Court Ruling on Repurchase Clause at Guaranteed Price

Extract

[...] By modifying the qualification of the clause, the Court adopts a posture of economic regulation even before participatory financing is actually institutionalized. This pragmatism, however, has its limits. It creates a gap between the rule and reality. Indeed, on the economic level, the investor is indeed protected against loss and the Court is aware of it. It nevertheless decides to retain only the legal form as long as it remains apparently coherent. This is the whole paradox of this jurisprudence. [...]

[...] This is exactly what H. Le Nabasque highlights, speaking of a 'contextual control' where 'the only question is to know if the promise finds its cause in the contribution'. 17 The result unfolds on two levels. On the one hand, the Court facilitates the use of clauses intended to secure the contribution of capital, on the other hand, it refuses to establish a presumption of validity. It maintains that the examination of the contractual balance belongs to the judges of the facts. [...]

[...] It judges with its knowledge and culture. This culture is not limited to technical aspects, it also has a symbolic dimension. This is reflected in the key concept that guides the decision, that of the "leonine clause", which does not find its origin in the Civil Code, but in an ancient imagination, at the crossroads of literature and law. As Marie Caffin-Moi points out, "Although absent from the law, the expression 'leonine clause' has acquired, by the force of its evocative power, the value of a classic concept of company law. [...]

[...] However, the qualification of 'provider of funds' is not neutral. In reality, it introduces a hierarchical distinction between associates by qualifying some as 'true associates', subject to affectio societatis and other simple disguised lenders, with a secure exit door. In doing so, the Court of Cassation validates a conception of the company that is far from the ideal of community of risks. The doctrine has seized this trend by indicating that 'this economic realism consecrates the fragmentation of the social body, there are now heart associates and passing associates' 6 Was it really necessary to accept this distinction? [...]

[...] It relies above all on the identity of the one who benefits from it. It notes that the contentious promise was 'the determining condition of his capital contribution' and that it was therefore appropriate to assimilate the investor to a provider of funds. By assimilating the associate to a simple financier, the Court implicitly sets aside the requirement of a genuine exposure to social risk. On this point, Marie-Laure Coquelet estimates that 'the criterion of legitimacy becomes less the nature of the clause than the economic status of the contracting party'. [...]