A contractual tool requiring careful handling
In complex commercial negotiations, it is common for counterparties to seek to secure their position by ensuring that they benefit from terms at least equivalent to those granted to their competitors.
While this objective reflects a legitimate economic rationale, its contractual implementation—typically through "Most Favoured Customer" or "Most Favoured Nation" clauses—raises significant legal risks under French law.
At the intersection of contract law, trade secrets, and restrictive trade practices, these clauses constitute high-risk provisions requiring particularly rigorous drafting.
Trade Secrets: A Structural Tension in Verification Mechanisms
The main critical point lies in verifying compliance with the clause.
When verification involves direct or indirect access to information relating to third parties (commercial terms, contractual conditions, economic parameters), it creates an immediate risk of trade secret infringement.
This risk is heightened by the fact that such information is frequently protected by standalone confidentiality obligations.
In the absence of an appropriate framework, the clause may prove unenforceable in practice, trigger disputes with third parties, or give rise to contractual liability.
Mitigating this risk requires mechanisms inspired by judicial practice—for instance, establishing restricted access ("confidentiality rings"), limiting data use to anonymised or aggregated information, and strictly binding it to its intended purpose.
Unilateral Termination: A Legally Fragile Construction
These clauses frequently include termination mechanisms in the event of non-performance.
Where termination relies on a unilateral assessment, even through an advisor appointed by one of the parties, its legal robustness remains limited.
French law requires prior formal notice, a breach of sufficient gravity, and, in practice, adherence to a basic adversarial process.
Furthermore, in established commercial relationships, termination without adequate notice may be recharacterised as a sudden termination of established commercial relations, triggering liability.
Restrictive Practices: Risk of Nullity
Substantively, these clauses may operate as automatic alignment mechanisms.
French law prohibits certain clauses that create a significant imbalance or restrict commercial freedom by granting automatic benefits from more favorable conditions given to third parties.
Inappropriate drafting may lead to nullity, with major consequences for the overall economic balance of the contract.
Ambiguity of Terms Used
Another source of uncertainty is the use of indefinite concepts such as "overall assessment", "more favorable terms", or the "decisive" nature of the guarantee.
In the absence of precise definitions, interpretation is left to the court's discretion on a case-by-case basis, creating legal uncertainty, evidentiary burdens, and conflicting interpretations.
Evidence: A Decisive Factor
The effectiveness of these clauses depends on complex evidentiary mechanisms.
Courts favor a proportionate approach, balancing the right to evidence with the protection of trade secrets through limited document production, redaction of sensitive data, and reinforced confidentiality measures.
Outside judicial proceedings, these mechanisms must be expressly anticipated and structured in the contract.
Towards Rigorous Contractual Structuring
Such clauses should not be dismissed outright, but must be structured with great care.
Key safeguards include:
- A clearly defined comparison framework (scope, economic parameters, methodology),
- Strict confidentiality architecture (restricted access, redacted data, limitations on competitive use),
- A balanced verification mechanism (independent expert, adversarial procedure),
- A legally compliant termination framework (prior formal notice, cure period, distinction between material and non-material breaches, appropriate notice requirements).
A Strategic Perspective on Contractual Design
Beyond their technical aspects, these clauses illustrate a broader challenge: translating a legitimate commercial objective into a legally sustainable contractual framework.
They require an integrated approach combining contractual structuring, litigation risk management, and protection of strategic information.
How We Can Assist You
Clauses of this nature crystallise particularly sensitive issues at the intersection of commercial strategy, competitive exposure, and legal risk. Our firm brings recognised expertise in identifying and mitigating these risks.
We support clients with a highly practical approach in the structuring and drafting of sensitive contractual provisions, ensuring an effective balance between the protection of economic interests, legal compliance, and operational feasibility. In practical terms, we assist clients in:
- Restructuring high-risk clauses to ensure enforceability and legal robustness,
- Defining clear and defensible contractual standards (scope, objective criteria, verification mechanisms),
- Designing effective confidentiality frameworks governing access to and use of strategic information,
- Structuring control and enforcement mechanisms to reduce litigation exposure.
Our approach aims at transforming potentially destabilising provisions into robust, enforceable contractual tools aligned with our clients' business objectives, both at the negotiation stage and in anticipation of pre-contentious scenarios.
