Business Contracts

Before the reform of contract law, the possibility of using a contractual stipulation to rescind a contract had been inferred by the courts from paragraph 1 of former Article 1184 of the Civil Code, which stipulated that “a resolutory condition is always implied in bilateral contracts, in the event that one of the parties fails to fulfill its commitment”. 

Article 1224 of the Civil Code codifies  …

Resolutory clause (Clause résolutoire)

Before the reform of contract law, the possibility of using a contractual stipulation to rescind a contract had been inferred by the courts from paragraph 1 of former Article 1184 of the Civil Code, which stipulated that “a resolutory condition is always implied in bilateral contracts, in the event that one of the parties fails to fulfill its commitment”. 

Article 1224 of the Civil Code codifies the possibility of recourse to a resolutory clause, while establishing it as a principle: “Rescission results either from the application of a resolutory clause or, in the event of sufficiently serious non-performance, from notification by the creditor to the debtor or from a court judgment”. Unlike rescission by notification and judicial rescission, therefore, the application of a resolutory clause is not conditional on “sufficiently serious non-performance”.

Article 1225 of the Civil Code provides a framework for the stipulation of such clauses: “The resolutory clause specifies the commitments the non-performance of which will result in the rescission of the contract. Rescission is subject to a formal notice without result, if it has not been stipulated that this would result from the simple fact of non-performance. A formal notice is in effect only if it expressly mentions the resolutory clause” . Article 1225 is suppletive in nature. Consequently, it cannot be an obstacle to judicial rescission which, as stated in Article 1227, “may be sought in any event”.

It follows from these provisions and from case law that, in the presence of a resolutory clause, the assessment of rescission is exceptionally left to the courts. Although rescission is in principle ipso jure  , the court, if called upon to rule on the matter, must confine itself to verifying the applicability of the resolutory clause, insofar as it is unequivocal , failing which it recovers its discretionary power . The automatic resolutory clause for the benefit of the seller in the event of non-payment of any sum forming part of the sale price of a garage and residential premises must therefore be applied, given that, in the case of a single sale for a global price, the purchaser owes a sum which, given its amount, cannot be allocated to the sale price of the garage alone .

On the other hand, the effect of a resolutory clause is neutralized in the event of non-performance by the beneficiary of its own obligations . Accordingly, the trial courts cannot uphold the seller's right to benefit from a resolutory clause in the contract of sale in the event of the buyer's failure to collect, without first finding that the seller has delivered the item sold in accordance with the terms of the contract . 

Bad faith on the part of the person seeking the benefit of the resolutory clause is also an obstacle to the enforcement of said clause . On the other hand, the debtor's good faith has no bearing on the application of the resolutory clause in the event of non-performance of his obligations. Thus, a court of appeal cannot reject the recognition of the resolutory clause in the contract of sale on the grounds that the purchaser, by making payments after the time-limit set by the order to pay, has discharged his debt in full, thereby demonstrating his good faith .

To produce its effect, a resolutory clause in favor of the seller implies that the unsuccessful demand for payment must allow the buyer a period of time in which to meet his obligations . The principle of the prohibition of individual lawsuits does not prevent the seller, after issuing a formal demand for payment to the purchaser, from having the contract of sale rescinded, in application of a resolutory clause which took effect prior to the opening of the insolvency proceedings against the purchaser . A buyer served with a writ of summons by the seller to establish the acquisition of a resolutory clause is not entitled to invoke a plea of non-performance (repudiatory breach) without having sought, within a month of the writ of summons, the suspension of the effects of the resolutory clause by operation of law . In addition, a person who avails himself of a resolutory clause can only claim damages following rescission of the contract, and not performance of the obligation. Consequently, a court of appeal cannot declare the sale of a property subject to a price converted into a life annuity to be rescinded, by virtue of the acquisition of the resolutory clause for the benefit of the seller, while ordering the purchaser to pay the arrears due and unpaid over a given period .

Furthermore, a resolutory clause in a contract of sale must be published, or expressly referenced in the publication of the deed of sale, in order to be enforceable against third parties who have acquired rights to the property through the purchaser .

Cass. ass. plén., 4 April 2008, No 07-14. 52: the contract of sale of a house for which the sale price was converted into a life annuity, which included two resolutory clauses, one in the event of non-payment of the price, the other in the event of non-payment of the annuity, must be rescinded by application of the resolutory clause for non-payment of the price, The buyer, by failing to pay a term of the annuity when due, was in breach of his obligation to pay the price when due. 

Cass. 3e civ. 24 February 1999, LawLex202300005285JBJ, overruled an order by a court of appeal to rescind the sale on the grounds that the deed of sale contained a resolutory clause by operation of law, and that the purchaser's loss of employment did not constitute a case of force majeure outside his control, whereas the object of the clause was to enable the seller to apply to the courts for the rescission of the sale if he so wished.

Cass. com, 25 November 1997, LawLex202100005195JBJ; 13 February 2007, LawLex202100005208JBJ.

Cass. 3e civ, 18 January 2006, LawLex202200003505JBJ; 28 January 2015, LawLex202200003489JBJ: the purchaser of an apartment, a parking lot and a garage in a future state of completion who has neither paid nor brought the matter before the court for the purpose of suspending the effects of the resolutory clause contained in the notice to pay, within one month of this notice, cannot invoke a plea of non-performance to oppose the application of the resolutory clause.

Cass. 1re civ, 16 October 2013, LawLex202300005987JBJ.

Cass. 3e civ, 15 October 2015, LawLex202200002579JBJ,

Cass. 3e civ, 7 December 1988, LawLex202300005283JBJ, stating that resolutory clauses must unequivocally express the common intention of the parties to terminate their agreement ipso jure.

Cass. 1re civ, 25 November 1986, LawLex202300003618JBJ.

Cass. 3e civ, 29 January 2003, LawLex202200003459JB, adding that if the surface area of the garage is in fact less than contractually agreed, the shortfall in surface area can only be reflected, in accordance with Article 1617 of the Civil Code, by a reduction in the sale price.

Cass. com. 14 December 1993, LawLex202300005983JBJ, stating that the seller cannot rely on the acquisition of the resolutory clause, once he has breached his contractual obligation. 

Cass. 1re civ, 25 May 1992, LawLex202200002757JBJ: a court of appeal cannot, without noting that the seller has previously delivered the item sold under the conditions provided for in the contract, apply the resolutory clause contained therein in the event of failure by the buyer to withdraw, since the revelation of a defect in the item sold, covered by the warranty against latent defects, authorizes the buyer to refuse delivery and prevents the seller from demanding removal of the vehicle without repairing the leak, so that the seller's sending of a registered letter giving the buyer a removal period, without indicating any repair, could not have caused the period to run.

Cass. 3e civ, 8 April 1987, LawLex202300003818JBJ: a seller who invokes a resolutory clause in bad faith cannot have his claim for rescission of the contract of sale, by acquisition of said clause, accepted.

Cass. 3e civ, 24 September 2003, LawLex202300005274JBJ.

Cass. com. 17 October 2018, LawLex202200003348JBJ: a resolutory clause which provides that the rescission of a contract of sale for life will be acquired after the delivery of a formal demand for payment which has remained without effect, implies that the said demand for payment, which implements the clause, leaves a period of time for the purchaser to pay the unpaid arrears.

Business Contracts

247. Resolutory clause (Clause résolutoire)

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247. Resolutory clause (Clause résolutoire)

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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