You’ve decided to draw up General Terms and Conditions of Sale to govern your business activity and your relationship with your professional customers. You’re wondering what must be included.
Article L. 441-1 of the French Commercial Code stipulates that general terms and conditions of sale must include two elements: (i) price-determining elements (such as the scale of unit prices and any price reductions) and (ii) terms of payment.
Elements of price determination
The unit price list
The December 8, 2005 circular on commercial relations sums up expectations in terms of pricing very well.
“A price list is not compulsory. In fact, it can only exist if the activity in question lends itself to its elaboration. This does not apply to products and services based on quotations. Similarly, the prices of certain products, particularly agricultural products, are subject to price fluctuations that preclude the establishment of a price list.
On the other hand, the seller is not prohibited from drawing up several price lists for several categories of customers to whom he markets his products or services.
Price reductions
This term covers three types of discount: rebates (immediate reductions in the price of a good or service), discounts (commercial price reductions granted in the event of quality defects, late delivery or non-conformity of the order) and rebates (reimbursement to the customer of part of the amount already paid). The amount and terms and conditions under which any buyer may benefit from these discounts must appear in the general terms and conditions of sale .
Terms of payment
These are all the terms and conditions under which the customer’s obligation to pay the price is to be fulfilled.
At the very least, the terms of payment specify the payment deadlines and penalties for late payment.
Payment terms
The French Commercial Code sets a maximum payment term of 45 days end of month, or 60 days from the date of invoice. However, this period may be contractually extended when the contract provides for an acceptance or verification procedure to certify the conformity of the goods or services, and explicitly provides for the extension of the maximum payment term.
However, this must not have the effect of unreasonably delaying the start of payment terms.
Penalties for late payment
By law, the interest rate for late payment is “equal to the interest rate applied by the European Central Bank to its most recent refinancing operation, plus 10 percentage points”. It is possible to derogate from this rule, but the late payment interest rate cannot in any case be less than three times the legal interest rate.
N.B.: this article concerns the General Terms and Conditions of Sale for business customers only. The General Sales Conditions for private customers include other mandatory clauses.
