on.

In France, unfair competition is punishable under the Commercial Code and the Intellectual Property Code. Victims of unfair competition can take legal action to obtain damages, as well as emergency measures to put a stop to illegal practices.

Can I take my competitor’s business?

It all depends on how you build up your customer base. In principle, it is not forbidden to attract customers who normally use another service provider.

On the other hand, the way in which you do it can be considered unfair, and characterize a case of customer misappropriation, which is illegal.

Customer “detour” consists in seeking to divert customers away from a competitor’s business by using illegal or unfair means, which can be :

  • Denigration: the dissemination of false information or rumours about a competitor’s products or services, with the aim of damaging its reputation and persuading customers to change supplier.
  • Use of confidential data: the illegal use of fraudulently obtained confidential information, such as customer lists, marketing plans, etc.
  • Offering excessive discounts or benefits: offering excessive price reductions or other financial advantages to attract competitors’ customers.

However, if you refrain from using unfair means, you can perfectly well solicit customers who usually use another service provider to offer them your services.

Can I canvass my former employer’s clientele?

If you’ve left one company to set up a competitor, there are a number of things you need to watch out for.

If you have signed an employment contract with a non-competition clause, it is possible that this clause prohibits you from carrying out an activity that competes with that of your former employer for a given period after the end of your employment contract.

In addition, your employment contract may contain a non-solicitation clause. A non-solicitation clause prohibits an employee from soliciting his former employer’s customers or suppliers for a specified period after leaving the company. This clause is often included in

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How do you handle a dispute with a business partner?

Your company has entered into a contract with a partner (customer, supplier, etc.) and you have a disagreement with them over the performance of the contract. We’ll show you how best to avoid a dispute, and how to protect your rights in the event of legal action.

Read and apply the contract

In the event of doubt or disagreement over the performance of a contract, it is always advisable to refer to it. What does it say? What sanctions does it provide for?

If you have entered into an agreement with your partner that deviates from the contract, find all traces of your written exchanges on this subject (sms, e-mail) and remind your partner of them.

Similarly, if you haven’t signed a written contract, keep a record of all your exchanges and the way things are usually done to prove that you’re fulfilling your obligations.

Negotiating with your co-contractor

Litigation, while it can have a very favorable outcome, is necessarily longer and sometimes more costly. Negotiation is often the quickest way to resolve a conflict situation. For a successful negotiation, remember that you are within your rights, but offer your co-contractor a solution in which he or she also has something to gain. Be firm, yet inviting, and remember that if you fail, you won’t hesitate to take your case to court.

Formal notice

Negotiating amicably does not exempt you from sending your co-contractor a letter of formal notice. This acknowledges the situation, and sets in motion certain deadlines which may encourage your co-contractor to be more reactive, and enable you to take legal action more quickly.

We urge you to consult a lawyer before drafting such a letter. It sets the framework for your potential future dispute, and it is therefore vital that it be drafted with diligence.

Consult a lawyer

Don’t wait until relations have been irretrievably compromised before contacting a lawyer. A large proportion of the disputes referred to us by our customers are settled out of court, following a formal notice and exchanges between the parties negotiating an amicable outcome.

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How to deal effectively with the sale of your business

You’re getting ready to sell your business. You have a buyer and want to get the process moving as quickly as possible. Here are 3 top tips for speeding up the process, without compromising safety.

Prepare your parts

Before buying your business, the buyer will conduct a kind of audit of your business, looking at every aspect of it. You’ll need to provide a range of documents, such as tax and accounting documents for the last few years, employee employment contracts, a list of current contracts, etc.

More often than not, the customer is missing parts. It could be the general terms and conditions of a leasing contract that he has lost and that the leasing company has failed to return despite repeated requests, a lost employment contract, or a certificate from a less-than-responsive accountant.

Our advice is to start as early as possible, listing the parts available to you, and looking for missing parts.

Purging pre-emptive rights

One of the main reasons for slowing down the sale of a business is the purging of pre-emption rights.

The right of pre-emption is the right granted to a person to have priority for the purchase of your business in the event of it being put up for sale. There may be several pre-emptive rights: for employees, for the municipality in certain cases, but also for a co-contractor, if you are a franchisee for example.

To purge a pre-emptive right, you must inform the person holding the pre-emptive right and wait a pre-determined period (usually two months) for them to come forward before you can sell.

However, to move more quickly, you can ask these people for certificates stating that they do not intend to acquire your business, leaving you free to proceed with the sale before the pre-emption period expires.

