Possibility of modifying the pricing rules by endorsement
This judgment provides an opportunity to recall the conditions under which an amendment may change the rules for determining the price of a convention and the precautions that should be taken in case of drafting several successive amendments or before signing an amendment.
As a reminder, as part of work to bring an incineration plant up to standard, an inter-municipal association for the recovery of household waste has entered into several successive amendments with the company holding the contract to modify the price revision formula as well as some works. The last rider removed the price revision clause and introduced a firm price. The holder of the contract then decided to engage the responsibility of the Union in an attempt to recover the amounts due for the price revision, arguing in particular a defect of consent of not having drawn his attention to the clause of the last addendum to the agreement. market which removed the price revision clause in favor of a firm price mechanism.
Rule # 1: A rider may change the pricing rules of a contract
The Conseil d'Etat points out firstly that the rules on public procurement do not prevent the parties to a contract concluded at a final price from agreeing in an amendment, particularly when the execution of the contract is nearing completion. , to modify the mechanism of evolution of the final price to move from a price to a firm price.
The Council of State then recalls the classic rule that an endorsement can not upset the economy of the market, nor change the object. In other words ; to make the terms of a public contract so extensive that it should be regarded as a new market. These new rules are now codified in Article 139 of Decree 2016-360 of 25 March 2016 for public procurement and in Article 36 of Decree 2016-86 of 2 February 2016 for concession contracts.
In that case, the High Court considers that the modification of the rules for determining the initial price per endorsement, which consisted in moving from a price which could be revised to a firm price, did not constitute a change in the market economy since that it intervened at the end of performance of the contract and in a disadvantageous sense to its holder so that its effects could not be regarded as having upset the general economy of the market.
Rule # 2: precautions to take before signing an endorsement
This judgment also gives the opportunity to recall the precautions that should be taken before signing an amendment including in case of succession of several amendments. In effect, the purpose of the amendments is to remove or neutralize all clauses of the initial contract which are contrary to the new provisions of each addendum, hence the need to remain vigilant before signing them and to anticipate their impact. ... In this case, the Council of State recalls that it is up to each party to take " the necessary precautions before signing the endorsement "... and failing that, the signatory of the amendment containing an unfavorable clause can no longer validly complain about it.
Reading of Wednesday, December 20, 2017
IN THE NAME OF THE FRENCH PEOPLE
- Whereas it appears from the statements in the judgment under appeal that, by an undertaking of 17 October 2003, the inter-municipal association for the recovery of household waste in Hainaut-Valenciennes, called Ecovalor, entrusted the joint consortium of the company Area Impianti, agent of the group, and companies Hiolle Industries, Beugnet Hainault and MA .., work to bring the Saint-Saulve incineration plant up to standard; that this contract was concluded for an initial amount of 13 714 977 euros revisable according to the modalities envisaged with the article 3.6 of the book of the particular administrative clauses; a first amendment dated 25 November 2004 replaced the price adjustment formula and modified certain works for an additional amount of 292 112 euros; a second amendment concluded on 21 July 2005 also modified certain works for an additional amount of 737 653 euros and postponed the end of the contract until 28 December 2005; a third amendment, concluded on 22 November 2005, modified other works for an additional amount of 165 800 euros and stopped the amount of the contract at the sum of 14 913 542 euros; that the company Area Impianti applied to the Administrative Court of Lille for the condemnation of the union Ecovalor to pay him a sum of 919 961.09 euros for the balance of the market and the damages resulting from the delay in the the acceptance of the works and an amount of € 2,459,793.47 for the revision of the market price; that his application was rejected by a judgment of 2 December 2014 which the company has appealed only in so far as it rejected his request for conviction to pay a sum for the revision of the market price; that the company appeals in cassation against the judgment of December 22, 2016 by which the administrative court of appeal of Douai rejected its appeal;
On the scope of the endorsement:
- Considering that it appears from the documents in the file submitted to the trial court that the third amendment to the works contract in question contains an article 5 entitled "Financial conditions", which states that "Following this addendum, the contract therefore goes to an amount of firm and definitive total of € 14,913,542 excluding taxes ", and an article 8 which specifies that all clauses of the initial contract not contrary to the present clauses remain and remain fully effective; It follows from the statements in the judgment under appeal, which are not disputed on this point, that the wording of that financial clause differs substantially from that in the previous addenda, which stated that the new prices would be revised according to contractually agreed formulas. that even though Article 2 merely states that this third amendment has "for object modifying work in the framework of the bringing to the standards and modifies the market accordingly" and that this addendum does not mention any modification of the clause review of the market price provided for in the previous riders, the Douai Administrative Court of Appeal did not distort the clauses of this addendum by considering that they waived the previous stipulations relating to the revision of the price and a firm price mechanism;
