Beware of the five-year limitation period for the action in payment of an invoice sent by a professional for the services provided to another professional.

By a decision of February 26, 2020, the French Supreme Court (Cour de Cassation) ruled that the limitation period began to run not from the day the invoice was issued, but from the day it should have been issued, namely in the present case at day of completion of the services.

It based its decision on two articles. The 1st, article 2224 of the French Civil Code, under the terms of which personal or movable actions are prescribed by five years from the day on which the holder of a right knew or "should have known the facts allowing him to exercise it". The second, article L441-3 of the French commercial code in its version prior to April 26, 2019 since the facts took place before that date, which stipulated that "the seller is required to issue the invoice as soon as the good is sold or the service is provided". Having considered that the issuer of the invoice knew the date of performance of its services and therefore the facts allowing it to exercise its action for payment, the Court considered that the starting point was that date and that the date of issue of the invoice did not matter.

This decision therefore calls for real vigilance on the deadlines for issuing invoices and collecting them. But this Court decision is also to be put in perspective in view of the circumstances of the case.

Would the solution be the same if the parties, by contract, had agreed to a given deadline after the date of completion of the services for issuing the invoice? Or if a deadline for payment of the invoice had been contractually agreed?
 
We do not have the details of the facts of the appeal judgment that gave rise to the French Supreme Court decision of February 26, 2020, which would allow us to determine whether this was the case or not in the case at stake. It is likely not if we stick to the previous case law and the logic of the decision of February 26, 2020 compared to this previous case law.
 
Thus for an invoice mentioning a "net in 14 days" payment, the starting point of the limitation period is the due date of the invoice, i.e., fourteen days net after the date of the invoice (Cass. com. 5-12-2018 no 17-16.282 F-D, Sté Atout pains v / Sté Becker Bongard Group).
 
Also for debts payable by successive terms, it has been held that the prescription is divided like the debt itself and runs in respect of each of its fractions from its date maturity. Hence, the action for payment of unpaid monthly installments starts running from their successive due dates. If the non-payment of one of these installments gives rise to the possibility for the creditor to avail itself of the forfeiture of the term and the immediate payment of the balance, the action in payment of said balance starts running from this new due date (Cass. 1st civ. 11-2-2016 n ° 14-27.143, 14-28.383, 14-29.539 and 14-22.938).
 

It should also be noted that even though the Cassation decision of February 26, 2020 at stake, is based on an article (L441-3) which has been entirely revised by Ordinance of April 24, 2019, the principle according to which the seller is required to issue the invoice as soon as goods are delivered or the services provided, remains valid.
 
Finally, it is worth remembering that this limitation period is only interrupted by acts precisely defined by law. As a reminder, a formal notice by registered letter (mise en demeure) does not interrupt the limitation period unless the parties have contractually agreed otherwise. You need for instance a court action (typically a writ of summons, or in the event of an order for payment (injonction de payer), the service of the order for payment (l'ordonnance d'injonction) if it has been obtained). It is also interrupted by the recognition by the debtor that he owes the amount claimed. It is also interrupted by a protective measure which has been notified to the debtor (for example a protective seizure on a bank account). It can also be interrupted as another example by any event which the Parties had contractually agreed to interrupt the limitation period.

By Dominique Dumas, attorney at law and managing partner of Dumas Structure, 13 Ter Bd Berthier, 75017 Paris - contact@dumas-structure.com