Price in procurement contracts
Objective: Properly structure the price clause in your contracts - from simple contracts to multi-year MSAs - to avoid nullity risks.
Price is an essential element of the contract. It must be determined or determinable (Art. 1163 C. civ.). Its absence or indeterminacy may lead to the nullity of the contract.
Legal sources
- Art. 1163 C. civ. - The obligation must have determined or determinable content
- Art. 1164 C. civ. - Unilateral price determination in framework agreements
- Art. 1165 C. civ. - Price determination after performance (service contracts)
Simple contracts (one-off sale, service)
The price must be fixed or determinable according to an objective method set out in the contract. A price "to be defined" without a determination mechanism makes the contract vulnerable or even void.
Framework agreements / MSA (Art. 1164)
In a Master Services Agreement (MSA) or framework agreement, the price may be set unilaterally by one party, provided it can be justified and is not abusive. The other party may refer to the court if the price is manifestly unreasonable.
Service contracts (Art. 1165)
If the price was not agreed upon before performance, it may be set afterwards by the creditor. In case of dispute, the court decides. This regime is common in consulting contracts or MSPA (Master Services & Purchasing Agreements) with time-and-materials provisions.
Practical case - Rate schedule in an MSA
A buyer signs an MSA with an IT provider for 3 years. The framework agreement sets out the general terms (liability, GDPR, confidentiality). The price is set by an annual rate schedule (Pricing Annex), revisable each year. Each purchase order references the current rate schedule.
- ✅ The price is determinable: the calculation method (rate schedule + daily rates) is defined in the contract
- ✅ The contract is valid even though the exact amount of each order varies
- ❌ A contract stating "at market price" would be insufficiently determinable