Business Contracts

An inalienability clause prohibits the transfer of ownership of a thing, and contravenes the principles of free disposal of property  enshrined in Article 537 of the Civil Code, and contractual freedom. It can appear in both gratuitous and onerous acts.
Inalienability clauses attached to gifts must comply with certain conditions laid down by the legislator. Under Article 900-1 of the Civil Code, i …

Inalienability clause

An inalienability clause prohibits the transfer of ownership of a thing, and contravenes the principles of free disposal of property  enshrined in Article 537 of the Civil Code, and contractual freedom. It can appear in both gratuitous and onerous acts.

Inalienability clauses attached to gifts must comply with certain conditions laid down by the legislator. Under Article 900-1 of the Civil Code, inalienability must be temporary and justified by a serious and legitimate interest . The temporal limitation requirement is derived from the principle that perpetual undertakings are prohibited . However, an inalienability clause stipulated in a deed of gift for the lifetime of the donor complies with the temporary nature prescribed by Article 900-1 of the Civil Code . The serious and legitimate interest is assessed on the day the clause is stipulated, and not on the day the court rules . An inalienability clause may be justified in particular by the donors' concern to guarantee the full effectiveness of the contractual right of return, and to ensure that the bare owner of the property concerned will be their child rather than a third party .

However, the donee or legatee may request the court to lift the inalienability clause if the interest that justified the clause no longer exists, or if a more important interest requires it. The disappearance of the donor's serious and legitimate interest does not affect the validity of the clause, but only allows the court to authorize the donee to dispose of the property . While in the past, the Court of Cassation was able to authorize the release of the inalienability clause, notably through the action oblique (derivative claim) , it now rules out the possibility for creditors or their representatives to apply to the court for authorization to dispose of a property given with an inalienability clause . In effect, an action for judicial authorization to dispose of property is exclusively linked to the person of the donee, as it is subject to personal considerations of a moral and family nature, inherent in the gift. Thus, the liquidator of the latter  or his creditor , including the Trésor Public   cannot exercise it.

Inalienability can also prevent the exercise of enforcement measures, such as seizure of the property by the creditors of the donor and donee, as long as it is in force . Similarly, a real estate seizure order published at a time when the property in question was subject to an inalienability clause inserted in a published deed of gift and drawn up in the interest of the donor for the duration of his life, must be annulled insofar as it relates to a non-seizable asset . 

An inalienability clause may also prevent the registration of a conventional mortgage, where real estate subject to inalienability constitutes a non-tradable item within the meaning of Article 2388 of the Civil Code . Similarly, when a gift is made to a legal entity, an inalienability clause precludes, without time limit, both the sale of the property and the creation of mortgages on it . On the other hand, the registration of a legal mortgage on an immovable encumbered by an inalienability clause is possible, provided that it does not allow seizure of the property while the clause is in force . Nor does the temporary unavailability of a security prevent it from being used as collateral . 

A sale concluded in disregard of a conventional inalienability clause must be sanctioned by relative invalidity. It also exposes the seller to civil liability towards the buyer, notably when, without having verified the substance of his rights, he accepts a unilateral promise to purchase a property encumbered by such a clause . Nevertheless, the invalidity of a sale concluded in violation of an inalienability clause is extinguished as soon as the clause loses its cause . 

Lastly, inalienability clauses in the articles of association are expressly authorized in simplified joint stock companies  and in European undertakings  for a period not exceeding ten years. In the context of insolvency proceedings, the court may regulate the conditions under which shares may be alienated . The Court of Cassation considers that, justified by the public interest, the provisions of Article L. 631-10 of the Commercial Code, which stipulate that the shares of a legal entity that is the subject of a continuation plan may not be transferred, do not infringe Article 1 of the First Additional Protocol to the Convention for the Protection of Human Rights and Fundamental Freedoms and Article 17 of the Declaration of the Rights of Man and of the Citizen of 26 August 1789 relating to the right of ownership .

Cass. 1re civ., June 15, 1994, LawLex202200000726JBJ.

These requirements have been extended to onerous acts by the courts, see Cass. 1re civ, 31 October 2007, LawLex202200000054JBJ.

Cass. 1re civ, 25 May 2004, LawLex202200000894JBJ; 3 June 1998, LawLex202200000846JBJ.

Cass. 1re civ, 8 March 2005, LawLex202200000725JBJ.

Cass. 1st civ. 15 June 1994, LawLex202200000726JBJ.

Cass. 2nd civ. 30 June 1993, LawLex202200000576JBJ.

Cass. 1st civ. 23 February 2012, LawLex202200000896JBJ.

Cass. 1re civ. 23 January 2008, LawLex202200000897JBJ.

Cass. 1re civ. 9 October 1985, LawLex202200000895JBJ.

Cass. com., 30 September 2008, LawLex202200000875JB.

Cass. 3e civ., 30 June 2010, LawLex202200001010JBJ. 

Cass. 1re ch. civ. 13 April 1992, LawLex202200000891JBJ.

Cass. com., July 12, 2005, LawLex202100001612JBJ.

Cass. 1re civ. 8 January 1975, LawLex202200000842JBJ. 

Cass. 1re civ, 6 March 2013, LawLex202200000876JBJ.

Cass. 1re civ. 8 December 1998, LawLex202200000892JBJ.

Cass. 1re civ. 11 January 2000, LawLex202200000425JBJ.

Cass. 1re civ. 29 May 2001, LawLex202200001090JBJ.

Cass. 1re civ, 4 July 2006, LawLex202200000845JBJ; Cass. com, 9 November 2004, LawLex202200000893JBJ.

Business Contracts

11. Inalienability clause

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

11. Inalienability clause

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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