Business Contracts

Pursuant to Article 1584 of the Civil Code, a sale may be made outright, or subject to a suspensive or resolutory condition. In practice, sales subject to a resolutory condition are extremely rare. A resolutory condition entails rescission of the sale once the condition has been implemented, in accordance with Article 1304, paragraph 3, of the Civil Code, which defines a resolutory condition as on …

Conditional sales

Pursuant to Article 1584 of the Civil Code, a sale may be made outright, or subject to a suspensive or resolutory condition. In practice, sales subject to a resolutory condition are extremely rare. A resolutory condition entails rescission of the sale once the condition has been implemented, in accordance with Article 1304, paragraph 3, of the Civil Code, which defines a resolutory condition as one whose implementation leads to the extinction of the obligation. Fulfilment of the resolutory condition extinguishes the obligation retroactively, without affecting any interim conservatory or managerial measures. If the parties agree, or if the benefits exchanged have become valuable in the course of mutual performance of the agreement, retroactivity may be set aside (Art. 1304-7).

A suspensive condition delays the definitive formation of the sale. The obligation whose performance is suspended becomes pure and simple as soon as the condition is fulfilled, although the parties may provide for this fulfillment to be retroactive to the date of the agreement (Art. 1304-6). Sales subject to a suspensive condition, which are much more common in practice, can take several forms, such as sales on approval (vente à l'agréage) or on taste testing (Art. 1587) , sales subject to financing , sales subject to confirmation by an authenticated deed , or trial sales (Art. 1588) . In the case of sales on approval, the provisions of Article 1587 are suppletive of the intentions of the parties, and cannot be waived by their silence .

As with all conditional obligations, suspensive conditions must depend on an future and unknown event (Art. 1304, para. 1, Civil Code) . This requirement distinguishes a suspensive condition from a term subject to the implementation of a future but certain event, to which the due date or extinction of the obligation is subject (Art. 1305) . The condition must be lawful and not contrary to public policy (Art. 1304). It must not relate to an element essential to the formation of the contract . Nor must the condition be implemented solely at the discretion of one party (Art. 1304-2). In effect, a potestative condition leads to the invalidity of the obligation and consequently of the sale . This is the case when the condition renders uncertain not only the date of the sale, but also its implementation, which depends solely on the buyer's will, whose obligation to pay the full price is conditional on the resale of the plots of land acquired, the fact that this resale also requires the consent of a third party being insufficient to rule out the potestative character .  The same applies when the property forming the subject matter of the sale is still owned by a third party, whose consent to the transfer of ownership to the intermediary seller is not subject to any deadline, or steps to be taken, since the sale to the final buyer is within the sole power of the intermediary seller, who may or may not decide to acquire the property at his own discretion, without being bound by any time-limit . On the other hand, the Court of Cassation has held that a condition which suspends the completion of the sale of one item of property on the sale by the buyer of another item of property, which does not require a simple manifestation of will on the part of the buyer, but presupposes the fulfilment of an external fact, namely the finding of a buyer for the property of which he is the owner, does not constitute a purely potestative condition .

If a suspensive condition is not fixed in time, could the agreement be reclassified as a contract in perpetuity? The Court of Cassation has answered this question in the negative. It considers that the stipulation of a suspensive condition without a fixed term does not confer a perpetual character on the obligation , although the agreement subsists as long as the condition has not been breached . Nor, according to the Court of Cassation, can the expiry of the term set for the regularization of the transfer, when the suspensive conditions have been lifted within the allotted time-limit, render a memorandum of understanding null and void, if it does not provide for such a sanction .

Failure to comply with the suspensive condition in the contract of sale renders it non-existent . The obligation and the correlative right are deemed to have never existed . A non-culpable breach retroactively prevents the creation of a legal relationship between the parties, and renders the contract null and void . On the other hand, the effect of a resolutory condition cannot be attached to the failure of a suspensive condition . The agreement is not rescinded, but null and void .

Lastly, a party may freely waive the condition stipulated in his/her favor as long as it has not been performed or breached (Art. 1304-4 Civil Code). The Court of Cassation has even held that parties may waive the legal consequences of the failure of a suspensive condition stipulated in their favor .

Cass. 1re civ, 12 July 2007, LawLex202300003489JBJ; 21 November 2006, LawLex202300003488JBJ. See also. CA Paris, 13 October 2021, LawLex202100005619JBJ; 24 February 2010, LawLex201000000695JBJ.

Cass. 3e civ, 21 November 2012, LawLex202300008339JBJ; 7 June 1983, LawLex202300004715JBJ.

Cass. 3e civ. 13 October 1993, LawLex202200000055JBJ.

Cass. 3e civ, 22 November 1995, LawLex202200000947JBJ.

Cass. 3e civ., 20 May 2015, LawLex202200003274JBJ.

CA Montpellier, ch. com. 2 June 2020, LawLex202300008331JBJ.

Cass. 3e civ, 14 January 2021, LawLex202300007536JBJ.

Cass. 3e civ. 21 January 1971, LawLex202200008367JBJ.

Cass. 3e civ, 18 December 1973, LawLex202300007604JBJ.

Cass. com, 20 October 1975, LawLex202300007609JBJ.

Cass. 1re civ. 1 July 1975, LawLex202300007607JBJ.

Cass. 3e civ, 6 May 2003, LawLex202300007611JBJ.

Cass. com. 6th February 1996, JCP N 1996. II. 1662, note PETIT

Cass. 1re civ. 8 July 1994, LawLex202300007567JBJ, which specifies that a trial sale presupposes that the buyer has agreed to pay a specific price for the item sold in the event that the trial has been satisfactory; Cass. com, 22 May 1991, LawLex202300007564JBJ, which held that when the purchaser gave notice of his decision not to conclude the trial sale the day before the last delivery of the equipment ordered, without waiting for the computer site to be set up, and without having carried out the trial enabling him to assess whether the equipment was unsuitable, a condition to which the agreement made renunciation of the sale subject, the sale was completed.

Cass. 1re civ, 13 October 1998, LawLex202100006432JBJ; 24 March 1998, LawLex202300002002JBJ.

CA Rennes, 14 December 2021LawLex202300008330JBJ.

Cass. 1re civ, 13 July 2004, LawLex202300008334JBJ.

Cass. 3e civ. 22 October 2015, LawLex202300009073JBJ; Cass. com. 16 April 1991, LawLex202300003004JBJ.

Cass. 3e civ, 7 June 1983, LawLex202300004715JBJ.

Cass. 3e civ., 8 October 1980, LawLex202300008337JBJ.

Business Contracts

122. Conditional sales

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Les décisions de justice citées dans ce paragraphe :

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122. Conditional sales

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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