It is therefore particularly important to identify existing pre-emptive rights early on in the process, in order to settle this formality as a matter of priority.

Give your board plenty of warning

As a matter of economics, many company directors wait until they are as far advanced in the process as possible before notifying their lawyer.

However, in the event of a dispute, your lawyer will not have been able to review the letter of intent or the promise to sell.

If you try to save a little, you could end up with a big loss.

If you’re planning to sell your business, we strongly recommend that you discuss the matter with your usual advisor as soon as possible.

What’s more, this will enable him to get organized and guarantee you maximum reactivity during the busy times of the transfer.

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Dissatisfied customer? Your responsibilities (withdrawal, warranty, hidden defects, etc.)

You’ve sold a product to a customer and they’re not happy with it. The customer may have changed their mind, the item may be damaged… your customer wants their money back. What exactly are your rights and responsibilities?

The right of withdrawal

The right of withdrawal is a right that certain buyers have, under certain conditions, to return a product to the seller and request a refund, without having to justify themselves.

The right of withdrawal only applies to sales made at a distance or off-premises (without the simultaneous physical presence of both parties), and where the buyer is a consumer, i.e. a natural person purchasing for personal use.

In special cases of “off-premises” sales, the right of withdrawal can be extended to professional buyers. This applies in particular to contracts concluded at trade fairs or exhibitions, when the contract does not fall within the scope of the customer’s main activity, and when the customer has 5 or fewer employees.

Customers may exercise their right of withdrawal within 14 days of delivery of the goods. In principle, the customer must return the goods at his or her own expense, but the seller is obliged to reimburse all sums paid by the customer at the time of purchase, including shipping costs.

Please note that the right of withdrawal also applies to services.

The Civil Code’s obligation to comply

The Civil Code devotes an entire section to the obligation to deliver the item sold. The term “obligation de délivrance conforme” (obligation to deliver in conformity) means that the item delivered and its accessories must conform to the order and, in particular, to the characteristics agreed between the parties.

If the goods are not delivered on time, the sale may be cancelled. However, certain formalities must be observed.

This obligation applies to all sales contracts.

The consumer code’s obligation to conform

The obligation of conformity, also known as the “guarantee of conformity” in the French Consumer Code, only applies to contracts concluded between professionals and consumers.

This guarantee of conformity covers the product sold for a period of two years after delivery. During this period, the consumer can turn to the professional if the product does not conform to the usual use of a good of the same type, does not correspond to the description, has a manufacturing defect, etc.

The seller is then obliged to repair or replace the product, at the customer’s option. If it is not possible to repair or replace the product, the seller must reimburse the customer.

Hidden defects

The warranty for hidden defects applies to all sales contracts, regardless of the status of the parties.

On the other hand, it only applies if the buyer discovers a defect that already existed at the time of purchase but was not apparent at that time, and if this defect renders the good unfit for the use for which it was intended.

The time limit for claiming a latent defect is also two years, but from the date of discovery of the defect, and not from the date of delivery of the good.

In this case, the customer has the choice of returning the goods and receiving a refund, or keeping the goods and requesting a partial refund.

Between professionals, under certain conditions, it is possible to include a clause excluding the benefit of the warranty for hidden defects in the sales contract or in the General Sales Conditions.

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Selling your business: what’s the difference between selling shares and selling goodwill?

You want to sell your business and may even have already found a buyer. However, you’re not sure which type of transaction to carry out, and don’t know the difference between selling your company’s shares and selling your business.

Who does it?

In the case of a sale of shares, you, as an individual, are selling the shares in a company that you own. If the shares sold are owned by another company, such as a holding company, it is this company that will sell the shares.

Conversely, in a business sale, the company sells its business.

This has tax and other consequences. In the first case, it is the person selling the shares who will be taxed. In the other case, the company selling the business will be taxed.

What exactly am I giving up?

In a business sale, you only sell the assets of your business. This means that you retain any debts that may have arisen prior to the sale agreement. In all likelihood, you will then have to deduct from the sale price the amount needed to repay the company’s debts.

With a sale of shares, you sell the entire company, with its assets and liabilities. This is riskier for the buyer, whose liabilities may turn out to be greater than anticipated at the time of sale. In most cases, therefore, a transfer of shares is accompanied by so-called “asset” or “liability” guarantees, enabling the seller to be held liable in the event of any unpleasant surprises.

That’s the main difference between the two.

The fate of current contracts

Buying a company necessarily means taking over all its activities, and therefore all its current contracts.

