## Facts

- Vassali (franchisor) and Gagnaire (franchisee) entered into a five-year franchise contract.
- The contract required Gagnaire to buy the products needed for the franchise exclusively from Vassali.
- The contract did not state a fixed price for future supplies at the time of signature.
- Instead, it provided that supplies would be invoiced at Vassali’s catalogue tariff “in force” on the date of each future order, as applied to all franchisees.
- Gagnaire sought to have the franchise contract declared void, relying on Civil Code article 1591, which requires that a sales price be set by the parties.
- A court of appeal annulled the contract on the ground that the pricing clause left price-setting to Vassali’s unilateral decision, making the price insufficiently determined.
- Vassali appealed to the Cour de cassation, heard by the Assemblée plénière.

## Issues

1. Whether a franchise contract is void for lack of a determined/determinable price when it refers future supply prices to the franchisor’s tariff in force at the time each order is placed.
2. If the franchisor misuses its power to set the tariff, whether the sanction is nullity of the franchise contract or remedies tied to performance (termination and/or damages).

## Decision

- The Cour de cassation (Assemblée plénière) quashed the appellate judgment annulling the franchise contract.
- A clause in a franchise contract that refers to the tariff in force on the day of future supply orders does not affect the validity of the franchise contract.
- The possibility that one party sets the tariff does not, by itself, make the contract void.
- Any abuse in the way the franchisor sets prices is addressed through termination of the contract and/or damages, rather than nullity.
- The case was remanded for further proceedings consistent with these rulings.

## Legal Principles

- A long-term franchise/framework contract may validly provide that the price of later supply transactions will be fixed at the time of each order by reference to a tariff established by one party.
- The question of contract formation (validity) is separate from the question of how the contract is carried out (performance).
- Unilateral price-setting power in such contracts is subject to judicial control for abuse; the proper responses to abuse are termination and/or damages rather than treating the contract as void from the outset.
- Civil Code rules requiring a sales price to be set do not automatically require nullity of a franchise/framework agreement that postpones price-setting to later implementing sales under an agreed reference method.

## Conclusion

Vassali v. Gagnaire holds that a franchise agreement is not void merely because it sets future supply prices by reference to the franchisor’s tariff in effect when each order is made; if the franchisor later sets prices abusively, the franchisee’s remedies are termination and/or damages, not annulment of the franchise contract.


Vassali v. Gagnaire, Recueil Dalloz, Jurisprudence 13 (1996)