Price indeterminacy

Price indeterminacy refers to the legal situation in which the price of a transaction is not sufficiently determined or determinable at contract formation to make the sale legally valid. Under French law (Article 1591 of the Civil Code), a sale is null if the price is not determined or objectively determinable. In M&A, this risk is addressed by using precise price definitions with objective adjustment mechanisms (completion accounts or locked-box) or by designating a third-party expert under Article 1592. Swiss CO law similarly requires a determined or objectively determinable price for a valid sale contract.

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Example: an SPA providing that "the price shall be agreed between the parties after closing" — with no objective calculation mechanism — may be declared null for price indeterminacy under French law. The correct approach specifies a fixed base price plus an objectively calculable adjustment mechanism (working capital reference, net debt definition, permitted/prohibited leakage) or designates an Article 1592 expert as tiebreaker.

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Hectelion secures price determinacy in every SPA it advises on, building objective adjustment mechanisms that are legally unassailable in both French and Swiss law.