Welcome to this chapter on commercial documents!
Throughout the life of the business unit, commercial documents are used to justify and secure business operations. Moreover, these documents are important for establishing a good business relationship.
So here is what you will discover throughout this article:
- Business documents: Infographics
- What are the mandatory information in commercial documents?
- What are the main commercial documents?
- Conclusion
Business documents: Infographics
To start this article, here is this magnificent diagram which shows all the main commercial documents which are used within the commercial unit.
What are the mandatory information in commercial documents?
But yes, what does the law say about commercial documents? In fact, there are many articles from the commercial code including the following two that I will take from the official website Légifrance.
With regard to all commercial documents, theitem R123-237 states:
Any registered person shall indicate on their invoices, order notes, prices and advertising documents as well as on all correspondence and receipts concerning their activity and signed by them or on their behalf:
1° The unique company identification number issued in accordance with Article D. 123-235;
2° The mention RCS followed by the name of the city where the registry where it is registered is located;
3° The location of its head office;
4° Where applicable, that it is in a state of liquidation;
5° If it is a commercial company whose headquarters are abroad, in addition to the information mentioned in 3° and 4°, its name, its legal form and the registration number in the State where it has its headquarters, if one exists;
6° Where applicable, the status of tenant-manager or agent-manager;
7° If it is the beneficiary of a business project support contract for the creation or takeover of an economic activity within the meaning of Chapter VII of Title II of Book I of the French Commercial Code, the corporate name of the legal entity responsible for the support, the location of its registered office, as well as its unique identification number;
8° If it has constituted an allocated asset pursuant to Article L. 526-6, the object of the professional activity to which the asset is allocated and the name used for the exercise of the professional activity incorporating its name or usual name immediately preceded or followed by the words: "individual entrepreneur with limited liability" or the initials: "EIRL".
Any registered person must also indicate on their website the RCS mention followed by the name of the town where the registry where they are registered is located, as well as the information mentioned in 1°, 3°, 5° and 8°.
The source of this article can be found here.
Another very interesting article can also be found on this same site and concerns invoices in particular.
This is article L441-3 which I reproduce below:
I.-A written agreement concluded between the supplier, with the exception of suppliers of products mentioned in Article L. 443-2, and the distributor or service provider mentions the reciprocal obligations to which the parties have committed at the end of the commercial negotiation, in compliance with Articles L. 442-1 to L. 442-3. This agreement is established either in a single document or in a set formed by a framework contract and implementation contracts.
II.-Without prejudice to Articles L. 442-1 to L. 442-3, any amendment to the agreement mentioned in I shall be the subject of a document which mentions the new element justifying it.
III.-The agreement mentioned in I sets out, for the purposes of contributing to the determination of the agreed price, the following obligations:
1° The conditions of the sale of products or services, including price reductions, and where applicable the types of situation in which and the terms according to which derogating conditions of the sale are likely to be applied;
2° Commercial cooperation services, likely to promote the marketing of the supplier's products or services, which the distributor or service provider provides to the supplier, not falling under the purchase and sale obligations, specifying the purpose, the expected date, the terms of execution, the remuneration of these services as well as the products or services to which they relate and the overall remuneration relating to all of these obligations;
3° Other obligations intended to promote the commercial relationship between the supplier and the distributor or service provider, specifying for each the object, the expected date and the terms of execution, as well as the remuneration or the overall price reduction relating to all of these obligations.
IV.-The agreement referred to in I is concluded for a period of one year, two years or three years, at the latest on 1 March of the year in which it takes effect or within two months following the starting point of the marketing period of the products or services subject to a particular marketing cycle. When it is concluded for a period of two or three years, it sets out the terms and conditions according to which the agreed price is revised. These terms and conditions may provide for the taking into account of one or more available indicators reflecting the evolution of the price of the factors of production.
V.-The supplier shall communicate its general conditions of sale to the distributor within a reasonable period before March 1 or, for products or services subject to a particular marketing cycle, before the starting point of the marketing period.
NOTE: Under the terms of article 5 of order no. 2019-359 of April 24, 2019:
I. – The provisions of II of Article L. 441-3 of the French Commercial Code, in their wording resulting from this ordinance, are applicable to any agreement in the process of being executed on the date of entry into force of this ordinance, from this date.
II. – Without prejudice to the provisions of I of Article 5, for agreements in progress on the date of entry into force of this ordinance whose duration is greater than one year, Article L. 441-3 in its wording resulting from this ordinance applies from March 1, 2020.
III. – The provisions of Article L. 441-3 relating to invoices remain applicable, in their wording prior to the entry into force of this ordinance, to invoices issued before October 1, 2019.
The source of this article can be found at this address.