On the legality of the endorsement:
Regarding the lack of knowledge of Articles 17 and 19 of the Code des Marches Publics
- Considering, in the first place, that under Article 17 of the Public Procurement Code in its then applicable version: "Subject to the provisions of Article 18, a contract shall be concluded at a definitive price. / A contract is concluded at a fixed price in the event that this form of price is not such as to expose the owner, the holder or the contracting public entity to major hazards because of the reasonably foreseeable economic conditions during the period. period of performance of benefits. The firm price is updatable under conditions fixed by decree. A market is said to be at an adjustable or revisable price when the price may be modified to take account of economic variations under conditions fixed by the decree mentioned in the preceding paragraph. Where a market includes a price variation clause, it lays down the periodicity for the implementation of this clause "; these provisions have neither the object nor the effect of preventing, as a matter of principle, the parties to a contract concluded at a definitive price from agreeing, in particular when the performance of the contract is nearing completion, to amend the mechanism of evolution of the final price to move from a price to a firm price; that, consequently, the Administrative Court of Appeal did not make mistake of law by dismissing for this reason the ground alleging the ignorance of Article 17 of the Code des Marches Publics;
Considering, secondly, that under Article 19 of the same Code in its then applicable version: "Except for unforeseen technical difficulties not resulting from the fact of the parties, an addendum may not upset the market economy, nor in change the object "; whereas those provisions have the effect of preventing the parties from making any changes to the terms of a public contract during the period of validity of the contract so large that it should be regarded as a new contract; that the court was able, without error of law, to consider that the modification of the rules for determining the initial price did not in itself constitute an upheaval in the market economy; It follows from the statements of the judgment under appeal, which are not disputed on this point, that the third addendum modified the market price-fixing mechanism, at the end of its implementation, in a disadvantageous way to its owner. ; that the court, which has made a sovereign appreciation of the terms of the contract, free of denaturing, did not mischaracterize the facts by holding that the deletion of the clause relating to the price revision could, in view of its nature and effects, to be regarded as having upset the general economy of the market;
With regard to the alleged existence of a defect of consent:
- Considering, on the one hand, that having supremely appreciated the lack of fraudulent intention of the Ecovalor trade union, the court did not commit an error of legal qualification in not holding back that the facts alleged against this union by the Area Impianti company, consisting in failing to report the removal of the price revision clause in the object of the amendment and insert a clause that did not give rise to a specific negotiation, constituted a fraud ;
Whereas, on the other hand, it is clear from the statements in the judgment under appeal that the Court rejected the plea alleging that Area Impianti, by signing the third addendum, made an error of such a nature as to vitiate its consent on the ground that the error invoked concerned only the price, and not the substantial qualities of the contract, and that, moreover, that error could have been avoided if the company, which contracts in the usual way in France, had taken , as any attentive professional must do, the necessary precautions before signing the endorsement; that in so ruling in view of the facts supremely appreciated, the Administrative Court of Appeal did not give the facts of the case an incorrect legal classification;
On the benefit of discounting the price:
- Whereas, under Article 17 of the Public Procurement Code in its then applicable wording, even in the absence of a review clause, a contract concluded at a fixed price "may be discounted under conditions laid down by decree" and if, pursuant to Article 1 of the Decree of 23 August 2001 implementing Article 17 of the Public Procurement Code and concerning the rules according to which public contracts may take account of variations in economic conditions applicable to the relevant market: "Where a contract is concluded at a fixed price for supplies or services other than current or for works, it must provide: - that the price will be updated if a period longer than three months elapses between the date of establishment of the price appearing in the contract and the date of effect of the act giving effect to the performance of the services (...) ", these provisions are applicable only to the conclusion of an initial contract; that, consequently, the court did not err in law by judging that they were not applicable to the third rider which was concluded at the end of execution of the market;
- Considering that it follows from all the foregoing that the Area Impianti company is unfounded to request the annulment of the judgment under appeal;
On the costs of the dispute:
- Considering that the provisions of Article L. 761-1 of the Administrative Justice Code prevent the Ecovalor union, which is not the losing party, from paying the sums requested by the title, the company Area Impianti; whereas, on the other hand, in the circumstances of this case, Area Impianti should be ordered to pay the sum of EUR 3 000 to the Ecovalor trade union under the same provisions;
Article 1: The appeal of Area Impianti is rejected.
Article 2: The Area Impianti company will pay the sum of 3,000 euros to the Ecovalor syndicate in application of article L. 761-1 of the code of administrative justice.
Article 3: This decision will be notified to the company Area Impianti and to the intermunicipal association for waste recovery of Hainaut-Valenciennes.