On the other hand, the purchaser of a business may, under certain conditions, not take over certain contracts. This applies to both employment and commercial contracts. For example, the sale of a business may provide an opportunity to break with an unreliable supplier.

Price payment

In the case of a tax sale, payment of the price is immediate, making the operation seem quicker. In reality, if guarantees are given, the transfer of securities can have much longer-term effects.

At the same time, the sale of a business usually requires that the proceeds of the sale be placed in escrow, to be released to the seller only after the expiry of a period known as the “opposition period”, during which the business’s creditors can request payment from the proceeds of the sale. The seller often has to wait at least three to five months before receiving the proceeds of the sale.

DESRUMAUX AVOCATS can support you in the sale of your business, as well as in an acquisition.

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Top 3 mistakes managers make when drawing up contracts

As the director of a small company, you are often the manager, human resources manager and legal expert all rolled into one. This means you have to do a bit of everything, including drafting your own contracts.

Here are the top 5 mistakes we notice in this type of contract, when they are not submitted for litigation.

1. Lack of clarity

If you draft your own contract, you can be sure of drawing up a personalized contract that covers every aspect of your agreement with your co-contractor. However, you also run the risk of losing sight of the big picture, and of a contract that is perfectly clear and detailed at the time of drafting becoming unreadable in the event of a dispute.

The number of clauses, the lack of standardized language and the complexity of the provisions, which are sometimes the result of lengthy negotiations, make the contract difficult to read, and sometimes even lead to contradictory provisions.

This becomes a problem in the event of disagreement between the parties, and the need to submit the contract to a judge or arbitrator.

2. Lack of provisions to prevent or resolve conflicts

Many contracts contain incomplete clauses. The best example is the price renegotiation clause, which can be found several times in the same contract. It is often stipulated that in the event of any event whatsoever, the parties undertake to renegotiate the price, or one party may propose a price increase to the other.

In reality, however, and especially in financial matters, negotiations often fail. In such cases, the price revision clause makes no provision: does the contract continue? Is the contract terminated? Should a conciliator be appointed?

It is the role of the contract to provide for unforeseen circumstances, so that when they arise, the parties are not left in the dark. If the parties change their minds by mutual agreement, there will always be time to conclude an amendment to settle the dispute in another way.

3. The presence of illegal clauses

Even if commercial contracts can be drafted very freely, there are a few clauses that cannot be inserted and will not be applicable in the event of a dispute.

In this respect, we note excessive jurisdiction clauses, limitation of liability clauses or penalty clauses, poorly drafted retention of title clauses, and so on.

What’s more, in the absence of specific provisions, the presence of an unlawful clause can jeopardize the entire contract.

These clauses give the drafter a false sense of security, and are a nasty surprise when he or she tries to enforce them in the event of a dispute.

Whether you have doubts about the wording of a contract, or need help negotiating with an opposing party, we can help you. We recommend this even more strongly when your co-contractor is himself advised by a professional.

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Poaching: can I solicit my competitor’s employees?

In principle, you are free to solicit your competitor’s employees to join your company. However, this practice can be considered as poaching if it is carried out unfairly, i.e. if you use unfair means to convince your competitor’s employees to leave their company.

You can therefore call on your competitor’s employees, but it’s important to respect the rules of fair competition.

When am I guilty of poaching?

Poaching is an unfair competition practice that consists of :

  • try to recruit employees from a competing company,
  • with the effect of disorganizing the company.

– The existence of an active approach initiated by the new employer

With regard to the first condition, case law insists on several criteria. Firstly, the company claiming to be the victim of poaching must provide evidence of positive acts of canvassing of its employees by the new employer.

Secondly, there is no such thing as “poaching” an employee whose contract has been terminated by the original employer.

Nor can we speak of poaching if the almost concomitant departure of several employees is the result of the deteriorated social climate prevailing at the original employer.

Finally, the theory of poaching is also rejected if the hirings were the result either of classified advertisements in the local press, or of the initiative of employees who had spontaneously approached the new employer.

– The existence of a disorganizing effect for the latter.

Disorganization occurs when a company is disrupted to such an extent that it is no longer able to operate normally in the market and meet its obligations to customers.

Disorganization also implies that the original employer cannot easily compensate for the departures that affect him, and that he has difficulty recruiting replacements.

Can I call on my former colleagues?

If your competitor is your former employer, the rules on poaching apply, but there are a few extra precautions to take.

You can hire your former colleagues at your new company, provided this does not constitute a breach of your previous employment contract. Two clauses are particularly relevant.

