A wholesaler selling clothing of the French fashion brand Kookai left Kookai’s invoices unpaid, after which Kookai stopped selling and delivering the clothes. In the proceedings, the wholesaler claimed that by not giving notice and actively soliciting the wholesaler’s customers, Kookai failed to perform the distribution agreement towards it, or at least acted unlawfully towards it and had to pay damages.
However, the District Court and the Court of Appeal took the position that, in principle, a party to a continuing performance contract is entitled to terminate that contract if its counterparty, even after demand, continues to refuse to actually pay the price agreed between the parties for services rendered and for future services. Under these circumstances, a notice period of several months (which – in the absence of an agreement to the contrary – could be considered in this case, given the relatively short duration of the cooperation) has no meaning: the wholesaler could not have had any orders delivered for its customers in that period, during that notice period, anyway, because it refused to pay for them in advance and Kookai was entitled to refuse delivery for that reason. The wholesaler’s complaints were insufficiently concrete and had not been established. Therefore, neither the duration of the notice period nor the failure to observe it has any significance in this case, or at least not in the sense that Kookai would be liable for damages. The Court held that Kookai was entitled to terminate its cooperation with the wholesaler on the basis that the wholesaler refused further payment(s). The damages claimed by the wholesaler were to be borne by it.
Thus, it is not advisable for a buyer under a continuing performance contract to state in advance that payment will not be made if his reasons are not substantiated. This case shows that no notice period then needs to be observed, or at least that the supplier is then not liable for damages.