In the following section, we will look in detail at each commercial document concerned by the business unit.
What are the main commercial documents?
The main commercial documents are:
General conditions of sale (GCS)
The General Terms and Conditions must be established prior to any commercial relationship. They are of great importance since they determine the rights and obligations of each party to the contract.
The drafting of general conditions of sale is not obligatory between professionals, but of course, it is strongly recommended.
What are the T&Cs?
The general conditions of sale are a document drawn up by the supplier with the aim of establishing contractual rules and establishing good commercial relations with the customer.
Consulting the general conditions of sale before carrying out any commercial transaction allows the customer to be informed of the conditions of the transaction in question. They apply to all customers of the commercial unit.
The general conditions of sale of a company specializing in the resale of furniture will be different from a company which carries out a service provision activity.
What are the T&Cs for?
Depending on the nature of the business relationship, different legal rules apply depending on whether the business unit carries out its activity with a professional or with an individual.
The customer is a consumer
THEitem L111-1 of the consumer code specifies that the seller must inform the customer of his obligations such as payment of the price, compliance with payment deadlines and payment methods.
This article also specifies the following:
- return conditions
- the conditions of reimbursement
- the withdrawal period
- delivery time
All this information must be in the possession of the customer before signing any possible sales or service provision contract.
The client is a professional
Article L441-1 of the commercial code specifies all the rules of the general conditions of sale between professionals. Thus, the article specifies the terms of fixing the price of services or goods on sale in order to avoid problems during the commercial transaction.
The T&Cs: Mandatory or not?
The general conditions of sale are not obligatory between professionals (except in the event of a request), however it is a legal obligation for the seller with regard to a consumer customer.
The T&Cs must include the following clauses:
- the conditions of sale
- the price
- the service
- price reductions
- delivery conditions
- the characteristics of the service or good
- payment terms
- the right of withdrawal (14 days)
- guarantees for possible hidden defects
- the right to object to personal data
The estimate
What is a quote?
The quote is a commercial document drawn up by the seller before concluding the sales contract with his client. In everyday life, the quote is often used for the provision of a service. In fact, it is a "contract proposal" since the seller agrees to carry out the service indicated at the indicated price.
If the customer signs the quote, he agrees to pay the price indicated on the document while also respecting the conditions provided for in the quote.
Is the quote mandatory?
The seller is not obliged to draw up a quote if his client is a professional.
In a B to C commercial relationship, the professional may be required to establish a quote.
There are services for which the seller is required to draw up a quote: optical products, work over €150, medical care (fees over €70), personal services over €100, moving.
The law does not require the preparation of a quote, but it is strongly recommended.
What is a quote for?
- The quote, once signed, becomes a kind of contract between the seller and his client. The professional must provide the service and the client must pay the price indicated on the document.
- Indirectly, the seller, by offering a quote, demonstrates credibility towards his client.
- Finally, the seller fulfills his pre-contractual legal obligation.
Purchase order
What is a purchase order?
The purchase order is a commercial document drawn up by the seller and signed by the customer. From the moment of signature, the proof of the agreement between the two parties is no longer to be demonstrated. The purchase order is more often used when selling goods.
The customer's signature is the trigger for the obligation to deliver the goods but also to receive them (and pay).
Is the purchase order mandatory?
The purchase order is not mandatory, but is often used because it can serve as proof in the event of a dispute.
The delivery note
What is a delivery note?
The delivery note is a commercial document drawn up by the supplier of goods or services. The customer receives the document when the service is completed or when he receives the goods.
The delivery note is proof that delivery has taken place under the conditions initially agreed between the two parties.
Is the delivery note mandatory?
The delivery note is not mandatory, but is often used because it can serve as proof in the event of a dispute. When it is established, mandatory information must appear on the document:
- delivery date
- order number
- legal information of the company (head office, RCS number, share capital, legal form of the company, etc.)
- customer contact details
- nature of the goods
The bill
What is an invoice?
The invoice is a commercial document drawn up in two copies by the seller which shows all the elements of the transaction in detail between the seller and his customer.
Is the invoice mandatory?
The establishment of an invoice is obligatory between professionals but remains optional when the client is an individual.
Conclusion
In order to avoid disputes or even non-payment, the seller must draw up compliant commercial documents. Criminal, tax and civil sanctions are also provided for in the event of non-compliant commercial documents.
If you want to apply everything you have just learned, I strongly encourage you to read my article on corrected management exercises 21 Exercises Invoice of due and credit.
There you have it, now you have mastered the chapter on commercial documents. You no longer have any excuses for getting an excellent grade on the Operational Management exam!
Very interesting
It is really necessary for a good accountant to understand all these documents well.
Hello Kalifa In Thienou,
Thank you for the comment.