If you have signed a non-competition clause with your previous employer, you must respect the terms of this clause, which may prohibit you from working for a competing company for a specified period. In this case, you must wait until the end of this period before joining a competing company, unless you obtain your former employer’s agreement.

In addition, your contract may contain a non-solicitation clause. A non-solicitation clause prohibits an employee from soliciting his or her former employer’s customers or suppliers for a specified period after leaving the company. This clause is designed to protect the company’s interests by preventing an employee from appropriating the company’s clientele or suppliers.

The non-solicitation clause can also apply to employees who leave the company to set up their own business, to prevent them from soliciting their former company’s customers or suppliers for the benefit of their new company.

How can you be sure you’re not taking a risk?

If you’re planning to hire and are concerned about approaching the legal limits of fair competition, don’t hesitate to contact us. We can advise you on your recruitment process and help you secure the development of your team.

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Unfair competition – am I at fault?

Competition is generally seen as beneficial for consumers, businesses and the economy as a whole. It would encourage innovation and lead to better quality products and services and lower prices.

Competition is therefore encouraged and protected by French law. However, certain practices that distort or restrict competition are prohibited. More specifically, the law prohibits “unfair competition”, which refers to a set of abusive commercial practices by one company against one or more other companies.

The 4 most common unfair competition offences

Parasitism” in business law

Parasitism is a legal term used to describe a situation in which a company takes undue advantage of the reputation, goodwill or investments of another company in order to develop without the latter’s consent or participation.

This practice can take many different forms, such as copying a product, plagiarizing a brand name or logo, imitating product packaging, or reproducing a competitor’s advertising and communication campaigns.

One example of a case of parasitism is that of La Manif Pour Tous, which was condemned for having used the visual codes and hashtags of a SPA advertising campaign, without the latter’s authorization. La Manif Pour Tous was ordered to pay 15,000 euros to the SPA.

This type of practice can have negative legal consequences for the offending company, including fines, damages and even criminal sanctions. It is therefore important to understand the rules governing parasitism to avoid any negative consequences for your company’s business.

Counterfeiting in business law

Counterfeiting is the illegal practice of manufacturing, distributing or selling products bearing a trademark, patent or copyright without the authorization of the owner of these rights. It can have major economic consequences for the companies owning the counterfeit rights, such as loss of revenue, damage to their brand image and risks to consumer safety.

Counterfeiting doesn’t just concern little-known brands that have been condemned for reproducing the designs of famous and expensive brands. For example, Louis Vuitton was ordered to pay 800,000 euros in damages to a designer for using a clasp of its own creation without her authorization.

Counterfeiting can result in negative legal consequences for the offending company, including fines, damages and even criminal sanctions. Companies must therefore be aware of the legal risks associated with counterfeiting, and take steps to protect their intellectual property rights. It is important to comply with counterfeiting laws to avoid any negative consequences for your company’s business.

Disorganization in business law

Disorganization is a legal concept that refers to an unfair practice aimed at disrupting the operation of a competing business by creating obstacles or difficulties in its normal activities. This practice can take several forms, such as obstructing access to resources essential to the business, disseminating false information about the company or its products, or disrupting commercial relations between the company and its partners.

One of the best-known acts of disorganization is to launch a campaign to poach a competitor’s staff or customers.

For example, companies competing with the SNCF, set up by a former SNCF executive, were convicted of poaching 16 employees, even though the latter represented only a small proportion of the SNCF workforce.

Denigration in business law

Disparagement is an unfair practice that consists of making false or misleading statements or disseminating false or misleading information about a company or its products or services, with the aim of damaging its reputation and brand image.

Denigration can take many forms, such as spreading false rumors, publishing defamatory or malicious comments on social networks or online forums, or running misleading comparative ads that present the company or its products in a negative light.

You need to be particularly careful about how you communicate about your competitors, both to the public and on your social networks, for example.

For example, the start-up Matera, which competes with professional condominium managers, was ordered to pay €70,000 to several managers because its advertising campaign denigrated them.

If you have a development strategy that you think may flirt with unfair competition, we invite you to consult us before implementing it. Similarly, if you feel that one of your competitors is engaging in unfair competition, we can work with you to find the best way to put a stop to it and obtain compensation.

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Communicating and securing acceptance of the General Terms and Conditions of Sale

Communicating and securing acceptance of the General Terms and Conditions of Sale Having General Sales Conditions (GSC) is good. Communicating them to your customers and getting them to accept them is even better. In fact, it’s not enough to have GTCs for them to apply to all your transactions. There are two conditions for your customers to respect them: they must have read them, and they must have accepted them. It is the seller’s or service provider’s responsibility to ensure that these two conditions are met. We have recently assisted two customers in disputes in which the terms and conditions of the General Terms and Conditions were central.

Inclusion in the quotation of the requirement to read and accept the General Terms and Conditions.

In the first case, our customer wishes to sue an IT service provider who is alleged to have committed faults in the performance of his services. These errors have caused our customer a significant loss of sales, which he intends to hold the service provider liable for. However, in accepting the service provider’s quotation, our customer ticked a very common box stating that he had “read and accepted the General Terms and Conditions”. When we become aware of them, these same terms and conditions contain a so-called “limitation of liability” clause which prohibits our customer from holding the service provider liable for any damage arising from the service, such as loss of sales. If he hadn’t accepted such conditions, we wouldn’t have been forced to look for other, more complex defense options. Don’t forget that you’re never obliged to accept terms and conditions, especially when you’re working on a B-to-B basis.

Sending the terms and conditions with the quotation for signature

Our second customer is an IT service provider with GTCs drawn up by a legal professional, in this case DESRUMAUX AVOCATS. He sends out his GTCs with his quotations and asks customers to sign them. But sometimes (not to say often), he forgets. Faced with a non-paying customer, he cannot enforce all the clauses in his GTCs that would enable him to settle the dispute more quickly, and in particular the very important jurisdiction clause. Instead of litigating in BORDEAUX, our customer was forced to take his case to a court in Eastern FRANCE, with all the costs and uncertainties that a distant procedure entails. What’s more, if the customer were to dispute the quality of his service, he could not invoke an obligation-of-means clause or a clause limiting his liability to defend himself if he had not had his GTCs signed, which provided for such restrictions.

How do I communicate my terms and conditions to my customers?

The terms and conditions must be communicated to the customer, who must acknowledge having read and accepted them. Please note that this must be done before the sale or the start of the service, otherwise the GTCS do not apply to this sale or service. Apart from that, there is no real rule. In practice, however, GTCs are often communicated in the form of a link, with a box to be ticked signifying reading and acceptance, at the time of purchase or when a quotation is signed. However, there’s nothing to prevent you from adopting other means of communication, such as having them signed directly by the customer via a digital signature platform, like Yousign, for example. If you have any doubts about the content of your terms and conditions or the way in which you communicate them to your customers, don’t hesitate to ask for our assistance.
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To whom are your General Terms and Conditions of Sale addressed?

The first mistake in General Sales Conditions (GSC) is not knowing who you’re talking to! Our firm recently carried out a mission to proofread and correct the GTCs of dozens of e-commerce sites, and we often noticed this basic error: our customers want to sell only to consumers or only to professionals, but this is not clearly specified in their GTCs. In fact, we recently defended a business customer before the Commercial Court, who had bought on a site dedicated to private individuals, benefiting from attractive conditions reserved for private individuals, without knowing that the offer was not aimed at him. The seller had not clearly defined the clientele he was targeting, but was claiming tens of thousands of euros in damages from our customer. We relied on the customer’s own General Terms and Conditions of Sale to assert his good faith, and obtained a decision in his favor.

Why is it important to specify the target clientele in your GTCS?

General terms and conditions of sale vary according to the clientele you are targeting. If you’re targeting professionals, you might consider including exclusive warranty clauses for hidden defects or a jurisdiction clause, which will greatly reduce the risk and cost of future litigation. If you’re dealing with consumer customers, then there’s a long list of compulsory clauses that you must include in your GTCS, on pain of penalties.

Is it possible to have several versions of the GTC?

Apart from legal obligations, your T&Cs reflect your business rules, which may differ depending on your target audience. As a no-show restaurateur, you can ask for pre-payment by credit card for any table booked by a private customer. But if the customer is a professional organizing a business lunch with a specific menu, the reservation and deposit payment process is likely to be quite different. To be effective both before and in the event of a dispute, terms and conditions must be extremely clear. Even better is to segment them according to the target clientele.

How do I know if my GTCS are compliant?

Several customers had purchased model GTCs from legaltech websites. These were neither complete nor compliant, and even included clauses that worked against them. Other customers had home-made GTCs, which would not have protected them very well in the event of a dispute. Worried you might be affected? We can review your terms and conditions and suggest any improvements that will help you defend yourself in the event of a dispute.